Chagee initiated with a Buy at Citi

Citi analyst Xiaopo Wei initiated coverage of Chagee (CHA) with a Buy rating and $43.70 price target The firm believes China’s fresh-made tea drink industry has “meaningful comparisons” with the decade-long consolidation process seen in China’s sportswear sector, which also has a franchise-dominant model. In this context, the firm prefers both the biggest-scale leader in the value segment and the “most deeply” entrenched player in the premium segment. As the leader in the premium segment, Chagee “well differentiates itself from most value players” with its solid long-term product strategy, managed franchise model, strong brand equity and high efficiency, the analyst tells investors in a research note.