Auntea Jenny's HKEX IPO: Franchisee GMV Drops – What's Next for Its Lower-Tier Market Strategy?

Auntea Jenny Goes Public in Hong Kong Amid Bubble Tea Boom

Auntea Jenny (HK: 02589) has become the latest bubble tea brand to go public in Hong Kong. It is the fifth Chinese tea chain to list there, following brands like Nayuki, Cha Bai Dao, Gu Ming, and Mixue. So far, its stock performance has been strong, second only to Mixue.

The company set its share price at HK113.12 and issued 2.41 million shares. During the IPO, demand was very high—about 3,400 times over-subscribed, with over HK113.12 million, and 2.41 million shares were issued. During the IPO, demand was very high—about 3,400 times oversubscribed, with over HK113.12 million, and 2.41 million shares were issued. During the IPO, demand was very high—about3,400timesoversubscribed, with over HK92 billion in orders. This makes Auntea Jenny the most popular new stock since Hong Kong tightened IPO rules in March.

A day before the official listing, the share price rose 62% in after-hours trading. That means each lot of 30 shares earned investors around HK$2,100 (before fees). On the first day of trading, the stock jumped more than 40%.

The company was founded by a married couple, Shan Weijun and Zhou Rongrong, who rang the bell at the listing ceremony. They are the latest couple in the bubble tea industry to take their brand public.

Mr. Shan, who serves as Chairman and CEO, said the company will use the new funds to improve products, expand its global strategy, and offer better service through more efficient operations.

Key Investors and Funding

Auntea Jenny raised around HK$195 million from the IPO. It received more than 127,000 applications from individual investors. The Hong Kong public offering was oversubscribed by over 3,600 times.

Two cornerstone investors joined the offering:

• Yingfeng Holdings, part of Yingfeng Group, bought 437,600 shares.
• Huazhi Trading, a subsidiary of Huabao International, bought around 188,600 shares.

Yingfeng Group is led by He Jianfeng, the son of the founder of Midea Group. Huazhi Trading is a supplier to Auntea Jenny, providing ingredients like bubble pearls.

Brand Story and Expansion Plans

Auntea Jenny was founded in 2013 in Shanghai. It became famous for its “Blood Rice Milk Tea.” According to industry data, it now has the fourth-largest network of bubble tea shops in China.

The company runs three brands:

• Auntea Jenny (main brand)
• Hu Ka (coffee drinks)
• Light Version (lower-cost options)

The company plans to use the money from the IPO in the following ways:

• 25% for digital upgrades (member systems, store technology, franchise platform)
• 20% for product development and better ingredients
• 20% for improving supply chain (production, storage, delivery)
• 15% for brand building
• 10% for marketing
• 10% for daily operations

Challenges in a Competitive Market

Auntea Jenny has more than 9,000 stores across China. More than half are in smaller cities (third-tier and below). Almost all of its stores—99.7%—are run by franchise partners. In 2024, 80% of its revenue came from franchising.

Financial performance in recent years:

• 2022: RMB 2.199 billion revenue, RMB 149 million profit
• 2023: RMB 3.348 billion revenue, RMB 388 million profit
• 2024: RMB 3.285 billion revenue, RMB 329 million profit

Revenue fell slightly in 2024 due to lower income from franchises and lower sales at company-owned stores. The number of closed franchise stores also increased—from 370 in 2023 to 987 in 2024.

Average sales per store also dropped, from RMB 1.6 million in 2023 to RMB 1.4 million in 2024. This is because the bubble tea market is becoming more competitive, especially in smaller cities.

In February 2024, Auntea Jenny opened its first overseas store in Kuala Lumpur, Malaysia. So far, it is the only international location.