Naixue’s tea is on the market, and Hi Tea is valued at 60 billion yuan. There are still 3 questions Today's headlines

Canyinjie / 2021-09-23
Naixue’s tea is on the market, and Hi Tea is valued at 60 billion yuan. There are still 3 questions

Naxue’s tea market broke, but investment institutions continued to increase the number of new tea drinks. It not only shows the worries of the capital market, but also shows radicalism.

There are still three key questions for this track to really run out. What is the optimal solution in the model, when will be fully profitable, and how the business can extend and expand the brand value.


Nayuki's tea hits the market

VS Hey Tea is valued at 60 billion

On June 30, Naxue’s tea was officially listed on the Hong Kong Stock Exchange and became the “first share of new-style tea drinks”. However, Naxue’s tea did not have a good start. Its opening price was HK$18.86, which was lower than the offer price. 19.8 yuan fell 4.75%, and then the decline once expanded to 11.11%, closing at 16.9 Hong Kong dollars, as of press time, the latest total market value has shrunk to 29.363 billion Hong Kong dollars.

Previously, Nayuki's Tea has completed 5 rounds of financing. Investors include well-known investment institutions such as Tiantu, Shenzhen Venture Capital, Pacific Alliance Investment Group (PAG), and Honghui Capital. The listing may be a more critical moment for Nayuki. Nayuki's tea plan will use about 70% of the proceeds to support the expansion of the company's tea shop network and increase market penetration.

Naixue’s tea is on the market, and Hi Tea is valued at 60 billion yuan. There are still 3 questions (图1)

But it does not mean that the capital is not optimistic about Nayuki. The research report issued by Guotai Junan Securities recommends that investors increase their holdings of Naxue and set the target price at 24.9 Hong Kong dollars.

In any case, Nayuki's tea still topped this first title.

On the other hand, Hi Tea has stood at a new high level of valuation.

Some media revealed that the latest round of financing for Hey Tea has been confirmed by multiple parties, and the valuation has reached an unprecedented 60 billion yuan, once again breaking the financing record of China's new tea drinks.

In our comparison, HiTea has completed 4 rounds of financing before, and its investors include IDG Capital, Dragon Ball Capital, Sequoia China, Hillhouse Capital, etc. The post-investment valuation of the C round of financing in March last year exceeded 16 billion yuan, but this time it reached 60 billion yuan. This speed has surprised many people in the circle. At the same time, many investment banks in the investment field want to share the pie, but they have no chance.

In addition to Hey Tea, it has been rare for capital to find such a good physical investment track like Xinchayin in recent years. For example, the tea brand Hushang Ayi has obtained nearly 100 million yuan in A+ financing, and the investor is still Jiayu Fund. In addition, Michelle Ice City, which has the largest number of stores, is also on the way to IPO.

We predict that the new tea drink capital competition will be even hotter this year and next. It's just that now there is more Nayuki as a reference for the industry.


New tea drink 3 questions

On one side the track is still very hot. According to Insight Consulting, the market size of my country’s new tea drink market will reach 113.6 billion yuan in 2020. With product innovation, increased consumer acceptance, and online business development, the market will accelerate its expansion and is expected to reach 340 billion yuan in 2025 (2020- CAGR will reach 24.5% in 2025), becoming the largest subdivision track in the tea industry.

The advantages of the head players have also emerged. As of the first three quarters of 2020, the national high-end new tea drink market scale CR5 reached 55%.

But there are still three key questions on this track, which all contestants need to answer.

One question: How to find the optimal solution in the online + offline store model?

Naixue’s tea is on the market, and Hi Tea is valued at 60 billion yuan. There are still 3 questions (图2)

Let's talk about hi tea. In terms of physical stores of Heytea, Heytea's stores are divided into standard stores, Pink stores, Black Gold stores, DP stores and Go stores (self-service cache).

We paid special attention to the development of HiTea GO. The model of self-pickup and mini-programs is more promising.

