Back in 2014, Peng Xin and her husband Zhao Lin pledged their home as collateral for a bank loan to get their fledgling bubble tea business off the ground.
Today, the company they founded, Nayuki Holdings, is valued at $3.8 billion, even after the stock slumped on Wednesday on its debut in Hong Kong. The couple’s stakes are each worth about $1.1bn, according to the Bloomberg Billionaires Index.
“It wasn’t a reckless decision,” Ms Peng, an executive director and the company’s general manager, said in an interview. “We spent almost two years testing our drinks on the street before opening our first store.”
Nayuki, which started with three branches in the southern Chinese city of Shenzhen, is riding a boom in the market for high-end tea drinks that’s seen it expand to more than 560 stores in more than 70 cities, mostly in China. But some analysts voiced concern about whether the still loss-making firm will be able to turn and stay profitable.
The company’s shares closed at HK$17.12 ($2.20), about 14 per cent lower than the initial public offering price of HK$19.80.
Bubble tea was created in Taiwan in the 1980s and later became popular elsewhere in Asia. While it’s frequently associated with tapioca balls that represent the “bubbles” in the name, Nayuki’s version often contains different items such as fresh fruits or cream cheese toppings.
Nayuki, which raised about $656 million in its initial public offering, accounted for around 19 per cent of the premium modern tea cafe market by total retail consumption in 2020, the company said in its prospectus, citing a China Insights Industry Consultancy report. That’s the second-largest share, it said. Another major player is HeyTea, which was established in 2012 and is closely held.
Ms Peng, 33, met and married Mr Zhao in Shenzhen, the city that serves as the country’s technology hub. She worked as a deputy secretary general of a software company before starting the firm.
I think Nayuki still has much room to improve its profitability by scaling up the store network in the next three to five years
Kenny Ng,
securities strategist at Everbright Sun Hung Kai
Mr Zhao, 42, Nayuki’s chairman, previously worked at several food companies including Burger King’s Shenzhen unit. Each of the two co-founders owns about 28 per cent of Nayuki. The company declined to comment on their net worth.
“Our family and friends were worried about us at the time,” Ms Peng recalled, referring to how they pledged their home as collateral. “But we and our team believed in our choice.”
More than 90 per cent of Nayuki’s outlets in mainland China are in Tier 1 and Tier 2 cities, the label that China gives to developed urban areas. It also has one store in Hong Kong and one in Japan.
The company aims to open 300 more branches this year and a further 350 in 2022, Ms Peng said. Most of them will be a new store format called Nayuki PRO, which also sells coffee and smaller-sized bakery items to lure office workers.
Nayuki has been launching a new drink every week since last year to keep younger customers coming back to its stores, Ms Peng said.
She said the company gets most of its sales online after the coronavirus changed consumption habits.
“After the pandemic, we see 70 per cent of our orders from online platforms,” she said. “Customers used to come to our stores in groups of three or four to hang out and share food, but now we find more of them just order a drink online whenever they feel like it.”
The company posted revenue of about 3.1bn yuan ($480 million) last year, and a net loss of about 203m yuan.
China’s tea café market will continue to enjoy “decent growth potential”, but whether Nayuki and other firms in the industry will achieve sustainable profitability is a concern, according to Jason Yu, managing director of research firm Kantar Worldpanel Greater China.
“Modernising the entire supply chain to drive more efficiency remains the key challenge for Nayuki and its peers,” Mr Yu said.
Nayuki may achieve a boost from its expansion, but the bigger question is whether it will be able to keep that going over the longer term, said Kenny Ng, a securities strategist at Everbright Sun Hung Kai in Hong Kong.
“I think Nayuki still has much room to improve its profitability by scaling up the store network in the next three to five years,” he said. “But the real challenges for sustainable growth will come after that.”
The company is working to cut costs and boost efficiency, such as by automating labour-intensive processes including cutting fruits and kneading dough, Ms Peng said.
“We hope Nayuki can be a brand that customers are willing to come back to every day,” she said. “We want it to become something we can do for our whole life.”
