Auntie of Shanghai (02589) plans to globally issue 2.41134 million H shares, bringing in Ying Feng Holdings and China Overseas as cornerstone investors.

Auntie in Shanghai (02589) will be listed from April 28th, 2025 to May 2nd, 2025, intending to globally offer 2.41134 million H shares, with 10% in Hong Kong and 90% in international sales, and an additional over-allotment option of not more than 15%; the offering price will not exceed HKD 113.12 per share, and is expected to be not lower than HKD 95.57 per share; with a lot size of 30 shares, it is expected that the H shares will start trading on the Stock Exchange on May 8, 2025 (Thursday) at 9:00 am. The company is a rapidly growing ready-to-drink beverage company. As of December 31, 2023, according to Zou Shi Consulting, the company operates the fourth largest network of ready-to-drink tea shops in China, with a large network in the lower-tier cities. In 2022 and 2023, the company was also one of the top five ready-to-drink tea brands in terms of store count and GMV growth rate. The company opened its first Auntie in Shanghai store in 2013 selling "Five Grain Milk Tea" - a milk tea with grains as an ingredient. In 2019, the company started offering fresh fruit tea, which was well received by customers, allowing the company to expand nationwide, including into the southern regions. Through the introduction of new products such as Hu Coffee and Light Enjoy, the company aims to reach more consumers. As of December 31, 2024, the company had a network of 9,176 stores covering all four direct-controlled municipalities in China, as well as over 300 cities in 22 provinces and five autonomous regions. As of December 31, 2023, the company was ranked first among mid-priced ready-to-drink tea brands in northern China, third in mid-priced categories, and fourth in the industry overall. During the historical period, most of the company's revenue came from franchise and self-operated stores. Franchise-related revenue includes sales of goods such as ingredients, packaging, and equipment, as well as franchise service fees for operations, training, marketing, and other support, including non-refundable initial fees and ongoing fees based on franchisees' purchases. The company also generates revenue directly from sales to customers at self-operated stores. The company experienced significant business growth during the historical period. The total number of stores increased by 46.8% from 5,307 as of December 31, 2022 to 7,789 as of December 31, 2023, and further increased by 17.8% to 9,176 stores as of December 31, 2024. GMV increased by 60.4% from RMB 6.068 billion in 2022 to RMB 9.7318 billion in 2023, and further increased by 10.3% to RMB 10.7364 billion in 2024. Total revenue increased by 52.3% from RMB 2.199 billion in 2022 to RMB 3.3482 billion in 2023, and remained relatively stable at RMB 3.2846 billion in 2024. Gross profit increased by 73.5% from RMB 586.3 million in 2022 to RMB 1.0174 billion in 2023, and remained relatively stable at RMB 1.0273 billion in 2024, with a gross margin increase from 26.7% in 2022 to 30.4% in 2023, and further to 31.3% in 2024. The company estimates that, assuming an offering price of HKD 103.37 per share (the midpoint of the indicative price range in the prospectus) and assuming the over-allotment option is not exercised, the net proceeds from the global offering after deduction of underwriting commission, expenses, and estimated costs will be approximately HKD 172.7 million, of which approximately 25% will be used to enhance the company's digital capabilities; about 20% will be used for research and development to improve the quality of raw materials and ingredients, create popular products, expand the company's product range, and upgrade equipment; about 20% will be used to enhance the company's production, processing, storage, logistics, and distribution capabilities to strengthen the supply chain; about 15% will be used to enhance the company's brand momentum and further expand and strengthen the company's store network; about 10% will be used for various marketing activities; and about 10% will be used for operating funds and other general corporate purposes. Furthermore, the company has entered into cornerstone investment agreements with Ying Feng Holdings and Wah Chee (together referred to as "Cornerstone Investors"). Assuming an offering price of HKD 103.37 per H share, the Cornerstone Investors will subscribe to a total of 685,200 H shares, representing approximately 28.42% of the offering shares and approximately 0.65% of the total issued share capital after the completion of the global offering (assuming the over-allotment option is not exercised).