Chabaidao shares suspended on Hong Kong SFC directive as first-half franchise fees and royalty income fall 19.5%

Trading in shares of Hong Kong-listed franchised tea drinks brand Chabaidao was suspended from 9am on 13 October 2026. According to a report published that day by the STAR Market Daily, the suspension was ordered by Hong Kong’s Securities and Futures Commission (SFC). Separately, the company reported a growing store network but falling franchise-related income — developments that those considering a franchise in Hong Kong should assess independently.

Trading suspended on the regulator’s directive

Citing a Hong Kong Exchanges and Clearing notice, the report said the Stock Exchange of Hong Kong had suspended trading in Chabaidao shares at the SFC’s direction under section 8(1) of the Securities and Futures (Stock Market Listing) Rules. This differs from a listed company voluntarily requesting a trading suspension while planning a major transaction or awaiting the disclosure of inside information.

At the time the report was published, neither Chabaidao nor the SFC had disclosed the specific reason for the suspension or announced arrangements for trading to resume. The suspension therefore cannot be attributed directly to operating performance, nor should it be taken to mean that stores have stopped trading.

Revenue and profit rise, but gross margin falls

Chabaidao reported revenue of RMB 2.655 billion for the first half of 2026, up 6.2% year on year. Net profit attributable to the parent company rose 3.2% to RMB 336 million. Gross margin, however, fell from 32.6% a year earlier to 30.0%, a decline of 2.6 percentage points.

In its financial report, the company attributed the lower gross margin to its expansion into freshly made coffee and concessions offered to franchisees. By the end of the first half, more than 2,700 stores had been equipped with coffee machines using freshly ground beans, representing around 30% of its mainland China network. This explanation concerns product strategy and franchisee support; it does not explain the regulatory trading suspension.

Store growth does not translate into higher franchise income

As at 30 June 2026, Chabaidao had 8,863 stores worldwide, up 4.7% year on year. These comprised 8,791 stores in mainland China and 72 outside the mainland. The mainland network recorded a net increase of 170 stores during the first half.

However, royalty and franchise fee income fell from RMB 101 million in the first half of 2025 to RMB 81.016 million in the same period of 2026, a year-on-year decline of 19.5%. Store numbers and this income stream moved in different directions, highlighting why network size alone is not enough to assess a franchise brand. These group-level figures also do not directly indicate the profitability of Hong Kong stores or individual franchisees.

Franchise assessments should distinguish three separate issues

For prospective franchise investors considering Hong Kong, the regulatory trading suspension, the brand’s financial performance and individual store operations are three distinct issues. What is currently known is that share trading has been suspended and that the company has disclosed its first-half operating figures. The undisclosed reason for the suspension should not be inferred from changes in the share price or franchise income.

In practice, anyone considering approaching the brand should first monitor subsequent announcements, then confirm its fees, supply arrangements and operational support directly with the company. They should also independently assess the costs and cash flow of their proposed store, rather than treating network growth as a substitute for investment due diligence.