(Yicai Global) July 20 -- Shares of Nayuki Holdings soared after the tea drink seller said it will join the club of Chinese bubble tea franchises to reach its ambitious expansion target for this year.

Nayuki [HKG: 2150] surged as much as 12.5 percent to HKD6.02 (80 US cents) intraday and closed at HKD6. The shares have slumped over 60 percent from the initial public offering in June 2021.

Franchisees need a budget of about CNY1 million (USD139,208), the Shenzhen-based brand operator said in a statement on WeChat today. A single-store partner will need to prove they have over CNY1.5 million of capital and a regional partner must garner over CNY4.5 million.

Nayuki opened 145 new stores in the first six months of this year to have more than 1,190 self-operated outlets, but the addition for the whole year should be 600 units, putting pressure on the second half, according to a target that was updated in the first quarter. Over 90 percent of the stores are based in first and second-tier cities.

Franchising is becoming the preferred option for Chinese tea brands as Heytea, the main rival of Nayuki, shifted to the less capital-intensive business model in November. Even Lelecha, another rival that was acquired by Nayuki for CNY525 million (USD73.1 million) in December, announced in April that it will begin leasing its brand to entrepreneurs.

Founded in 2015, Nayuki is not yet making a profit. The firm recorded a net loss of CNY469 million last year, narrowing by 90 percent from 2021, according to its annual report. Revenue shrank by 0.1 percent to CNY4.3 billion (USD598.6 million).

Editor: Emmi Laine