Less than a year after ChaPanda became the second-ever “new-style” tea brand to go public, the third brand has already emerged. On 12 February, Goodme (古茗, also Guming) was successfully listed on the Hong Kong Stock Exchange (HKEX) via IPO.
The IPO came over a year after Goodme first submitted its prospectus to go public in 2024, which became invalid after 6 months. Goodme’s IPO attracted 5 cornerstone investors, including Chinese tech giant Tencent. The 5 stakeholders invested 71 million USD in total. With its issue price at 9.94 HKD (1.28 USD) per share, the IPO makes Goodme’s market value over 23 billion HKD (2.95 billion USD). It also began trading at 10 HKD (1.28 USD) per share, up 0.6%.
However, it quickly dropped below its issue price, and for a time, was down 10% on its first day and ended the day with 6.44% below issue price. Goodme’s share prices continued to plummet on the second day of trading, down 11% at its lowest on 13 February. This type of bumpy start happened to both Naixue (formerly Nayuki) and ChaPanda, and pundits call it the “below issue price curse” of “new-style” tea chains.
Goodme has grown significantly in the past few years before going public. As of the end of September last year, the chain had over 9,000 branches. Gross merchandise value (GMV) in 2023 was over 19.2 billion RMB (2.63 billion USD), second only to Mixue Bingcheng. However, the fierce competition in the sector and stagnating profitability of branches, as well as barriers the chain has faced during regional expansion, have put stress on the brand.
The costs of the supply chain and the pressure of expanding into lower-tiered cities and towns are common issues “new-style” tea brands face. It is a similar reason as to why HeyTea has paused franchising and Goodme is investing in optimising its supply chain.
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