A social media post has thrust the one-time global leader in the new-style tea beverage market back into the spotlight.

Recently, "Gen Z" small shareholder Xie Haicheng shared his detailed notes from the annual general meeting of NAYUKI (HK:02150), with the stock trading at HK$0.65 and a market cap of HK$1.1 billion. The candid account has prompted reflection among market observers, who noted that while it was known the company was falling behind, the extent was more pronounced than anticipated.

"It was intense but restrained. For instance, shareholders raised sharp questions, like why the chairman doesn't take a symbolic one-dollar salary, or why freshly baked pastries have become pre-made. The questions were pointed, but there was no shouting," Xie Haicheng recalled of the scene.

For Xie himself, attending was more of a novel experience. He had purchased just 4 shares via Hong Kong's odd-lot trading system, with a total cost of around HK$4, joking that he had already recouped his investment with the two complimentary drinks provided at the venue. The mood for other attendees, however, was starkly different. "Some investors present have unrealized losses on paper exceeding a million yuan," he noted.

Once crowned the "global new tea drink first stock," NAYUKI's fortunes have diverged sharply from its debut. Its 2021 IPO price was HK$19.80 per share; today, the stock has fallen below HK$1, becoming a penny stock. Of the five full fiscal years since listing, four have been loss-making, with the 2025 fiscal year still failing to turn a profit. This has placed Chairman Zhao Lin and his wife, General Manager Peng Xin, under sustained market scrutiny.

The company declined to comment on related inquiries.

The rise and fall of NAYUKI serves as a mirror for the broader new tea beverage and new consumption sector.

Addressing High Costs Through Store Reform

"I attended the company's AGM at their headquarters in Shenzhen," Xie stated, adding that the venue was not large, attendees were few, and there were "no institutional shareholders." He contrasted this with another AGM he attended earlier, which had shuttle buses and a dedicated table for institutional investors.

The AGM began at 3 PM on June 24th. After the formal proceedings, the session moved to shareholder questions.

Soaring costs and when the company might return to profitability were the first concerns raised by shareholders.

"One shareholder, aged around sixty or seventy, asked: Why are NAYUKI's costs so high compared to other tea chains? Are there any improvement plans?" Xie recounted.

The core high-cost elements are its prominent mall locations and spacious stores. In its early years, the company was positioned as the "Chinese version of Starbucks," aiming for prime locations. However, this model has faced significant pressure recently, with flagship stores in top locations either relocating or closing.

Meanwhile, product pricing has struggled to support the high store costs. The average order value, disclosed as RMB 43.3 in the first three quarters of 2020, had fallen to RMB 24.4 for company-operated stores by 2025.

In response to the shareholder's query, Xie recalled that Chairman Zhao Lin's key reply focused on "downsizing large stores, with the transformation expected to be completed this year." The company's 2025 annual report also mentioned optimizing underperforming stores through closures, renovations, or format adjustments, and introducing various store models for franchisees.

Dual Operating Model: Do Franchise Stores Receive Equal Support?

Shifting from over a thousand wholly company-operated stores to a "direct-operated + franchised" model has been another strategic move in recent years.

Shareholder Li Hu (pseudonym), who also attended the AGM, believes NAYUKI is undervalued in the capital markets and began building a position after the New Year. He analyzed that while stores near his home perform well and the company's balance sheet shows ample cash, profits are impacted by asset write-downs when leases expire and stores are relocated or closed, despite good current business.

Li Hu posed a question at the meeting. "Zhao Lin responded that they plan to open about 300 stores this year, split evenly between direct and franchise. He specifically mentioned their U.S. stores, which are all franchise-operated, with average monthly revenue of $300,000 per store—far exceeding other U.S.-expanding tea brands. They plan to open two company-owned stores there this year," Li said.

Some shareholders questioned the focus on overseas expansion, particularly in high-cost markets like the U.S., before solidifying domestic profitability.

What is the current state of domestic franchisees? Does the brand treat franchise and company-operated stores equally?

A franchise store manager, Zhang Shifeng (pseudonym), revealed that his location was originally company-operated. After the mall lease expired and performance was deemed unsatisfactory, the plan was to close it, but a franchise partner took over and reopened it in 2025.

"We replaced machines, renovated... the initial reinvestment was nearly RMB 600,000, with equipment alone costing over RMB 200,000," Zhang said. "Unexpectedly, after converting to a franchise, sales nearly halved. The brand no longer provides the same online traffic support (like platform promotions) as it did for company stores. All marketing is up to us now. But we have to keep going, otherwise the initial investment would be a total loss. Our contract with NAYUKI is for three years; we're planning on a three-year payback period."

