F-1/A: Chagee Holdings Limited Files for U.S. IPO, Aiming to List on Nasdaq

Chagee Holdings Limited, a leading premium tea drinks brand in China, has filed an amended registration statement for its initial public offering (IPO) on the Nasdaq Global Select Market under the ticker symbol 'CHA'.

Summary

• Chagee Holdings Limited, a Cayman Islands holding company, is pursuing an IPO to list its American Depositary Shares (ADSs) on the Nasdaq Global Select Market.
• The company is offering 14,683,991 ADSs, with an expected initial public offering price between US$26.0 and US$28.0 per ADS.
• Underwriters have an option to purchase up to 2,202,598 additional ADSs to cover over-allotments.
• Four independent investors have shown non-binding interest in purchasing up to US$205.0 million worth of ADSs in the offering.
• Chagee plans to use the net proceeds from the offering to expand its teahouse network, for brand building and marketing, for investment in technology, for product development, for building overseas supply chain network, and for general corporate and working capital purposes.
• The company's issued and outstanding share capital will consist of Class A and Class B ordinary shares, with the founder retaining significant voting control.
• Chagee faces legal and operational risks related to doing business in China, including regulatory oversight and potential policy changes.
• The company has completed filings with the CSRC for the offering and proposed overseas listing.
• The possibility of being a Commission-Identified Issuer and risk of delisting could continue to adversely affect the trading price of our securities.
• The company's net revenues increased by 167.4% year-over-year in 2024, amounting to RMB12,405.6 million (US$1,699.6 million).
• Net income increased by 213.3% to RMB2,514.6 million (US$344.5 million) in 2024.
• As of March 31, 2025, the number of teahouses increased to 6,681 (including 169 teahouses overseas), up from 6,440 as of December 31, 2024.
• The total GMV generated in China and overseas grew sequentially to RMB8,231 million in the first quarter of 2025 from RMB8,177 million in the fourth quarter of 2024.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Chagee, highlighting strong financial performance and growth prospects. However, it also acknowledges risks and challenges associated with the business and regulatory environment, preventing a higher score.

Positives

• Chagee is a leading premium tea drinks brand with a large and growing network of teahouses.
• The company has experienced rapid revenue and income growth.
• The company has a strong brand reputation and social influence.
• The company is committed to technology and innovation.
• The company has a well-managed franchise model.
• The company has a strong working capital position.

Negatives

• Chagee faces intense competition in the freshly-made tea drinks market.
• Chagee has limited control over the operations of its franchise partners.
• Chagee is subject to evolving consumer preferences and tastes.
• Chagee faces the risk of fluctuations in the cost, availability and quality of its raw materials.
• Chagee may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading under PRC laws.
• Chagee has identified material weaknesses in its internal control over financial reporting.

Risks

• Chagee's limited operating history may not be indicative of future results.
• Chagee may not be successful in expanding its teahouse network.
• Chagee's operating results are closely tied to the success of its franchise partners.
• Chagee is subject to evolving consumer preferences and tastes.
• Chagee faces risks related to doing business in China, including regulatory oversight and potential policy changes.
• Chagee may rely on dividends from its PRC subsidiaries, which could be limited.
• Chagee may be classified as a PRC resident enterprise for tax purposes, which could result in unfavorable tax consequences.
• Trading in Chagee's securities may be prohibited under the Holding Foreign Companies Accountable Act.
• The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.
• Forum selection provisions in Chagee's post-offering memorandum and articles of association could limit the ability of holders of our Class A ordinary shares, ADSs, or other securities to obtain a favorable judicial forum for disputes with us, our directors and officers, the depositary bank, and potentially others.

Future Outlook

Chagee intends to continue expanding its teahouse network, elevate its brand value, enhance its global supply chain capabilities, and invest in technology to improve automation, standardization, and digitalization capabilities.

Industry Context

The announcement highlights Chagee's position in the rapidly growing premium freshly-made tea drinks market in China and globally, emphasizing the increasing consumer demand for quality, health, and brand image.

Comparison to Industry Standards

• Chagee's average monthly GMV per teahouse in China of RMB511.7 thousand in 2024 stood out as the highest among all freshly-made tea drinks brands with over 1,000 stores in China, according to iResearch.
• Chagee's logistics costs accounted for less than one percent of its total GMV generated in China and overseas in 2024, and its inventory turnover days were approximately 5.3 days, representing the lowest figure among all freshly-made tea drinks brands with over 1,000 stores in China, according to iResearch.
• In 2024, CHAGEE ranked the first in terms of the number of posts, number of views, and total audience interaction volume on RED (Xiaohongshu) in 2024, and experienced the highest year-on-year growth rate of 234.5% in Douyins keyword search index in 2024, according to iResearch.
• CHAGEE appeared in Weibos trending search more than 50 times in 2024, ranking first in Chinas premium freshly-made tea drinks industry, with the cumulative number of views of these trending searches exceeding 4.9 billion, according to iResearch.

Related Party Transactions

• The company has engaged in transactions with related parties, including sales of products and services to franchised teahouses in which it holds minority interests.
• The company has extended loans to related parties, including its founder and other key personnel.
• The company has exchanged ordinary shares for preferred shares with related parties.

Stakeholder Impact

• Shareholders: Potential for increased value through IPO and future growth.
• Employees: Potential for career advancement and equity ownership.
• Customers: Continued access to high-quality tea drinks and improved services.
• Franchise Partners: Continued support and resources for operating successful teahouses.
• Suppliers: Potential for increased business through Chagee's expansion.

Next Steps

• Complete the IPO process and list ADSs on Nasdaq.
• Expand the teahouse network in China and overseas.
• Continue brand building and marketing efforts.
• Invest in technology to support business development and operations.
• Develop and innovate new products.
• Build overseas supply chain network.

Key Dates

Keywords

Chagee, IPO, ADSs, tea drinks, franchise, China, Nasdaq, premium, market, growth, revenue, regulatory, risk factors