Business Context and Reporting Period
Company: Chagee Holdings Ltd. (CHA)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Chagee is a leading premium freshly-made tea drinks brand operating primarily in China with expanding overseas presence. The company utilizes a franchise-heavy model (91.6% of stores) supplemented by company-owned locations. As of December 31, 2025, the network comprised 7,453 teahouses (7,108 in China, 345 overseas).
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (RMB) | 2025 (US$) | 2024 (RMB) | YoY Change |
|---|---|---|---|---|
| Net Revenues | 12,907.4 million | 1,845.7 million | 12,405.6 million | +4.0% |
| Gross Merchandise Value (GMV) | 31,582.3 million | N/A | 29,457.7 million | +7.2% |
| Net Income | 1,186.3 million | 169.6 million | 2,514.6 million | -52.8% |
| Operating Income | 1,347.2 million | 192.7 million | 2,886.6 million | -53.3% |
| Operating Margin | 10.4% | N/A | 23.3% | -12.9 pts |
| Cash & Equivalents | 7,607.3 million | 1,087.8 million | 4,754.8 million | +60.0% |
| Working Capital | 6,000.5 million | 858.1 million | 3,141.7 million | +91.0% |
Note: US$ amounts are translated at RMB 6.9931 = US$1.00.
Material Changes vs. Prior Period
- Revenue Growth Deceleration: Net revenue growth slowed to 4.0% in 2025 compared to 167.4% in 2024. This was driven by a 1.9% decline in revenue from franchised teahouses, offset by a 92.7% increase in revenue from company-owned teahouses (which grew from 169 to 615 locations).
- Profitability Compression: Net income dropped significantly by 52.8% to RMB 1.19 billion. Operating expenses as a percentage of revenue rose to 89.6% from 76.7% in 2024, primarily due to increased General and Administrative expenses (driven by share-based compensation and IPO-related costs) and higher operating costs for new company-owned stores in the ramp-up phase.
- Store-Level Performance: Average monthly GMV per teahouse in China decreased to RMB 387,000 from RMB 512,000 in 2024. Same-store GMV growth turned negative (-24.2%) in 2025, reflecting market saturation and increased competition.
- Liquidity Position: Cash and cash equivalents increased substantially to RMB 7.6 billion, bolstered by net proceeds of approximately RMB 3.18 billion from the April 2025 IPO.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- The company plans to continue expanding its teahouse network in China and overseas, entering new markets including the United States, Vietnam, and the Philippines in 2025.
- Management acknowledges a transition to a "more moderated phase" of store-level performance in China due to network density and competitive pricing pressures.
- Dividend Policy: A special cash dividend of US$0.92 per ADS was declared in November 2025. The company does not expect to pay annual dividends in the near future, intending to retain earnings for growth.
- Regulatory Risks (China): Significant exposure to PRC regulatory changes regarding foreign investment, data security (Cybersecurity Law), and overseas listings (CSRC filing requirements). Non-compliance could lead to fines or operational restrictions.
- Franchise Model Risks: Limited control over franchisee operations poses risks to brand reputation, food safety, and compliance. Franchisee financial distress could impact revenue.
- Competition & Pricing: Intense competition in the tea drink market, including "delivery price wars," pressures margins and consumer acquisition costs.
- Legal Proceedings: Two securities class action lawsuits were filed in February 2026 in New York County Supreme Court alleging violations of the Securities Act of 1933 regarding the IPO registration statement. The cases were consolidated in April 2026; the outcome is currently unpredictable.
- Internal Controls: A material weakness in internal controls over financial reporting identified in 2024 (related to U.S. GAAP expertise) was remediated as of December 31, 2025.
Investor Verification Checklist
- Store Economics: Verify the sustainability of the declining average monthly GMV per teahouse and the timeline for new company-owned stores to reach profitability.
- Franchisee Health: Assess the financial stability of the franchise partner network and any potential churn or disputes.
- Legal Exposure: Monitor the status of the consolidated securities class action lawsuits filed in early 2026.
- Regulatory Compliance: Confirm ongoing compliance with PRC data security laws and CSRC filing requirements for overseas listings.
- Expense Management: Evaluate the trajectory of General and Administrative expenses, particularly share-based compensation, as the company transitions post-IPO.