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
The specs: 2018 Chevrolet Trailblazer
Price, base / as tested Dh99,000 / Dh132,000
Engine 3.6L V6
Transmission: Six-speed automatic
Power 275hp @ 6,000rpm
Torque 350Nm @ 3,700rpm
Fuel economy combined 12.2L / 100km
Killing of Qassem Suleimani
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
UAE currency: the story behind the money in your pockets
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Company info
Company name: Entrupy
Co-founders: Vidyuth Srinivasan, co-founder/chief executive, Ashlesh Sharma, co-founder/chief technology officer, Lakshmi Subramanian, co-founder/chief scientist
Based: New York, New York
Sector/About: Entrupy is a hardware-enabled SaaS company whose mission is to protect businesses, borders and consumers from transactions involving counterfeit goods.
Initial investment/Investors: Entrupy secured a $2.6m Series A funding round in 2017. The round was led by Tokyo-based Digital Garage and Daiwa Securities Group's jointly established venture arm, DG Lab Fund I Investment Limited Partnership, along with Zach Coelius.
Total customers: Entrupy’s customers include hundreds of secondary resellers, marketplaces and other retail organisations around the world. They are also testing with shipping companies as well as customs agencies to stop fake items from reaching the market in the first place.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Read more from Mina Al-Oraibi
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
More from Rashmee Roshan Lall
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Wednesday and the pair embraced but he failed to give her his backing as she cried a day earlier.
A spokesman said her upset was due to a personal matter.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
MATCH INFO
Final: England v South Africa, Saturday, 1pm
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
How tumultuous protests grew
- A fuel tax protest by French drivers appealed to wider anti-government sentiment
- Unlike previous French demonstrations there was no trade union or organised movement involved
- Demonstrators responded to online petitions and flooded squares to block traffic
- At its height there were almost 300,000 on the streets in support
- Named after the high visibility jackets that drivers must keep in cars
- Clashes soon turned violent as thousands fought with police at cordons
- An estimated two dozen people lost eyes and many others were admitted to hospital
WORLD CUP SEMI-FINALS
England v New Zealand
(Saturday, 12pm UAE)
Wales v South Africa
(Sunday, 12pm, UAE)
FIXTURES (all times UAE)
Sunday
Brescia v Lazio (3.30pm)
SPAL v Verona (6pm)
Genoa v Sassuolo (9pm)
AS Roma v Torino (11.45pm)
Monday
Bologna v Fiorentina (3.30pm)
AC Milan v Sampdoria (6pm)
Juventus v Cagliari (6pm)
Atalanta v Parma (6pm)
Lecce v Udinese (9pm)
Napoli v Inter Milan (11.45pm)
Terminal High Altitude Area Defense (THAAD)
What is THAAD?
It is considered to be the US' most superior missile defence system.
Production:
It was first created in 2008.
Speed:
THAAD missiles can travel at over Mach 8, so fast that it is hypersonic.
Abilities:
THAAD is designed to take out projectiles, namely ballistic missiles, as they are on their downward trajectory towards their target, otherwise known as the "terminal phase".
Purpose:
To protect high-value strategic sites, such as airfields or population centres.
Range:
THAAD can target projectiles both inside and outside of the Earth's atmosphere, at an altitude of 93 miles above the Earth's surface.
Creators:
Lockheed Martin was originally granted the contract to develop the system in 1992. Defence company Raytheon sub-contracts to develop other major parts of the system, such as ground-based radar.
UAE and THAAD:
In 2011, the UAE became the first country outside of the US to buy two THAAD missile defence systems. It then deployed them in 2016, becoming the first Gulf country to do so.
Three ways to boost your credit score
Marwan Lutfi says the core fundamentals that drive better payment behaviour and can improve your credit score are:
1. Make sure you make your payments on time;
2. Limit the number of products you borrow on: the more loans and credit cards you have, the more it will affect your credit score;
3. Don't max out all your debts: how much you maximise those credit facilities will have an impact. If you have five credit cards and utilise 90 per cent of that credit, it will negatively affect your score.
First Person
Richard Flanagan
Chatto & Windus
What is dialysis?
Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.
It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.
There are two kinds of dialysis — haemodialysis and peritoneal.
In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.
In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.
It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.
If you go
The Flights
Emirates and Etihad fly direct to Johannesburg from Dubai and Abu Dhabi respectively. Economy return tickets cost from Dh2,650, including taxes.
The trip
Worldwide Motorhoming Holidays (worldwidemotorhomingholidays.co.uk) operates fly-drive motorhome holidays in eight destinations, including South Africa. Its 14-day Kruger and the Battlefields itinerary starts from Dh17,500, including campgrounds, excursions, unit hire and flights. Bobo Campers has a range of RVs for hire, including the 4-berth Discoverer 4 from Dh600 per day.
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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