According to the "HiTea 2020 Annual Report", in 2020, HiTea will enter 18 new cities while enlarging the layout of the original cities. As of December 31, 2020, Hey Tea has opened 695 stores in 61 cities at home and abroad (and so far, the number of Hey Tea stores has exceeded 800). There will be 304 new stores in 2020, including 202 main stores and 102 GO stores.

As of December 31, 2020, the "Hi Tea GO" WeChat Mini Program has over 35 million members, and 13 million new members have been added throughout the year. The large number of users reached through the mini-programs provided Heytea with reference consumption scenarios and behavioral data.

Since the epidemic, a large amount of offline traffic has shifted to online. Online takeaways, mini programs, and hicha GO self-collection counters have exerted great power.

Here is a special mention, for the sinking market, Hey Tea has tried to launch Hey Xiaocha Beverage Factory. This move has already seen Xicha's ambitions. From April 2020 to the beginning of April this year, Xixiaocha has taken root in first- and second-tier cities such as Shenzhen, Guangzhou, Dongguan, Foshan, Zhongshan, and Huizhou, and quickly opened dozens of stores. The next step should be to quickly hit the South China market.

But in contrast, Nayuki actually took a different path.

Nai Xue's main tea position is in first-tier and new first-tier cities. As of the Latest Practicable Date, 194 of its 562 stores nationwide cover first-tier cities and new first-tier cities, 135 stores in second-tier cities, and 39 stores in other cities.

From the perspective of the route, Nayuki made it clear that he did not intend to sink the market. Instead, the goal is to increase density in first- and second-tier cities.

Founder Peng Xin believes that as long as encryption can reach a better state of the city, the performance of a single store will have a good performance.

Peng Xin also stated that Naixue’s tea will rethink the four product structures and profit models of dine-in, take-out, take-out, and retail, and re-allocate resources. ‘Online orders’ and ‘new retail and other diversified consumption scenarios’ are our new direction in the next phase.

In terms of exploring the physical store model, Nayuki tried more, such as the launch of Nayuki restaurant BlaBlaBar, and the multi-scenario Nayuki DreamWorks. There is also the fourth category of Naxue's tea store "Naxue PRO" opened in Shenzhen. The new store that focuses on coffee has been upgraded in terms of products, environment and scenes. It seems that it has crossed from tea to coffee.

Looking at it now, the PRO store will be the focus of Nayuki's efforts. The prospectus shows that by 2022, Nayuki's tea will open about 650 stores in first-tier cities and new first-tier cities, of which about 70% will be Nayuki PRO tea shops.

From the perspective of stores, it should be a combination of standard stores + PRO stores to increase the penetration rate of commercial districts, high-end office buildings and core residential areas.

In fact, the PRO store is also a lighter model. Nayuki will deploy five central kitchens (that is, prefabricated products) across the country in the next three years to support the expansion of PRO stores. The subsequent expansion will be faster.

Online is also its focus. In 2020, orders through WeChat, Alipay applet, Naixue's tea App and third-party online ordering platforms accounted for 69.6% of the total. We can see from this trend that online order entry has far surpassed offline.

Question 2: Profitability under accelerated expansion? When will it be fully profitable?

Relevant information shows that the net profit of Naxue's tea in 2020 is only 0.2%, and the adjusted net profit is 16.64 million yuan. Based on the loss of 11.74 million yuan in 2019, it has turned losses into profits. According to International Accounting Standard No. 17, Nayuki's tea will have an adjusted net profit of 62.17 million yuan in 2020. Nayuki's tea has a net profit of 0.2% in 2020.

We carefully compared its data for the past three years, and in fact the funding pressure is still very large.

But fortunately, we have also seen positive data from many stores. According to founder Peng Xin, listing is not for money. Going public is just a milestone in running the company longer, not just for financing. She mentioned in an interview with the media that we made money from one store to more than 500 stores across the country to 17,000 partners.

