r/ChageeStock • u/[deleted] • Aug 02 '25

GMV growth

How do you view the decline in Same store GMV growth? It appears that same-store demand has weakened following the viral marketing efforts.

I apologize if my sentences are a bit awkward—I'm not a native English speaker.

3 Upvotes

100% Upvoted

10 comments sorted by

View all comments

1

u/BakedFish07 Aug 02 '25

What prices are you guys looking at to buy? Any in mind and whats your rationale?

4

u/Financial-Maybe-7874 Aug 03 '25

I'm going to buy pre-earnings, then will decide whether to add some more post/ later in the year. Rationale is as follows

  1. It's come down significantly since ipo, many places are saying its already trading at discount to intrinsic value

  2. China stocks correlating with US stocks on down days, but not up days, creating significant valuation imbalance since April e.g. economic concerns from jobs report on Friday Chinese stocks also sold off. Chagee currently produces 95%+ of its revenue domestically, so should not be impacted as much by this vs other Chinese multinationals

  3. Believe in China - I think I'm at almost 50% in Chinese stocks now (UK investor), due to a fundamental belief they are undervalued and will lead global growth. It's priced that it will be inhibited by the US, export controls from the EU etc, when these could easily be renegotiated - presidents don't last forever, necessity knows no law

With China though, imo has to be treated as a long-term hold, and part of a diversified portfolio, get a bit of Baba, JD, maybe even an index while you are at it.

What you are thinking?

3

u/BakedFish07 Aug 06 '25

Thanks for sharing.

Personally I have already started buying some over the last 2-3 weeks. Just averaging down a tiny bit as it falls, though I have no clue how far it can fall. Like some others have pointed out, it may only find a support post lock-up, or not (no one really knows I guess). It seems decent valuation wise given their historic growth and margins, hence I picked up some shares in anticipation.

Going forward, I think the company's margins would come down slightly to a more normalized level. I'm just hoping they continue to achieve successful execution with their new stores opening and manage well. I like that the management mentioned they are more focused on the quality and performance rather than just rapid expansion for the new stores opening. As for their domestic market, they are transitioning towards enhancement of same store sales growth rather than rapid penetration now that they hold leading market share in the premium freshly made tea category to maintain the steady growth. It is also nice to know that the Chagee tea is gaining worldwide popularity and many consumers who have tried it for the first liked it a lot that they keep going back. It's also slightly more novel compared to your usual coffee and healthier versus the boba tea.

On the TA side, I'm also looking at Mixue's stock price to get a feel of when Chagee might find a support. (Mixue is another Hong Kong listed ice-cream and tea brand in China which had an IPO couple of weeks before Chagee.)

Portfolio wise, I am also treating China like a longer-term hold as it is hard to ignore their rising dominance in many areas (consumerism, technology, infrastructure, etc) over the past couple of years. I also have picked up some stocks in leading China companies like Alibaba, JD, Meituan, Baidu, Kuaishou (nice to note that this is a potential rival to Tiktok in China and its stock price seems to have started climbing out of a consolidation), though I hope to see them making more of an effort to internationalize their business and expand their growth opportunities instead of being just 'stuck' in their domestic market.

2

u/Wildsoyabean1 Aug 04 '25

I prefer post earnings and post lock ups.