\n<\/p>\n
Analysts point to a number of reasons for these weak performances, including concerns about the Hong Kong stock market as a whole.<\/p>\n
The amount raised from new listings in the city since the start of this year has dropped to levels not seen since 2009, according to consultancy firm Deloitte.<\/p>\n
But this hasn’t discouraged other bubble tea chains from planning their own share sales.<\/p>\n
Earlier this year, China’s first and second largest chains by number of shops – Mixue Group and Guming Holdings – submitted applications to list on the Hong Kong Stock Exchange.<\/p>\n
“Persisting weak market sentiment in Hong Kong is the primary reason” for Chabaidao’s market blunder, said Gary Ng, a senior economist at Natixis.<\/p>\n
He believes the city will struggle to attract new listings until there “is a clear sign of China\u2019s pivot to growth and lower US interest rates”.<\/p>\n
Others, however, say investors are focusing on problems within the bubble tea industry itself. <\/p>\n
It “has relatively low barriers to entry, leading to increased competition,” said Kenny Ng, Securities Strategist of Everbright Securities International.<\/p>\n
“Many companies rely on opening new stores to sustain revenue growth. However, this expansion strategy can lead to a decline in gross profit margins as companies face higher costs associated with store operations and management.” <\/p>\n
For bubble tea fans, growing competition has its advantages. Han is a regular boba drinker from Beijing who used to stay away from certain premium brands because she found them too expensive. <\/p>\n
That has changed. She says price has become less of a factor when choosing between different brands because “they have a lot of discounts and vouchers”.<\/p>\n
But for bubble tea makers and their potential investors, lower prices and higher costs could prove to be an unattractive recipe.<\/p>\n
“The Chabaidao case highlights the risks and does not bode well for the listings of other bubble tea chains,” warned Gary Ng.<\/p>\n
Lili and Han say there is another far more important risk associated with the often sugar-packed drink that is holding them back from ordering more – putting on weight.<\/p>\n<\/div>\n