According to the prospectus, Naixue Tea Drinks Store has achieved positive operating profits at the store level. In 2018 and 2019, the store operating profits were 172 million yuan and 374 million yuan, respectively, and the store operating profit margins were 18.9% and 16.3%, respectively. .

As for when it will be fully profitable, it depends on the density effect, and the profitability of a single store achieves geometric growth.

Three questions: How to extend the new business and continue to increase the brand value? And become a lifestyle brand?

From the category point of view, Hi Tea has made many category extensions. For example, outside the main business tea sector. We have noticed that Hi Tea is also moving towards retail. In the "Hi Tea Food Laboratory", there are moon cakes, hi tea biscuits, hi tea mixed nuts, etc., and they are also selling rice dumplings and popcorn.

From the perspective of channels, Hey Tea is also breaking boundaries and is no longer limited to its own channels. For example, the juices and sodas launched this time will also enter the circulation and new retail channels such as convenience stores and Hema.

Ruxi Xiaocha bottling plant mainly focuses on the beverage market, which allows us to see its extended value. The first batch of soda products of Hey Tea are sparkling water with 0 sugar and 0 fat. Previously, we started selling soda in the Weiya live broadcast room, creating a sales record of 300,000 bottles overnight, and 25,000 boxes of soda were robbed in seconds.

Similarly, Nayuki's tea is also vigorously retailed. Its core menu has more than 25 classic teas and more than 25 classic bakery products. Among them, tea drinks include fresh fruit tea, fresh milk tea and pure tea. In addition, it also provides a variety of retail products, such as tea gift boxes, snacks and ready-to-drink tea beverages.

However, the logic of FMCG and physical stores is different. Only rapid circulation can truly become a mass brand. What I want to talk about here is the channel level. The main consumption scenes of fast-moving consumer goods are still offline convenient outlets. How to achieve a deep distribution channel network in the future is the real big test.


Where is the "new" of the new tea?

The focus of the new tea drink is still a new word.

The author believes that, fundamentally speaking, we need to look backwards from the consumer’s point of view. The "new" of new tea drinks is reflected in innovations in products, models, experiences, services, etc., in order to improve and satisfy consumers in all aspects, in order to finally win Word of mouth.

In the future, the competition in the new-style tea industry will mainly lie in the competition in the integration capabilities of the upstream supply chain. New tea players pay great attention to the creation of the raw material supply chain. For example, Peng Xin has repeatedly stated that "the cost of raw materials will not be reduced." Naixue has always insisted on using fresh fruits, fresh milk and high-quality tea as raw materials. Judging from Nayuki's tea prospectus, its raw material costs accounted for 35.3%, 36.6%, and 37.9% of various costs and expenditures in 2018-2020.

Naixue’s tea is on the market, and Hi Tea is valued at 60 billion yuan. There are still 3 questions (图3)

The end of the supply chain is also a barrier that tea players must build. At the same time, it is the ability and speed of product innovation.

From last year's product SKU, Nayuki has launched more than 100 new products throughout the year, including tea, soft European buns, baked goods, and retail products. In the first half of this year, the new products of the domineering jade oil orange were popular among consumers, and it also showed Naxue's ability to manufacture explosive models.

For consumers, efficiency is the key when looking at the consumption scenarios at home and in the store.

From the current 2C consumer experience, we believe that there is still a big improvement in efficiency. One is how to achieve smarter product production, so that the product can not only guarantee the taste, but also does not rely on more labor. The second is to speed up the efficiency cooperation with third-party fast-matching platforms on the distribution side. Such as many intelligent equipment.

The consumption scene is becoming more and more subdivided, so online and offline "stores" must be matched differently, and more consumer groups need to be spanned to eventually become a lifestyle brand.New tea drinks also need to be "intensively cultivated" during expansion. Density, single-shop benefit, grasp with both hands and hard with both hands.