Chabaidao has been suspended from trading, with its IPO subscription and the flow of raised funds becoming the focus.
Six brokerage firms have been subject to restrictive measures simultaneously
On October 13, the Securities and Futures Commission of Hong Kong (SFC), in accordance with Section 8(1) of the Securities and Futures (Listing on the Stock Market) Rules, instructed the Hong Kong Stock Exchange to suspend trading of Cha Baidao shares, with the measure taking effect from 9 a.m. on the same day.
The SFC released a notice on the afternoon of that day, stating that it has high concerns that Cha Baidao's initial public offering may have been artificially manipulated to create non-genuine share demand.
Focusing on Cha Baidao's IPO, the SFC has issued restriction notices to six brokerage firms, prohibiting the disposal or handling of assets worth up to approximately HK$4.379 billion in accounts of one individual and eight companies.
It is worth noting that according to the SFC, this is the action with the highest restricted amount among similar operations in Hong Kong.
However, the HK$4.379 billion is the upper limit of the assets restricted from disposal, not the amount identified as involved by Cha Baidao, nor can it be equated to the funds related to Cha Baidao's IPO. The relevant suspicious group is also suspected of participating in the IPO of Bokang Vision Cloud, and the SFC has not yet disclosed the respective amounts involved in the two transactions.
The SFC of Hong Kong also emphasized at the same time that the integrity and robustness of the market is the cornerstone of maintaining a fair capital market and the confidence of real investors, and it adopts a zero-tolerance attitude towards acts of manipulating IPOs, price rigging and creating false markets. In practical operations, the SFC will adopt highly focused and appropriately intensive regulatory actions to create a favorable environment and promote the sustainable development of the market.
The investigation is still ongoing, but the reason for the trading suspension has been clearly pointed to the IPO in 2024. It remains to be verified how much of the subscription demand at that time came from independent investors, how the subscription funds were formed, and where the funds flowed after listing.
01 New Doubts Arise Over the Sluggish IPO Market
Cha Baidao was listed on the Hong Kong Stock Exchange on April 23, 2024, with an issue price of HK$17.50 per share. A total of about 148 million shares were issued, raising a net amount of about HK$2.463 billion. The Hong Kong public offering was subscribed by about 0.50 times, and the international offering was subscribed by about 1.11 times, with the overall demand not being strong.
On the first day of listing, Cha Baidao closed at HK$12.80, down about 26.9% from the issue price. Before this trading suspension, the stock price was HK$4.035, a cumulative drop of about 77% from the issue price.
An originally relatively sluggish IPO is now suspected by regulators of having potentially artificially arranged demand.
IPO demand is not an isolated number on the underwriting book. Orders submitted by institutional investors will affect pricing, share allocation and the market's judgment of valuation. If some accounts lack independent sources of funds, or subscribers can obtain compensation through undisclosed arrangements, the subscription multiple on the book cannot fully reflect the real demand.
Cha Baidao's public offering was undersubscribed, and the international offering was only slightly oversubscribed, which also made the formation process of relevant orders the focus of the investigation.
The same suspicious group mentioned by the SFC was also previously suspected of participating in the IPO of Bokang Vision Cloud. On September 10, Bokang Vision Cloud was also ordered to suspend trading by the SFC in accordance with Section 8(1).
The two companies are included in the same investigation framework, and the regulatory focus is on an operation mode that may span different IPOs and involve repeated participation of specific accounts and fund arrangements.
There is also an overlap in the list of intermediaries behind the two IPOs.
China International Finance Hong Kong Securities Co., Ltd. served as the exclusive sponsor and exclusive overall coordinator for Cha Baidao, CICC and Citi jointly served as global coordinators, and CMB International, CCB International, Shenwan Hongyuan, China Merchants Securities, Futu and Tiger Brokers participated in bookkeeping or underwriting.
For Bokang Vision Cloud, CCB International and Huatai Financial Holdings served as joint sponsors and overall coordinators, and CMB International, ABCI Wealthy participated in global coordination. CCB International, CMB International and Fosun International Securities all appeared in the underwriting syndicates of the two transactions.
In the first set of regulatory actions related to Cha Baidao and Bokang Vision Cloud, the six brokerage firms that received the restriction notices are: China International Finance Hong Kong Securities Co., Ltd., CMB International Securities Co., Ltd., Futu Securities International (Hong Kong) Co., Ltd., Haitong International Securities Co., Ltd., Harvest Global Investments Limited and Wall Street Securities Limited.
Among them, China International Finance Hong Kong Securities Co., Ltd. and Futu Securities International (Hong Kong) Co., Ltd. appeared in the underwriting syndicate list of Cha Baidao's IPO at the same time.
On the CMB International side, the entity that received the restriction notice is CMB International Securities Co., Ltd., while the entity participating in the two IPO underwritings is CMB International Capital Corporation Limited. The two belong to the same group but are not the same legal entity.
The remaining three restricted brokerage firms did not appear in the publicly disclosed underwriting syndicate lists of the two IPOs.
The SFC has made it clear that the six brokerage firms are not the subjects of the investigation. The restriction notices only indicate that the relevant client accounts are held or managed by these institutions, and it cannot be inferred that the brokerage firms participated in the alleged fraudulent arrangements. However, account opening materials, transaction instructions and fund flows may become key evidence to restore the subscription chain.
Under normal circumstances, Cha Baidao's share price fell sharply below the issue price on the first day of listing, and placing investors need to bear the losses on their own. If the investigation finds that part of the subscription funds or investment losses can be compensated through other agreements, it is necessary to re-judge whether the relevant orders represent independent and real market demand.
