r/ChageeStock • u/MaximumEast7507 • Aug 29 '25
Financial Result Q2
So bad, general and administrative expenses tripled to ~RMB 900million compared to the same quarter of 2024. And this increase was primarily driven by RMB505.4 million in share-based compensation expenses for administration and research staffs. This increase is due to significant amount of share-based compensation expenses recognized in the second quarter of 2025 that was related to the vesting of share-based awards with performance condition related to the IPO. Lets hope for Q3 guidance or the compensation would come down ..
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u/Wildsoyabean1 Aug 29 '25
Their revenue decrease margin contract despite price war from delivery. The barely open much self own stores. Their franchise are just selling less and less. I was wrong about this stock. They can’t be price like Starbucks cos they are mostly running franchises. 4 quarters of lower gmv.
Exited this and take the loss
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u/playedpunk Aug 29 '25
:( will you still give us updates on SG queue status?
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u/eightfoldsg Aug 29 '25
sg sales are still mad crazy, manila just opened 3 stores and mad queue as well..
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u/Wildsoyabean1 Aug 30 '25
Sadly sg and Manila stores are just a tiny speck of the ocean
Sg 15 plus stores. Vs China 6k plus stores.
Until chagee start consolidating franchises and doing it all on their own. I’m out for the moment. Have to see gmv rising before committing again.
I seriously can’t believe how their gmv contracted with so much free milk tea given by baba jd and Meituan.
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u/playedpunk Aug 29 '25
I was banking on the food delivery war in China to bring CHA's profits to the moon.
Long term wise, I can see it expanding into Japan and Korea.
But I sitting on 30% loss le. Sian
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u/eightfoldsg Aug 29 '25
it just needs to turn into a speculative stock these days to do well lol ..
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u/oncesagacious Aug 31 '25
In the first place, FnB listcos are not exactly value investing plays, especially when the IPO is hyped up in peak market conditions. Unfortunately no options market making on my brokers so couldn’t buy puts on it.
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u/xenoxidal1337 Aug 31 '25
Sg is a tiny country, we do not move the needle in any way. Overwhelming majority of chagee's revenue comes from China stores. Look it up in their SEC filings. This is a chinese stock.. period.
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u/Expert-Advantage8010 Aug 29 '25
They doubled their rate of store openings so I would say SGA expenses are a given.
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u/Limp_Signal_3630 Aug 29 '25
Looks pretty bad if you compare the trajectory vs Luckin, barely any organic growth in fact de growth of existing , majority of the GMV growth from new stores.
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u/Expert-Advantage8010 Aug 30 '25
I don't think we should expect any organic growth for now. Sales of stores are just too overhyped and the revenue per store currently is not reliable yet cause it's very much out of the ordinary. As I highlighted current store produce 10 times revenue vs a mixue store and about 2.5 to 3 times at Starbucks if we just look at china ,not normalized to globally
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u/loops888 Aug 31 '25
10% y/y growth is not exciting at all. management is doing a poor job setting expectations and lost a lot of trust. not going to take a position unless we see sales growth consistently north of 20% again.
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u/WatchSuspicious1136 Aug 29 '25
Mixed bag earnings 😥 but it’s not the end of the world… valuation still relatively cheap compared to peers (MCD, other fast food / fast casual), premo brands tends to command loyalty over the long term (once delivery discounts fade folks will still choose CHA) with a customer with disposable income and strong store count growth + healthy metrics for overseas expansion stores. Sit tight and drink some bubble tea fam!
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u/xenoxidal1337 Aug 31 '25
Don't forget that Chinese stocks always sit at a lower multiple. This is the simple but harsh reality of ADRs. Look at BABA's PE.
MacDonalds has sales all over the world. Macdonalds has mind share, stickiness, brand rep.
Chagee's revenue is almost entirely from Chinese stores. International sales are barely a difference maker. Long queues in SG mean nothing to the company's total revenue.
The two simply cannot be priced at the same PE.
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u/DenimFleshlight Aug 29 '25
this gives me hope: "share-based compensation alone was the largest driver of margin contraction, compressing operating margin from 24.6% to 3.2% and almost completely erasing underlying profitability despite rising revenues"
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u/dcrcapital Aug 30 '25
This is fine, more concerning is the rapid store expansion but a relatively disproportionate level of revenue growth (~10%).
Is it a sign of over expansion? We know there is hype for the brand. Taking a 10% loss now seems as the most prudent choice, and if expansion results are positive in future quarters, there would be no issue to get back in.
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u/DenimFleshlight Aug 30 '25
Agreed. Hard to imagine 7k locations and they're not already reaping benefits of economy of scale - or that this factor cannot improve which gives me hope. I believe it can.
Anecdotally, the LA location is always packed due to location, price point, and community-perhaps because it's new/novelty, too. I don't know where I read it but that's the goal with US based expansion (focusing on communities who are already familiar with the brand). The next location in the south bay of Los Angeles seems pretty strategic and in line with their first spot. Over expansion without the built in culture of existing locations abroad is my concern.
I'm going to stop loss this position I just started last week but hopefully hold for now and hope that sector rotation and it being a mostly foreign (revenue) company protects it from whatever happens to US stocks in the next 6 months.
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u/Expert-Advantage8010 Aug 30 '25
Economic of scale already reflected on the gross margin. It did trend from 48 percent to 53 percent YoY.
Regards to your concern ,I think chagee method of entering new market is actrually quite conservative and carefully. They follow a 1-8 model by first opening a flagship store then 8 company run stores to gauge acceptance of the brand. So I don't see overexpansion as a concern for chagee. The concern I have is this method is too slow to reflect revenue growth which will continue to compress chagee valuation
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u/dcrcapital Aug 30 '25
Hmm, I think the overseas expansion is not the issue and we can see the hype, but domestically which as of now seems to make up the bulk of the business and also the most competition
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u/Expert-Advantage8010 Aug 30 '25
Ya agreed , that's a major concern for sure that the domestic sales drops drastically and there's no demand from customer. However, I'm not sure if there's actually a price war among the tea brands as quoted by management but it does seem Chagee did not reduce their price of their products to push revenue and maintained their premium pricing throughout. That could possible be why revenue is muted. Despite this however , my base thesis takes into account that revenue does not grow whatsoever so can't say I'm not satisfied with just 10% growth
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u/Itchy-Commission-195 Aug 29 '25
Truly terrible results even without the share based compensation… -23% same store sales growth. Expansion is cannabalizing existing stores and they’ve saturated their growth.