Shares of China’s largest bubble tea and drinks chain, Mixue Group, leapt by around 45% in its debut on the Hong Kong Stock Exchange on Monday, taking investors by surprise. New listings in the city have recorded their best start since the COVID-19 pandemic began.

The group, a leader in the “low-end tea drinking” market, has quietly grown to have more establishments than McDonald’s and Starbucks. The group operates most of its 43,000 locations through franchisees, upending the typical direct management of stores approach.

Mixue’s business model has been used frequently as a case study by academics and analysts as a success story. The company focuses on low price points, as its primary consumers are college students and township residents. 

It is also heavily present through its online marketing activities and uses its supply chain, supplying raw materials to its franchisees at a cost-effective price and free shipping. 

Surprise jump 

The company raised US$444 million in an initial public offering (IPO) by selling 17 million shares.

“Many Chinese tea chain stocks had dismal debuts, and Mixue’s 30% plus jump is a pleasant surprise to investors,” George Au, Phillip Securities deputy sales director, told Yahoo! Finance. 

“Some clients were so enthusiastic they brought their entire families to open accounts just to participate in this IPO.”

Mixue was founded in 1997 by student Zhang Hongchao. After working part-time at a drinks kiosk, he was inspired to start his own business. The company’s stores are recognizable for their Snow King mascot and the official theme tune played in its chains. 

The Chinese company’s performance is in stark contrast to competitors Guming, whose shares fell in February, and Chabaidao, whose shares dipped on their market debut.