Sichuan Baicha Baidao, which is renowned for its fruit and milk tea chain Cha Panda across China, has applied for a listing in Hong Kong with CICC (3908) as its sole sponsor.

The company opened its first ChaPanda store in 2008 in Chengdu in 2008 and over the years the number of stores has grown exponentially to 7,111 across 31 provinces and municipalities.

Most of these are franchised outlets, apart from six self-operated ones.

ChaPanda ranked third in China's new-style tea shop market in terms of retail sales in 2022 with a market share of 6.6 percent, behind Mixue Ice Cream & Tea with 10 percent and Guming with 6.9 percent, according to data from Frost & Sullivan cited in its prospectus.

ChaPanda stores are said to harmonize traditional Chinese tea culture with contemporary innovation, and this year the chain refreshed its brand with a new "Cha Cha" logo featuring a panda enjoying tea.

It also adopted for life a giant panda named Cha Cha at the Chengdu Research Base of Giant Panda Breeding, to show its bonds to the province which is home to giant pandas, and its care for ecology and biodiversity conservation.

ChaPanda specializes in innovative fruit tea beverages targeted at younger people who prioritize premium and imaginative concoctions.

Its portfolio includes classic, seasonal and regional tea drinks and its most popular ones are mango pomelo sago, taro bubble tea and jasmine milk green tea.

These three drinks sold more than 60 million cups each last year with mango pomelo sago raking in 1.28 billion yuan through sales of 66.8 million cups.

ChaPanda's classic tea drinks are available all though the year.

Seasonal and regional tea drinks are exclusive to specific time-frames or particular locales and depend upon the availability of seasonal fruits or distinctive local specialties as well as market demand.

To ensure the quality of its beverages, the firm says it strictly selects tea, fresh fruits and dairy products from "superior sources."

ChaPanda says it gives consumers "a delightful and refreshing experience" through meticulous service, strict food safety controls and promotions that "resonate with the younger generation."

Its revenue mostly come from sale of goods and equipment to franchised stores and royalties and franchising income.

Franchise fees for a store in a top tier city are around 248,000 yuan (HK$267,960) a year.

In the first quarter of 2023, the company's total revenue rose 53 percent year on year to 1.25 billion yuan (HK$1.35 billion) and its net profit nearly doubled to 281.6 million yuan compared to 187.6 million yuan in the same period of 2022.

Between 2020 and 2022, its net profit margin stood above 21 percent and in the first quarter of this year it rose to nearly 23 percent.

In June, the company secured a first round of financing led by Orchid Asia worth nearly 1 billion yuan. Other investors included CICC and Tomato Capital, which focuses on investments in catering brands.

Sichuan Baicha Baidao aims to continue expanding its network and wants to boost its presence in international markets, especially in Southeast Asia.

It also hopes to broaden its product offerings and develop of a standalone sub-brand for freshly brewed coffee.

Most of the IPO proceeds will be used for enhancing warehousing and delivery capabilities, improving its multi-temperature controlled system, strategic investments in the upstream supply chain and advancing its digitalization capabilities.

SUPPORTING BIODIVERSITY: Young Cha Cha, left, has been adopted for life by ChaPanda.

REFRESHING NEW LOOK: The chain's emblem shows a panda enjoying tea.

All set to tee off