Returning to the AGM, both Li Hu and Xie Haicheng noted the small number of participants and the meeting's brevity. "I counted about 10 shareholder attendees, all seemingly insignificant individual investors. The meeting started at 3 PM, and by 4 PM they wanted to wrap up, with the CFO saying Chairman Zhao had another meeting. I said, 'Let's finish answering the questions; what could be more important than the shareholders' meeting?'" Xie recalled.

Shareholder Questions on Executive Pay Amid Losses

Market capitalization was another major concern for shareholders.

"One shareholder stated they held over 400,000 shares with a cost basis over ten dollars per share, incurring losses in the millions. Another, a business owner overseas, also mentioned losses exceeding a million," Xie said. "At that moment, the coffee Peng Xin had arranged arrived. Zhao Lin said, 'Let me pause; everyone, have some iced coffee to cool down.'"

Regarding market cap management, attending investors recalled Zhao Lin stating the company would allocate funds for share buybacks.

Indeed, NAYUKI frequently repurchased shares in June 2025, issuing 10 buyback announcements in the first half of the month alone. Statistics show the company repurchased approximately 6.57 million shares for about HK$4.79 million during that period, with buybacks continuing into late June. Since Q1 2024, the company has repeatedly used funds for share repurchases. However, the frequent buybacks have not reversed the stock's decline; the share price has fallen over 96% from its IPO price.

"Yet, at the same time, NAYUKI's management salaries have increased year after year. I'm also a business owner; I wouldn't pay myself a salary before the company is profitable. Can your (Zhao Lin's) salary be tied to company performance? Take a one-dollar annual salary, with other income based on performance incentives?" Xie recounted this as the most pointed question at the meeting. "Everyone present almost couldn't hold back. Peng Xin's reply was that since the IPO, none of their shares have been sold, and he (Zhao) also needs to live on his salary, so one dollar is not realistic." Another attendee confirmed this exchange.

Looking across five Hong Kong-listed new tea beverage companies—Mixue Group, Guming, Cha Bai Dao, NAYUKI, and Auntie Shanghai—2025 performance and founder compensation show significant divergence.

Mixue led with revenue of RMB 33.56 billion and net profit of RMB 5.88 billion; its co-founders received the highest compensation. Guming's founder saw a reduction in salary. Cha Bai Dao's controlling couple also saw significant salary decreases. Auntie Shanghai's founders took a slight pay cut.

NAYUKI was the only one among the five to report a revenue decline and an annual loss. Chairman Zhao Lin and General Manager Peng Xin received salaries of RMB 1.372 million and RMB 1.728 million, respectively.

Customer Concerns Over Product Changes: From Fresh to Pre-made

Once, the combination of "a bite of European-style bread with a sip of milk tea" was NAYUKI's differentiated competitive edge. However, with store downsizing, have the freshly baked pastries become "pre-made"?

Xie noted that a young couple who are shareholders and long-time customers raised the issue at the meeting, saying they recently purchased bread only to find it was reheated. "You previously said you wouldn't compromise on quality despite lower raw material costs. How is that achieved? How did NAYUKI's bread go from fresh to pre-made?" they asked.

According to Xie, Peng Xin responded that while ensuring standards like pesticide residue are met and quality is unaffected, using slightly smaller fruit reduces costs. Post-pandemic, she noted, customer ordering has shifted predominantly online. "Pre-made bread" ensures consistent taste, as fresh bread left in display cases, cooled, and then reheated would taste worse than bread delivered via cold chain and then reheated.

A former NAYUKI employee explained that the bread previously came in two models: "baked in-store" and "cold-chain delivered." Stores with in-house baking required large ovens and multiple types of flour daily, with peak monthly sales reaching RMB 2 million. However, for the company, producing fresh bread meant additional costs for specialized bakers and expensive equipment, making it uneconomical, especially for franchisees. Around 2023, the model shifted entirely to cold-chain delivery to save on costs and time.

NAYUKI's 2025 financial report shows that revenue from in-store counter orders fell from RMB 544 million in 2024 to RMB 357 million in 2025, with its contribution dropping from 13.1% to 9.3%. Offline, in-store consumption demand continues to weaken. The proportion of pickup orders also declined to 38.1%.

Conversely, delivery order revenue surged, rising from RMB 1.72 billion in 2024 to RMB 2.009 billion in 2025, with its revenue share jumping from 41.4% to 52.6%, an increase of 11.2 percentage points.

However, the delivery channel commonly faces the industry pain point of increasing revenue without increasing profits, as platform commissions, delivery fees, and packaging costs continuously erode margins. Higher order volumes lead to greater fixed additional expenses. This remains a significant challenge for NAYUKI.

For Xie Haicheng, his "experience card" for the NAYUKI AGM might not be used again—"it was just for the spectacle." But for investors sitting on millions in unrealized losses and loyal customers who have followed the brand for years, this shareholder meeting filled with pointed questions illuminates the predicament facing the former high-end tea beverage leader.