by Lu Yibei

Auntea Jenny became the latest Chinese bubble tea chain to go public in Hong Kong, debuting on the Hong Kong Stock Exchange on May 8. Shares opened at HK$196.80—up 74% from the offer price—pushing its market capitalization to HK$20.6 billion. By midday, gains had narrowed to 53%, valuing the company at HK$18.1 billion.

The listing followed a highly oversubscribed IPO, with subscriptions exceeding HK$94 billion and a 3,400-times retail oversubscription rate—second only to Mixue Group’s 5,200 times. In gray market trading the day before, shares had surged more than 66%.

According to a report by China Insights Consultancy, Auntea Jenny ranks among the top five made-to-order tea brands in China by gross merchandise value (GMV), alongside Mixue, Guming, Chabaidao, and CHAGEE—all now publicly listed.

Investor enthusiasm has extended beyond tea chains to the broader restaurant sector. Green Tea Restaurant, after four failed attempts, is set to launch its IPO on May 16. Yet while capital markets remain bullish, growth momentum in the real market is slowing.

Auntea Jenny’s prospectus reveals a challenging operating environment. The company’s average store GMV fell to 1.37 million yuan in 2024, down from 1.56 million yuan in 2023, amid intensified competition. Revenue declined 1.9% year-on-year to 3.29 billion yuan (US$455 million), while net profit dropped 15.2% to 329 million yuan (US$45.5 million). The decline is attributed to weaker franchise and self-operated store income.

A key headwind is mounting competition in the lower-priced segment, where brands are aggressively expanding to capture market share. The rise of rival CHAGEE, for example, has diverted customer traffic. In 2024, CHAGEE reported GMV of 29.5 billion yuan (US$4.1 billion), a 173% year-on-year jump, with average monthly GMV per store reaching 512,000 yuan.

To sustain growth, Auntea Jenny has lowered the barrier to entry for franchisees. Its average startup cost per store is 275,000 yuan—below the industry average of 350,000 yuan. It also allows franchisees to source certain equipment independently, a draw for those switching brands.

The company now operates three brands: Auntea Jenny, Huka Cafe, and a budget “Lite” version tailored for smaller cities. As of end-2024, the group had 9,176 stores nationwide. Of its revenue, 96.5% comes from franchise-related business—mainly product and equipment sales, as well as service fees—similar to Mixue’s 97.5% reliance on those streams.

But scale alone may not be enough. Mixue generated 24.2 billion yuan in 2024 from product and equipment sales, up 21.7% year-on-year, while Auntea Jenny’s comparable revenue plateaued at 2.55 billion yuan.

Industry-wide, store expansion is slowing. While top players like Mixue and CHAGEE still show growth, others are hitting a ceiling. For example, Chabaidao added just 587 stores in 2024, and Guming’s store count rose only 10.1% to 9,914.

In a saturated market, Auntea Jenny must differentiate or risk fading from consumer and investor focus. The three fastest-growing chains—Mixue, CHAGEE, and Guming—each offer clear competitive edges: Mixue’s affordability backed by a robust supply chain, CHAGEE’s premium milk-tea positioning, and Guming’s tight control over fresh fruit sourcing and regional density.

Founded in 2013, Auntea Jenny initially set itself apart with “grain teas” featuring ingredients like black sticky rice, barley, and oats, appealing to northern markets during colder months. But these products proved less popular in southern China, where consumers prefer fruit teas and lighter milk-based drinks. In response, the company rebranded in 2020 with the slogan: “Love Fresh Fruit Tea, Drink Auntea Jenny.”

Despite this pivot, it has yet to establish a strong brand identity.

The company continues to diversify. Its coffee brand, Huka Cafe, was spun off into standalone outlets in late 2024, while the “Lite” model—offering drinks priced between 2–12 yuan (US$0.28–1.66)—was launched for lower-tier cities. The Lite line was upgraded in March 2024 under the name “Chapubu” (Tea Waterfall) to further capture value in the budget segment.

Still, building brand equity remains an uphill task.

In hopes of matching investor confidence in Mixue’s supply chain model, Auntea Jenny has begun investing in its own production capabilities—manufacturing ingredients such as tapioca pearls and tea leaves. Its gross margin improved to 31.3% in 2024 from 26.7% in 2022, thanks to cost controls, increased procurement scale, and more efficient franchise operations.

Yet risks loom. The Hong Kong market has historically shown limited tolerance for weak post-IPO performance. Nayuki’s Tea, for instance, has lost over 80% of its value since listing. Mixue debuted at a price-to-earnings ratio of 48, now down to around 38.

With thinner supply chain defenses and less pricing power, Auntea Jenny may find it difficult to sustain its valuation if future growth fails to meet expectations.