Who is the "Starbucks of Chinese Tea Drinks"? HSBC: More optimistic about GUMING compared to MIXUE

The Chinese new-style freshly brewed tea market is showing remarkable growth. Among many tea brands, HSBC believes that GUMING and MIXUE Ice City stand out due to their scalability and competitiveness, with HSBC being more optimistic about GUMING's growth prospects.

According to news from the Chasing Wind Trading Desk, on June 25th, HSBC's research report rated the listed tea brands based on five dimensions: supply chain, product strength, brand image, and domestic and international expansion capabilities. Among them, GUMING has a stronger growth outlook due to its specialization in fresh fruit tea and strong supply chain capabilities.

HSBC pointed out that although MIXUE Ice City has a large retail network and cost advantages, its valuation has fully reflected its current competitive position . At the same time, from the perspective of payback period, GUMING also performs excellently, with a store payback period of 16 months.

According to HSBC data, the market size of China's new-style tea drinks reached 211.5 billion RMB by the end of 2023, far exceeding the 151.5 billion RMB of the freshly brewed coffee market during the same period. However, the market is extremely fragmented, with approximately 660,000 freshly brewed tea shops in China by the end of 2024, with as many as four to five thousand brands and a very low survival rate. As of the time of writing, MIXUE Ice City's stock price has risen over 120% this year, while GUMING has risen over 160%.

MIXUE Ice City vs GUMING: The Duel of Scale King and Growth Dark Horse

HSBC has provided a clear profile of the fundamentals of the two companies, which is also the core basis for their rating differences.

MIXUE Ice City - The absolute leader in the low-price market:

Positioning: A clear "low-price" market leader, with some drinks priced as low as 7 RMB.

Scale: By the number of stores, it is the largest fast-food chain brand in the world, with over 46,000 stores in China and nearly 5,000 overseas.

Advantages: Its large retail network greatly enhances its cost leadership advantage.

Neutral Rating: Although its market leadership position is solid, its current valuation has basically reflected its advantages. Based on its expected compound annual growth rate of net profit from 2024 to 2027 (17.4%), its price-to-earnings growth ratio (PEG) is about 1.67 times, making it less attractive. Therefore, a "hold" rating is given.

Guming - A Specialized New Star in the Mid-Range Market:

• Positioning: Mid-range market, focusing on "fresh fruit tea" category.
• Differentiation Advantage: Established a self-operated cold storage supply chain, which creates a strong competitive barrier in the fresh fruit-centric category, ensuring product quality and the ability to expand into lower-tier markets.
• Advantage: Successfully broke through in the most competitive mid-range market through supply chain and product specialization.
• Buy Rating: Possesses stronger growth prospects. Based on its expected compound annual growth rate (CAGR) of net profit from 2024 to 2027 (24.4%), its price-to-earnings growth ratio (PEG) is approximately 1.03 times, indicating better growth cost-effectiveness. Therefore, a "buy" rating is given.

Franchisee Profitability: The "Deciding Factor" for Expansion Speed

The report emphasizes that the franchise model is key to expansion in the beverage industry, and the unit economics of franchisees is the "fuel" driving brand expansion.

HSBC believes that Guming's higher single-store profitability is sufficient to support its higher initial investment and provide franchisees with considerable returns (the report estimates Guming's store payback period to be 16 months), thus forming a positive cycle that drives continuous healthy network expansion. Specific data shows:

Initial Investment: Guming's single-store initial investment (approximately 419,000 RMB) is higher than MIXUE (approximately 216,000 RMB).

Single-Store Output: Guming's single-store productivity is significantly higher. Data from 2024 shows that Guming's average annual GMV (Gross Merchandise Volume) per store is 2.4 million RMB, while MIXUE is 1.4 million RMB.

Average Transaction Value: Guming's average GMV per transaction is 27.9 RMB, while MIXUE is 11.6 RMB, clearly reflecting the different market positioning of the two.

Long-Term Blueprint and Potential Risks: Who Has a Higher "Ceiling"?

Looking ahead, both companies have set ambitious expansion plans.

MIXUE aims to ultimately have 100,000 stores in the Chinese market, while Guming targets 30,000 to 40,000 stores. However, HSBC's "endgame" model calculation indicates that even with a difference in total store numbers, Guming's compound profit growth potential after 2027 (34%) is actually higher than MIXUE's (26%).

However, HSBC stated that investors need to pay attention to the common risks in the tea beverage market:

• Same-store sales growth (SSSG) deterioration: Increased market competition may lead to a decline in single-store revenue, affecting franchisees' profitability and willingness to expand.
• Food safety issues: Any food safety incident could deal a fatal blow to brand reputation.
• Overseas expansion not meeting expectations: Operations and management in overseas markets face new challenges.

In addition, GUMING and MIXUE will both face the expiration of the shareholder lock-up period in the third quarter, which may create selling pressure on short-term stock prices:

• GUMING: Shares held by pre-IPO investors accounting for 12.07% of total share capital and cornerstone investors accounting for 2.34% will be unlocked on August 11, 2025.
• MIXUE: Shares held by pre-IPO investors accounting for 9.48% of total share capital will be unlocked on March 2, 2026; shares held by cornerstone investors accounting for 2.03% will be unlocked on September 2, 2025.

In summary, HSBC's report provides investors with a clear analytical framework: In the battle for the "Starbucks of Chinese tea beverages," MIXUE Ice City wins by scale, but high valuations compress its upside potential; while GUMING, with its deep layout in products and supply chain, demonstrates better growth potential and investment cost-effectiveness