Shares in Chinese bubble tea company Chabai Dao fell nearly 40% on their first day of listing in Hong Kong

Ice-cold bubbly milk tea on a hot day.

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Shares in Chinese bubble tea chain Chabaidao fell nearly 40% on their first day of trading on the Hong Kong stock exchange.

The stock, officially listed as Sichuan White Tea Baidao Industrial, fell to HK$10.84 late in the morning, about 38% below its issue price of HK$17.50.

According to the data, the bubble tea company’s IPO is the largest IPO in Hong Kong so far in 2024, with the company’s net proceeds from the IPO amounting to HK$2.59 billion (excluding listing fees). Its prospectus is filed on the Hong Kong Stock Exchange.

The company said it will rank third in China’s newly created tea shop market in terms of retail sales in 2023, with a market share of 6.8%.

Chabaidao sold 90% of its 147.7 million shares worldwide and the remaining 10% in Hong Kong.

However, the public offer was subscribed only 0.5 times, causing the company to reallocate the remaining shares to the global offer, which was subscribed 1.11 times.

Chabaida also disclosed in its prospectus that revenue for the fiscal year ending 2023 was 5.7 billion yuan ($786.8 million), with gross profit of 1.96 billion yuan for the same period.

From 2021 to 2023, the net profit compounded rate will reach 21.6%.