Sign Up

Auntea Jenny Remains A Cautionary Tale Despite Returning To Profit Growth

After a difficult period of revenue contraction in 2024, the mid-tier premium tea seller returned to strong profit growth last year

image credit: Bamboo Works

Key Takeaways:

Auntea Jenny said it expects to report its profit last year rose as much as 60% from 2024

The mid-tier bubble tea seller's overseas expansion is stalled at just a single store, significantly trailing behind its more aggressive larger peers

There was a time when investors couldn't get enough of bubble tea companies, finding special sweetness in their tales of huge domestic networks and going abroad. But stocks of several recently listed chains have faltered after their IPOs, as the market descends into the type of cutthroat competition often seen in China. That's caused all but a few leading players to drop off investor radars, quickly becoming yesterday's tea story.

Auntea Jenny (Shanghai) Industrial Co. Ltd. (2589.HK), known for its signature "grainy milk tea" containing five separate grains, is squarely in the class of second-tier players. The homey company's shares surged to as high as HK$197.60 after their IPO last May, representing a 75% premium over its offer price. But that frothy valuation proved fleeting, as the stock quickly lost momentum after its midyear results showed a profit increase of only 20% in the first half of last year, short of market forecasts.

After laying dormant through an extended winter, Auntea Jenny ‘s shares came back to life last week after it announced it expected to report a profit of 495 million yuan ($71 million) and 525 million yuan for 2025, up 50% to 60% year-on-year. The company attributed the jump to ongoing expansion of its store network, which drove revenue growth. It also credited its cost-reduction and efficiency-enhancing initiatives, alongside improvements in its supply chain efficiency.

But even after a 7% rise in its stock over the two trading days after the announcement, Auntea Jenny's shares are still down more than 50% from last year's peak. Even so, the company's profit forecast for last year translates to a relatively high price-to-earnings (P/E) ratio of 19 times, suggesting ...