Summary of Key Issues
NaiXue Tea, once the “number one new tea drink company,” is now facing a series of challenges including a plummeting stock price, shareholder dissatisfaction, and financial losses. At the 2026 annual general meeting of shareholders, investors were outraged by the stock price having dropped by 96% from its peak (now at only HK$0.62 per share, with a market value of HK$1.05 billion), as well as substantial book losses. They raised concerns about high costs, changes in product quality, executive salaries, and the rationale for overseas expansion. The management responded by stating that they would reduce costs by converting large stores into smaller ones and that their U.S. stores were performing well. However, investors remain skeptical about the profitability of the domestic business and the sustainability of the overseas expansion strategy. Even the company’s share repurchase efforts have failed to reverse the downward trend.
I. The Stock Price Has Plummeted: How Badly Has NaiXue Lost?
NaiXue’s stock performance can hardly be described as anything other than catastrophic: its initial public offering price in 2021 was HK$18.98 per share, but it has now fallen to HK$0.62, a 96% decrease; it was still at HK$1.2 at the beginning of this year, meaning it has lost another 48% in just half a year. This is particularly painful when compared to its competitors: MieXue Ice City has a market value of HK$94.6 billion (90 times that of NaiXue), GuMing has HK$49.4 billion, and ChaBaiDao has HK$6.9 billion—even Shanghai Auntie has a market value of HK$14.7 billion.
In terms of financial performance, NaiXue’s revenue decreased by 12% in 2025, resulting in a loss of HK$241 million (although less than previous losses, it still didn’t turn a profit). The number of domestic stores has continued to shrink, with over 150 closures last year, and there is no room for growth in per-store revenue. Given these circumstances, how can shareholders not be angry? One shareholder holding more than four million shares suffered a substantial book loss and directly expressed his dissatisfaction at the meeting.
II. The Core of Shareholder Anger: Losses and Lack of Hope
The questions raised by shareholders at the meeting hit NaiXue’s most vulnerable points:
1. Excessively High Costs: The large-store model has become a “cost black hole”—in 2021, employee costs accounted for 33% of revenue, and rent accounted for another 5%, together consuming nearly one-third of the total income. With the average transaction price dropping from HK$43 to HK$24, it’s no wonder the company is losing money.
2. Product Quality Decline: Long-time customers have noticed that the freshly baked European-style bread, which was a major attraction, is no longer available; instead, pre-made products are being used. One couple of shareholders mentioned that they used to buy NaiXue’s European bread for their afternoon tea, but the quality has significantly declined.
3. Executive Salaries: Shareholders questioned whether executive salaries, such as those of Chairman Zhao Lin (HK$1.37 million) and Peng Xin (HK$1.72 million), are linked to company performance.
4. Rationality of Overseas Expansion: Investors are concerned that the company is investing in U.S. stores instead of addressing domestic issues first.
III. NaiXue’s Self-Care Measures: Cutting Costs, Converting Stores, and Exploring Opportunities Abroad
In response to these concerns, the management proposed several solutions:
1. Converting Large Stores into Smaller Ones: All large stores will be converted into smaller ones within this year to reduce unnecessary space and equipment (such as ovens used for freshly baked bread), thereby lowering rent and labor costs.
2. Reducing原材料 Costs: Using medium-sized fruits instead of larger, more expensive ones (which are also more prone to spoilage) has reduced costs by 18.7%, while maintaining the same pesticide residue standards.
3. Pre-Made Bread Instead of Freshly Baked: Centralized production of pre-made bread at the factory, with stores responsible for reheating it, has cut baking-related expenses by 30%.
4. Overseas Expansion: Six stores have been opened in the U.S., with monthly sales of $300,000 per store (higher than domestic sales), and these are franchise models that do not require additional investment from the headquarters. The management believes that if the business is successful, they will expand further.
IV. The Dilemma of Self-Care Measures: Seeking Cost Savings While Preserving the Premium Image
NaiXue’s dilemma lies in its desire to balance multiple goals:
- Premium Image vs. Cost Reduction: The company once used large stores and freshly baked bread to create a premium feel similar to Starbucks’ in China. However, by converting to smaller stores and using pre-made products, the average transaction price has dropped from HK$43 to HK$24, threatening its premium status. Consumers now prioritize value for money and convenience over store size. NaiXue fears losing its loyal customer base if it completely shifts to a more affordable market segment.
- Slow Franchise Expansion: Franchising was only launched in 2023, with high entry barriers (requiring a significant investment), resulting in only 345 franchises compared to MieXue’s 46,000. This slow pace prevents cost reductions and puts the company at a disadvantage compared to its competitors.
- Product Homogenization: NaiXue’s innovative products are often quickly copied by other brands. For example, its initial “tea drink + European bread” combination has now become more similar to those offered by HiCha and ChaBaiDao.
V. The Capital Market Disapproves: Share Repurchases Are Ineffective, and the Overseas Strategy Lacks Credibility
NaiXue has repurchased shares multiple times over the past half month, spending several million Hong Kong dollars, but the stock price continues to decline. Why?
- Poor Domestic Business Performance: Declining revenue, store closures, and losses leave investors without confidence in the company’s ability to turn a profit.
- Weak Overseas Strategy: With only six stores in the U.S., the scale is too small, and profits have not been disclosed (monthly sales of $300,000 per store, but with high rent and labor costs, it’s unclear whether the business is profitable).
- Investment in Financial Products: The company has invested its surplus funds in financial products (U.S. bonds due to higher interest rates), which shareholders see as a sign that its main business lacks direction.
NaiXue’s current situation is akin to being “sandwiched” between its competitors: it cannot compete with HiCha at the premium end and cannot match MieXue’s affordable, widespread presence. Its survival space is shrinking. Whether it should completely lower its price point or maintain its premium image remains unclear. The management has not provided a clear answer, and shareholders see no hope for improvement.
This annual general meeting effectively highlighted a decade of issues at NaiXue Tea. The company’s once-promising “premium tea drink” narrative has been debunked, and its transformation efforts have fallen short. Whether it can turn things around depends on its ability to balance costs without sacrificing its premium brand identity.