Bama Tea’s Ipo Journey: Regulatory Hurdles & Expansion

It was a little of both for Bama Tea Co. Ltd., whose application for a Hong Kong IPO ran out earlier this month just as its planned listing received a crucial regulatory authorization from the China Stocks Regulatory Payment (CSRC). Destiny has so far declined to smile on this major farmer and vendor of leaves made use of to make China’s preferred drink, which has actually attempted however failed to go public three times.

In a statement on its website on June 17, the CSRC formally signed up Bama’s plan to list in Hong Kong by selling up to 29.13 million shares. Simultaneously, the regulator revealed that 106 Bama shareholders intend to transform about 44 countless the business’s shares right into supply that can be traded in the Hong Kong listing.

Regulatory Approval and Shareholder Transformation

Bama is one of China’s much better known tea brands, with a background dating back extra than 300 years. The Black Feline Customer Complaint Platform discloses multiple complaints against the business’s products, from people who discovered little pests in some tea after developing, to others who uncovered tea leaves that turned blue after saturating in water for a while. One firm called Septwolves owns 2.61% of Bama’s shares; sports apparel gigantic Anta has actually connected transactions with the business on tea purchases; and Gaoli Holding Group has supply chain partnership with the firm. Bubble tea chains have actually become the primary stars within that group, while interest towards the conventional tea field that Bama inhabits stays more warm. That may be partially due to the fact that detailed standard tea stocks such as Pu’er Lancang Ancient Tea (6911.

Quality Concerns and Partnerships

Having gotten the CSRC’s true blessing, the business must currently file an updated application once again with the Hong Kong Stock Exchange. Its opportunities of brewing up success seem stronger this time around, as it looks likely to cruise through the stock exchange’s authorization process.

The firm’s promoting of 3 centuries of history and imperial court organization naturally results in expectation that Bama uses proprietary techniques to create its items. However the reality is a bit different, considering that the business contracts out a big component of its production to 3rd parties. Such practice might increase some eyebrows, leading to doubts over Bama’s insurance claims of carrying on a centuries-old family tradition.

Manufacturing Outsourcing and Historical Claims

The Wang bros have actually mosted likely to great size to squeeze as much worth as feasible from the tieguanyin name and its royal beginnings. Whether the story is true or simply a sales tactic is anyone’s assumption. Still, there’s nothing like a good tale to offer a product, and no one seems testing the company’s account, at the very least not yet.

The largest problem for franchisers has actually constantly been keeping their franchisees in line, which is essential to smooth procedures and maintaining high quality and consistency. Failure to do that typically results in problems, including potential claims over food safety and security and various other quality concerns in extreme cases.

Bubble tea chains have become the primary celebrities within that team, while interest toward the typical tea field that Bama occupies continues to be more lukewarm. That may be partially because listed traditional tea supplies such as Pu’er Lancang Ancient Tea (6911. HK) and Ying Kee Tea Home (8241.

Contracting out manufacturing could likewise bring about quality concerns. In 2017, Bama was censured by China’s state media for substandard high quality of several of its oolong tea samples that contained pollutants surpassing security requirements.

According to its initial Hong Kong Stock market declaring in January, the firm gained 2.12 billion yuan ($296 million) in income in 2023, up 16.8% year-on-year, while its internet earnings increased 9% to 206 million yuan. Its development primarily ran out in 2024, as its 1.65 billion yuan in profits for the first 3 quarters of the year was up much less than 1%, while its revenue climbed 5.8% to 208 million yuan. A brand-new listing application ought to consist of final financials for all 2024, and possibly data for the perhaps 2nd and initial quarters of 2025.

Financial Overview and Growth

Bama is one of China’s much better known tea brand names, with a history dating back much more than 300 years. In the year 1742, Wang Shirang, a popular official in South China’s Fujian province, provided the tea to the Qing Empire’s Qianlong Emperor.

Wang Wenli and Wang Wenbin, two bros descended from the 13th generation of the Wang Shirang family, established Bama Tea more than two and a half centuries later in 1997. Its tieguanyin fallen leaves are the business’s crown jewel, while it likewise offers associated items like tea collections, tea tables and tea treats.

Company History and Origins

Bama is familiar with such hazards. The Black Pet Cat Customer Issue System exposes numerous grievances against the company’s items, from people that spotted little insects in some tea after brewing, to others who discovered tea leaves that turned blue after taking in water for a while. Some franchisees have actually also been charged of blending lower-quality tea entrusts Bama’s items to boost their revenues.

Franchise Challenges and Quality Control

The business additionally faced inquiries at the time of its ChiNext listing attempt in 2021. Back then, the Shenzhen Stock Exchange inquired 3 times regarding stock cycles of Bama’s franchisees, including just how well their inbound shipments matched their sales and whether they were building up inventory of unsold tea leaves.

Like its history, Bama’s journey to the funding market has been long and additionally tough. It first provided on the National Equities Exchange and Quotes (NEEQ) market in Beijing, also referred to as the “New Third Board,” but later on took out from the thinly traded exchange in 2018. Three years later it filed for an IPO on the Nasdaq-style ChiNext board of the Shenzhen Stock Market, only to abandon that effort in 2022. Later it filed to list on the Shenzhen Exchange’s major board, but once more ended that initiative in 2023.

One company called Septwolves owns 2.61% of Bama’s shares; sportswear large Anta has actually connected deals with the company on tea acquisitions; and Gaoli Holding Team has supply chain cooperation with the business. All of those companies are linked to Bama via marriage ties.

The business’s organization version could additionally be a source of financier problem. By the end of last September, the business had 3,498 shops, 92% of those franchised. Of its profits pie, regarding fifty percent came from those franchisees.