Milk Tea Mogul Wang Is China’s Latest Billionaire After Guming’s IPO

Wang Yun’an, the 38-year-old founder of Chinese milk tea company Guming Holdings, has become a billionaire after the chain listed in Hong Kong on Wednesday.

Wang, who is Guming’s chairman and CEO, has amassed a fortune of $1.2 billion mostly based on his stake in the Hangzhou, Zhejiang-headquartered company, according to Forbes estimates. The company’s shares rose as much as 4.6% in morning trading before paring some of the gains to end 0.6% higher as of 11:30 a.m.

Guming raised HK$1.8 billion ($233 million) by selling 182.4 million shares at HK$9.94 apiece, the top end of a previously marketed range, according to a stock exchange filing.

Its stock market performance has so far surpassed competitors such as Nayuki Holdings and ChaPanda. ChaPanda, a Chinese milk tea chain that sells similar products such as freshly brewed tea mixed with fruit, saw its shares crash nearly 30% on its first trading day in April 2024. ChaPanda has been trading below its IPO price ever since amid worries of cut-throat competition in the industry.

Underwriters could be buying Guming shares to support the IPO, Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities, says via WeChat. Clarence Chu, a Singapore-based analyst at Aequitas Research who publishes via the Smartkarma research platform, wrote that further share price increases might be limited given the fierce competition and “little product differentiation,” according to a Feb 4 research note.

Guming didn’t respond to an emailed request for comment.

Aside from mixing tea with fruit or chewy tapioca balls, the company employs the same expansion strategy as its competitors. Using a franchise model in which it sells milk-tea ingredients and charges training fees to its franchisees, Guming has expanded its network to almost 10,000 stores across China since its start in 2010.

After graduating from Zhejiang Sci-Tech University with a bachelor’s degree in engineering, Wang opened the first Guming store in his hometown of Daxi in Zhejiang Province in 2010, according to local media reports. The company prices its products between 10 yuan ($1.40) and 20 yuan per cup, and today still has a stronghold in Zhejiang, which accounts for over one fifth of its network, according to the prospectus.

In the first nine months of 2024, the latest financial results available, Guming’s revenues grew 15.6% year-on-year to 6.4 billion yuan. Its profit was 1.1 billion yuan, up 11.8% from the same period a year earlier, its prospectus shows.

Ng says he’s advising investors to wait and see. “I think its valuation is still at relatively high levels,” he says. “Investors can check whether the company can hold up to its IPO price later on.”