The shares started trading at HK$262 (US$33.7) each and the gains outpaced a 0.8% rise in Hong Kong’s Hang Seng Index.
Retail investors subscribed for 5,258 times more shares than were on offer in that tranche, according to Mixue’s filings, making it one of Hong Kong’s most popular ever IPOs. The firm raised $444 million in the IPO.
The retail subscription rate was just below Bloks Group whose retail book was 6,000 times oversubscribed, a record, in its January IPO.
The institutional tranche of the deal was 35 times covered, the filings showed.
Media reported Hong Kong retail investors applied for a record HK$1.8 trillion (US$231.4 billion) worth of margin loans to buy Mixue stock during the book-building process.
The debut is a positive start for Mixue compared to its rival Guming whose shares slumped 10% on their first trading day in Hong Kong on February 12.
Mixue is often seen as China’s largest chain of iced drinks, milk tea, and ice cream. However, it operates more like a raw-material supplier than a traditional beverage brand.
Founded in 1997 as a small ice shop in Zhengzhou, Henan province, Mixue has grown into a franchise giant with over 45,000 stores globally by September 2024, surpassing Starbucks’ 40,576 stores worldwide, and is considered the world’s largest fast-food chain by store count.
Unlike Starbucks, which operates 53% of its stores directly, Mixue relies heavily on franchising, with more than 99% of its stores run by franchisees.
This model has proven highly profitable. In the first nine months of 2024, Mixue reported a net profit of 3.49 billion yuan, up from 3.19 billion yuan in the same period of the previous year, according to its IPO filings.
This comes from selling drinks priced at an average of just 6 yuan ($0.8234) per cup.
The secret lies in its franchise model, which generates revenue by selling food materials, packaging, and equipment to thousands of franchisees, supported by its robust manufacturing capabilities, according to its filings.
Mixue’s prospectus showed sales of goods and equipment accounted for 97.6% of Mixue’s total revenue in the first nine months of 2024, while franchise fees contributed a mere 2.4%. Mixue relies on its supply chain rather than traditional franchise income.
Mixue’s playful snowman mascot, Snow King, wearing a crown and a red cloak, played a significant role in the brand’s popularity.
Mixue has expanded at an astonishing pace, adding 8,582 net new stores in 2023 and another 7,737 in the first nine months of 2024 – averaging 28 new stores daily. In contrast, Starbucks opened just 377 net new stores in the quarter ending December 2024.
This rapid growth is underpinned by Mixue’s vertically integrated supply chain. The company produces about 60% of its beverage ingredients in-house, the highest proportion in China’s freshly made beverage industry. It also ensures 100% procurement of beverage ingredients, packaging materials, and equipment from its own brand, a rarity in the industry.
Mixue’s five production bases across China churn out vast quantities of sugar, milk, tea, and coffee. In 2023 alone, the company produced 244,666 tons of sugar, accounting for 1.8% of China’s total output. This scale allows Mixue to maintain its low-price strategy while ensuring quality control.
