Mixue Group's Hong Kong IPO Surges 30% on Debut, Highlighting Franchise Success

Shares of China’s leading bubble tea chain, Mixue Group, soared nearly 30% on their first trading day in Hong Kong, surpassing the Hang Seng Index’s 0.8% gain. The company raised $444 million in its IPO, pricing shares at HK$202.5 each. Retail demand was exceptional, with investors subscribing 5,258 times the shares available, just behind Bloks Group’s record-breaking 6,000x subscription in January. Institutional investors also showed strong interest, oversubscribing their tranche 35 times.

Hong Kong retail investors sought a record HK$1.8 trillion ($231.4 billion) in margin loans for Mixue stock, making it one of the city's most anticipated IPOs. The stock’s strong performance contrasts with rival Guming, whose shares dropped 10% on debut.

Founded in 1997 in Zhengzhou, Mixue has expanded rapidly, operating over 45,000 stores globally by September 2024, surpassing Starbucks’ 40,576 stores. Unlike Starbucks, which directly manages more than half of its locations, Mixue follows a franchise-heavy model, with over 99% of stores run by franchisees. This strategy has driven profitability, with net earnings reaching 3.49 billion yuan in the first nine months of 2024, up from 3.19 billion yuan the previous year.

Mixue’s success stems from its vertically integrated supply chain. The company manufactures 60% of its beverage ingredients and supplies 100% of franchisee needs, from sugar and milk to packaging and equipment. This control allows it to keep costs low, with drinks averaging just 6 yuan ($0.82).

The brand’s iconic Snow King mascot and aggressive expansion—adding 7,737 stores in 2024 alone—have fueled its dominance. With its low-price strategy and supply chain efficiency, Mixue continues to disrupt China’s beverage market while strengthening its global footprint.