(Yicai) April 23 -- Shares in ChaPanda plunged on the Chinese tea chain’s first day of trading today, but the firm still managed to raise HKD2.6 billion (USD331.8 million) in the biggest IPO on the Hong Kong market this year.

Operator Sichuan Baicha Baidao Industrial issued 148 million shares at HKD17.50 (USD2.23) apiece today. However, the offer price slumped 10 percent as it opened for trading [HKG: 2555] at HKD15.70. The shares sank as much as 38 percent during the day before closing down 27 percent at HKD12.80.

Just over half of the proceedings, at 51 percent, will go towards upgrading warehousing facilities, outlets equipment, investing in the supply chain and exploring overseas markets, according to the IPO prospectus that was filed in February. Another 20 percent will be spent on digitization and talent building and the rest for brand building and general operations.

ChaPanda, which was formed in 2008, logged a strong performance last year. Net profit soared 19 percent from the year before to CNY1.2 billion (USD165.6 million), while revenue surged 35 percent to CNY5.7 billion, according to the prospectus.

The Chengdu-based company expanded the number of stores by 23 percent at the end of last year from a year earlier to 7,801 outlets. Of this, only six are direct-sales stores and the rest are franchises.

ChaPanda is the second modern Chinese tea chain to go public after Nayuki Holdings, which listed in Hong Kong in June 2021. The Shenzhen-based company’s stock has lost 90 percent of its value since listing and is now only worth around HKD2.28 apiece.

Despite the glum prospects, plenty of other tea chain brands, including Guming Holdings, Mixue Group and Auntea Jenny Industrial, are lining up to go public in Hong Kong this year.

Editor: Kim Taylor