Mixue Group’s Explosive HK Debut: A Sweet 43% Surge and What’s Next

On Monday, March 3, 2025, Mixue Group (02097.HK), China’s beloved budget-friendly tea and ice cream chain, made its Hong Kong stock market debut with a spectacular performance. The stock soared 43.21% on its first trading day, closing at HK$290—far above its IPO price of HK$202.5. As of writing, the stock continues to climb, reaching HK$296. This surge may seem surprising, but there’s a clear rationale behind it.

Mixue’s IPO Journey

Founded in 1997, Mixue grew from a small street-side shop in Zhengzhou to a global tea and dessert giant. Its strategy revolves around offering high-quality yet affordable products, making it a household name. Today, it operates over 46,000 stores worldwide, including more than 4,800 overseas locations across 11 countries. With a supply chain spanning 38 countries, Mixue has become the largest freshly made beverage company globally.

On February 21, 2025, Mixue launched its IPO at HK$202.5 per share, raising HK$3.45 billion (US$440 million), making it the largest IPO in Hong Kong this year. The offering included 17.06 million shares, with five cornerstone investors subscribing to US$200 million worth of H-shares, accounting for 45% of the total.

By February 28, Mixue’s shares surged nearly 30% in the gray market, and retail subscriptions were oversubscribed by 485 times. Investor enthusiasm was evident, with margin financing reaching HK$168 billion, signaling strong demand ahead of the official listing.

On March 3, Mixue debuted at HK$262 (+29.4%), reaching an intraday high of HK$298 before closing at HK$290 (+43%). This performance pushed its market capitalization to HK$1.1 trillion (approximately US$140 billion). As of now, the stock continues its upward momentum.

Why Is Mixue So Successful?

Market Positioning & Expansion Strategy

With 46,479 stores worldwide, Mixue dominates the "high-quality, low-cost" market. Its core products, priced between RMB3-6, cater to lower-tier cities and young consumers. Notably, 57% of its 40,500+ domestic stores operate in third-tier cities and below, reinforcing its affordability-driven appeal.

Mixue’s presence in Southeast Asia is also expanding rapidly, with over 4,000 stores in the region. Key growth markets include Vietnam, Indonesia, and Thailand, where the tea and beverage industry is projected to grow at a 19.8% CAGR through 2028.

Strong Supply Chain & Cost Efficiency

Mixue’s vertically integrated supply chain is a key competitive advantage. The company operates five self-built production bases and a logistics network that covers 90% of China’s counties within 12 hours. By self-producing 100% of its core ingredients, Mixue minimizes costs while maintaining quality.

The company is also investing in research and development, such as flash-freezing fruit pulp at -35°C to enhance freshness and sustainability. These innovations support its low-cost, high-quality strategy.

Financial Strength & Profitability

Despite its affordable pricing strategy, Mixue is highly profitable. In Q1-Q3 2024, revenue reached RMB186.6 billion (~US$26 billion), marking a 21.2% YoY increase, while net profit surged 42.3% to RMB34.9 billion (~US$4.9 billion). Its gross margin remains strong at 32.4%.

From 2021 to 2023, Mixue consistently expanded its revenue base, and its franchise model has proven successful. The company’s daily sales per store continue to rise, with new stores outperforming older ones—indicating strong franchisee profitability and operational efficiency.

Challenges & Risks

Despite Mixue’s impressive growth, it still faces some challenges. Rising global ingredient costs and logistics challenges could pressure margins, especially as overseas expansion accelerates. Competitors like Luckin Coffee and Cotti Coffee are also eyeing Southeast Asia, intensifying competition. Additionally, food safety concerns could impact brand trust.

A Long-Term Play?

Mixue’s IPO isn’t just about market hype—it’s a bet on scalable globalization and cost leadership. The post-IPO surge reflects investor confidence in its ability to replicate its China success overseas. However, with a steep valuation (P/E ~30x based on 2024 earnings), execution risks remain, particularly in expanding into untapped international markets.

That said, Mixue is a rare combination of growth and profitability in the consumer sector. While short-term volatility is likely, its supply chain moat and lower-tier market dominance make it an attractive long-term investment. Investors should watch Q1 2025 earnings and overseas expansion metrics closely.

Disclaimer: This is not financial advice. Always do your own research before making any investment decisions.