Despite Trade War, 30-Year-Old Lists His Chinese Tea Chain In The U.S.

Zhang Junjie, the 30-year-old founder of Chinese milk tea company Chagee Holdings, listed his firm on the Nasdaq Thursday amid a deepening trade war between China and the U.S. Shares rose 16% on the first day of trading despite the Donald Trump administration’s repeated threats to delist Chinese firms from American bourses.

Chagee, which rallied as much as 50% from its initial public offering share price of $28 before some of the gains were pared, now has a market capitalization of $5.9 billion. Zhang, who is chairman and CEO, has a net worth of $800 million based on a company stake, according to Forbes estimates. A Chagee representative declined to comment on his wealth.

Analysts say the share price was able to rise because Chagee priced its shares on the cheap. Although the company raised $411 million by selling 14.7 million American Depositary Shares at the top end of a previously marketed range of $26 to 28, the deal still represents a discount when compared with the prices of other publicly traded Chinese tea chains, Ke Yan, Singapore-based head of research at DZT Research, says by WeChat.

“Investors are willing to accept the uncertainties because they can make quick money by buying Chagee shares,” Ke says.

The shares were priced at less than 15 times Chagee’s estimated earnings-per-share for 2025. Shares of Mixue Group, a Hong Kong-listed bubble tea chain, are selling at 29 times estimated earnings-per-share. Guming Holdings, a milk tea company also listed in Hong Kong, trades at 19 times its projected earnings for this year, according to Ke.

Recent Hong Kong listings by Chagee’s competitors are precisely why Zhang chose the U.S. despite the trade war between the world’s two largest economies, Shen Meng, Beijing-based managing director of boutique investment bank Chanson&Co., says by WeChat. U.S. Treasury Secretary Scott Bessent has said kicking Chinese companies off American bourses is an option as Trump tries to force China to the negotiation table on trade.

“There are several milk tea companies listed in Hong Kong already, and they have attracted a good amount of capital,” Shen says.

There may be a limit to the amount bubble tea chains can raise in Hong Kong, while bourses in mainland China prioritize the funding plans of companies with advanced technologies as Beijing tries to build domestic tech prowess. The U.S. became “the only viable” option for Chagee, Shen says.

Mixue Group, for example, listed in Hong Kong in March and the retail tranche of its IPO was oversubscribed by more than 5,000 times. Zhang Hongfu and Zhang Hongchao, the billionaire brothers behind the company, now each has a fortune of $9.3 billion as Mixue shares rose almost 80% since.

Chagee’s U.S. listing is a major milestone for Zhang considering his humble beginnings. According to The Paper, a state-affiliated news outlet, Zhang was born in the southwestern province of Yunnan and was orphaned at the age of 10. He had no formal education and ended up at age 17 in a job at an unnamed local milk tea chain.

Zhang learned to read and write when he was 18. He was so good that the milk tea chain promoted him to manager position, according to local media reports. The company’s prospectus shows that he once worked as a regional deputy manager and franchise partner for Yunnan David’s Beverage Co. Before founding Chagee in 2017, he spent less than two years at Shanghai Muye Robotics as the deputy head of a department, according to the prospectus.

Chagee operates a network of 6,440 stores across China, which offer drinks like jasmine green tea latte and peach oolong teappuccino for about 20 yuan ($2.70). Last year, its revenue rose 167.4% year-on-year to 12.4 billion yuan, while net income jumped 213.3% to 2.5 billion yuan. To differentiate itself from competitors such as Mixue, which is known for selling bubble teas for less than $1, Zhang positions Chagee as a premium tea brand serving freshly made drinks, according to the prospectus.

But future growth in China might be a lot slower. Devi Subhakesan, a Singapore-based analyst at research firm Investory who publishes via the Smartkarma platform, wrote in an April 16 research note that the value of products sold in each Chagee store on a monthly basis is declining, which suggests “domestic market saturation.”

“As Chagee finds it challenging to further penetrate an already mature domestic market, investors should be aware that its future revenue expansion might be more constrained compared to competitors that have room to grow in scale and market reach,” she wrote.

Chagee is trying to expand abroad. The IPO proceeds will be used in part for expanding its network in China and overseas, according to the prospectus. The company first set up a division managing international plans in 2018, according to its website. Its progress appears to be limited as it has only 156 stores abroad, including in Malaysia, Singapore and Thailand, the prospectus shows.