What the Nayuki Hong Kong IPO Means for China and Coffee
Nayuki, the new-style tea beverage brand founded in 2015, filed a prospectus with the Hong Kong Stock Exchange on February 11 after withdrawing an earlier U.S. listing application. JPMorgan, CMBI and Huatai International are joint sponsors. The company had 420 stores across 61 cities in China as of September 30, 2020, and had expanded into Hong Kong and Japan.
Store count grew nearly tenfold in three years, yet the business stayed loss-making, posting a RMB 27.51 million loss in the first three quarters of 2020. Proceeds are earmarked for store expansion, digital operations and supply chain development. A successful listing would make Nayuki China's first listed new-style tea beverage company, a milestone for china and coffee-adjacent drinks.
Nayuki, a leading new-style tea beverage brand founded in 2015, withdrew its prospectus for a U.S. listing and then submitted an application to the Hong Kong Stock Exchange on February 11, officially sprinting toward an IPO. The joint sponsors are JPMorgan, CMBI, and Huatai International. As of September 30, 2020, Nayuki had 420 stores across 61 cities in China and had expanded to Hong Kong and Japan. However, while its store count grew nearly tenfold in the past three years, the company remained loss-making, with a loss of RMB 27.51 million in the first three quarters of 2020. The proceeds will be used for store expansion, digital operations, and supply chain development. If the listing succeeds, Nayuki will become China's first listed new-style tea beverage company.
At the beginning of last year, Nayuki had submitted an IPO prospectus to the U.S. Securities and Exchange Commission, but the impact of the COVID-19 pandemic forced the company to ultimately withdraw the application. A year later, this tea beverage brand founded in 2015 turned to the Hong Kong Stock Exchange on February 11 and submitted its prospectus, officially launching its sprint toward an IPO.
JPMorgan, CMBI, and Huatai International are jointly serving as the sponsors for Nayuki's listing. Regarding the use of proceeds, Nayuki has outlined four directions: first, to expand its tea beverage store network and increase market penetration over the next three years; second, to advance the digitalization of its overall operations and use technology to improve efficiency; third, to strengthen supply chain and channel development to support scale expansion; and fourth, to supplement working capital and meet general corporate purposes.
Nayuki was founded in 2015, with its headquarters located at Happy Valley Commercial Street in Nanshan District, Shenzhen. It is one of the core brands under Shenzhen Pindao Catering Management Co., Ltd. According to data from Tianyancha, the brand has completed five rounds of financing to date.
In terms of shareholding structure, the shareholders currently holding more than 5% of Nayuki include: founder Mr. Zhao and his wife Ms. Peng and their controlled Linxin Holdings, the company's equity incentive platform, and Shenzhen Tiantu Capital-affiliated entities and their actual controller Wang Yonghua.
Nayuki disclosed in its prospectus that as of September 30, 2020, it operated 420 tea beverage stores across 61 cities in mainland China, while also extending its business to the Hong Kong SAR and Japan, with one store in each location.
As a leading player in the new-style tea beverage sector, Nayuki had only 44 stores at the end of 2017; by September 30, 2020, its total number of stores had climbed to 422, including 420 in 61 mainland cities, nearly ten times the scale of three years earlier. In terms of store formats, Nayuki currently operates two types: first, standard tea beverage stores, covering different scenarios and functions such as Nayuki's Gift, Nayuki Bar, and Nayuki Dream Factory.
In addition, at the end of 2020, Nayuki also launched the Nayuki Tea Pro store format, dividing its product operating model into four major modules: coffee, tea beverages, light baking, and snack retail.
Unlike previous Nayuki stores, which were mostly located in high-end commercial districts, Nayuki Pro stores will focus on deepening their presence in first-tier cities, with priority given to business office areas and high-density communities, and subsequent plans to open stores successively in Shanghai, Beijing, Xiamen, and other places. It is expected that 20 Nayuki PRO stores will open before the Spring Festival, and about 200 Nayuki PRO stores are expected to be added in 2021.
However, Nayuki, whose store count surged by nearly 400 in less than three years, has not achieved profitability and is still in a loss-making state.
Prospectus data shows that in the first three quarters of 2020, Nayuki's operating revenue was RMB 2.11 billion, with a loss of RMB 27.51 million; in 2018 and 2019, it recorded losses of RMB 69.73 million and RMB 39.68 million, respectively.
Regarding its development plans for 2021 and 2022, Nayuki stated that it plans to open about 300 and 350 tea beverage stores in 2021 and 2022, mainly in first-tier and new first-tier cities, respectively, of which about 70% will be planned as Nayuki PRO tea beverage stores.
If the listing proceeds smoothly, Nayuki will become China's first listed new-style tea beverage company.
*Image source: Internet
The above content is compiled by CoffeeHunters, a coffee news website.