The key here is not whether the accounts participate in the subscription, but whether their capital sources, risk bearers and ultimate beneficiaries are consistent.
The information that is still not public includes the list of international placing objects, the relationship between accounts, the initial source of subscription funds, and the destination of funds after listing.
Before these facts are disclosed, what can be confirmed is that the regulatory investigation has extended from abnormal accounts to the IPO demand itself.
02 The Capital Circuit Behind Subscriptions
The more critical content in the SFC's notice is the description of the path of suspicious funds.
Regulators suspect that part of the IPO raised funds may deviate from normal uses after listing. There may be undisclosed agreements between listed companies and the suspicious group, and the funds are transferred out in the name of investing in financial products, and then secretly returned to key placing objects or relevant persons.
If this closed loop is established, the placing objects first contribute funds to subscribe, and after the listed company completes the issuance, part of the raised funds will be returned through other arrangements. The demand that ostensibly comes from external investors may actually be supported by the issuer's raised funds.
Therefore, whether the subscription demand is real and the flow of raised funds are not two isolated issues.
Cha Baidao disclosed in its 2026 interim report that the net proceeds from the global offering were HK$2.4633 billion. As of the end of June, the company had used about HK$1.7565 billion, with about HK$706.8 million unused, and planned to complete the use by the end of June 2027.
According to the use disclosed by the company, about HK$1.2563 billion was allocated to improve operations and strengthen the supply chain, of which HK$507.8 million has not been used; about HK$492.7 million was allocated to digital capacity building, of which HK$177.6 million has not been used; R&D funds are about HK$49.3 million, of which HK$21.4 million has not been used, and the rest of the uses have been basically implemented.
The company stated that the unused raised funds are stored in interest-bearing accounts of licensed commercial banks and financial institutions in mainland China or Hong Kong, and specifically stated that the proceeds from the global offering have not been used to purchase wealth management products. This is the caliber publicly disclosed by Cha Baidao at present.
What the SFC's notice puts forward is another level of verification direction: whether the funds flow through financial products, investment arrangements or related accounts, and finally flow to key placing objects or relevant persons.
Therefore, what needs to be checked is not only the balance of the special account for raised funds, but also the complete path of each fund, counterparty and ultimate beneficiary.
At present, the regulator restricts the disposal of large-scale assets in an account network. Whether and to what extent Cha Baidao is involved in the arrangements described in the notice remains to be determined by the investigation results and further disclosures.
03 The Window of Good News Before Trading Suspension
Before the trading suspension, the recent information released by Cha Baidao mainly focused on new products, coffee, overseas expansion, dividends and equity incentives.
The company said that in the first half of 2026, a total of 62 new products were launched, among which the sales of bayberry lychee iced milk exceeded 17 million cups in more than 50 days after its launch, and fresh coffee equipment covered more than 2,700 stores. As of the end of September, the number of overseas signed stores exceeded 130.
On October 8, Cha Baidao updated its interim dividend arrangement of about RMB 222 million. The dividend amount is equivalent to 65.9% of the attributable net profit in the first half of the year. The funds come from its own funds and do not involve IPO raised funds. The H-share incentive plan announced in the same period has an upper limit of 10% of the total number of issued shares of the company.
These pieces of information together constitute the "good news window" before the trading suspension.
However, judging from the financial data in recent years, Cha Baidao's performance is not stable.
In 2024, the company's revenue decreased by 13.8% to RMB 4.918 billion, and the attributable net profit decreased by 58.55% to about RMB 472 million.
In 2025, the revenue increased to RMB 5.395 billion, and the attributable net profit rebounded to about RMB 805 million, but the scale of revenue and profit still did not return to the 2023 level.
In the first half of 2026, Cha Baidao achieved revenue of RMB 2.655 billion, a year-on-year increase of 6.2%, and the attributable net profit was about RMB 336 million, a year-on-year increase of 3.2%. In the same period, the gross profit margin decreased from 32.6% to 30.0%, and the adjusted net profit margin decreased from 13.6% to 13.1%.
The company attributed the decline in gross profit margin mainly to the development of fresh coffee business, as well as the adjustment of supply policies to transfer benefits to franchisees.
Cha Baidao's revenue is still highly dependent on the sales of goods and equipment to franchise stores.
In the first half of 2026, this part of revenue was about RMB 2.524 billion, accounting for 95% of the total revenue, a year-on-year increase of 7.0%. Revenue from franchise royalties and franchise fees was about RMB 81.02 million, accounting for 3.1% of the total, a year-on-year decrease of 19.5%.
The pace of store opening and the operating status of a single store will still directly affect the company's revenue base. In the same period, Cha Baidao opened 669 new franchise stores, closed 499 stores, with a net increase of 170 stores. 612 franchisees joined, and 497 terminated cooperation.
As of the end of June, the company had a total of 8,863 stores, of which 8,791 were located in mainland China.
New products, coffee and overseas expansion point to new incremental sales in stores, while dividends and equity incentives are targeted at the capital market, but these positive messages cannot answer the questions of the source of subscription funds at the IPO stage and the flow of funds after listing.
As of press time, Cha Baidao has not made a public response to the specific issues involved in the SFC's notice.
Two and a half years ago, investors subscribed for Cha Baidao shares at HK$17.50 per share. Before this trading suspension, the stock price stood at HK$4.035.
After the trading was suspended, the main line of market attention has fallen on the authenticity of Cha Baidao's IPO demand, the destination of raised funds and the completeness of information disclosure.
This article is from the WeChat official account "Global Finance Comment", author: Lin Luoxu, editor: Wei Fanxi, published with authorization from 36Kr.