To The Moon

I find Chagees rapid growth and strong financial performance impressive, especially its ability to turn profitable so quickly. With a net profit margin of 20.3%, it has outpaced competitors like Mixue and Luckin Coffee, which suggests that its high-end positioning and premium pricing strategy are working. The fact that Chagee focuses on a smaller range of high-quality products rather than frequently launching new flavors also aligns with its goal of being the “Starbucks of the East.” However, while its IPO timing seems favorable given the bullish sentiment around Chinese stocks, I'm cautious about whether it can sustain this profitability in the long run.

One concern I have is the decline in same-store sales, which dropped sharply by 18.4% in Q4 2024. This is a red flag because it indicates that growth might be driven more by aggressive expansion rather than strong consumer demand per store. In contrast, Mixue $MIXUE GROUP(02097)$  , which operates on a much larger scale, saw only a slight dip of 0.6% in same-store sales. If Chagee $Chagee Holdings Limited(CHA)$   wants to maintain its premium positioning while expanding further, it will need to ensure that existing stores remain profitable rather than relying solely on new store openings to drive revenue growth.

As for whether I would participate in Chagee's IPO, I'd approach it with some caution. While the strong growth figures and current market momentum could lead to a short-term surge, I'd want to see how it sustains its profitability post-IPO, especially in a competitive and rapidly changing market. I do enjoy Chagee's tea lattes, particularly their Jasmine Green Tea Latte, but in the long run, I think its ability to keep customers engaged and maintain pricing power will determine its true investment potential.

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