Chagee Holdings Ltd. (CHA)

Price$11.63Cached quoteAs of 2026-09-04 16:23 UTC

AI: Undervalued

Price checkLow-teens earnings valuation looks inexpensive once Chagee’s large net cash position is recognized.

Research confirms CHA is Chagee Holdings Limited, whose ADSs trade on the Nasdaq Global Select Market under ticker CHA. Recent market data put equity value around $2.4 billion. At June 30, Chagee held about $1.0 billion of cash, restricted cash and time deposits plus $207 million of short-term investments, versus only $27 million of borrowings. Even after recognizing about $207 million of lease liabilities, leverage is modest. P/E, the price paid for each dollar of annual earnings, sits roughly in the low teens, which looks inexpensive despite weak same-store sales.

Big pictureStrong liquidity and recovered margins offset weak China same-store sales and heavier investment needs.

Chagee earned RMB912 million of GAAP net income in the first half, while operating cash flow was RMB552 million. Operating cash flow is cash produced by day-to-day operations, so profit is not converting one-for-one into cash. Still, short-term investments rose as cash balances fell, leaving near-liquid resources substantial. The 2025 annual report also showed operating profitability fell sharply from 2024, underscoring sensitivity to competition and consumer demand. Liquidity is durable today, but company-owned expansion, buybacks and a prolonged slowdown could consume the cushion.

Business strengthBrand scale, overseas growth, and cost discipline are real, but the model is becoming more capital intensive.

The network reached 7,639 teahouses, up 8.5% year over year, and overseas GMV more than doubled in Q2. GMV is Chagee’s measure of customer sales across its teahouses. Revenue still rose 2.5% while operating income recovered to RMB525 million and non-GAAP net margin held at 14.3%, showing useful cost discipline. However, Greater China same-store GMV fell 16.1%, active members slipped sequentially, and company-owned stores grew much faster than franchised locations. That shift can improve brand control, but rent, payroll and store investment make the model more capital intensive and economically cyclical.

What could change the storyA China sales recovery would unlock upside; persistent declines or new dilution would weaken the case.

Bull case: same-store declines narrow toward flat, overseas GMV keeps growing at strong double-digit rates, margins stay around the mid-teens, and the remaining buyback authorization retires shares without materially shrinking liquidity. Bear case: China traffic stays down by double digits, company-owned expansion absorbs more cash, or price competition compresses margins. The June F-3 shelf adds another risk: it permits future share issuance, so dilution could offset buyback benefits if capital is raised without a high-return use.

AI: News

Q2 profit reboundsAugust results showed modest revenue growth, sharply better GAAP profit, and continued China store weakness.

On August 28, Chagee reported Q2 2026 revenue of RMB3.41 billion, up 2.5% year over year, with operating income of RMB524.7 million and GAAP net income of RMB464.8 million. The rebound mainly reflects much lower operating expenses, including reduced share-based compensation and leaner overhead. The operating picture remained mixed: Greater China GMV fell year over year and same-store GMV was down 16.1%, while overseas GMV increased 114.3%.

Buyback moves forwardManagement disclosed meaningful repurchases, signaling confidence while leaving most authorization still available.

In the August 28 release, Chagee said that by August 24 it had repurchased about 2.57 million ADSs for $29.5 million under the $150 million program authorized on May 28. Roughly $120.5 million of authorization remained. Repurchases can reduce share count and improve per-share economics when done below intrinsic value, but they also consume cash. Given Chagee’s sizable liquidity and minimal borrowings, the program is currently affordable, though expansion needs still deserve priority.

Shelf registration filedA June shelf filing increased financing flexibility but also preserved a route to future equity dilution.

On June 5, Chagee filed an automatically effective Form F-3 shelf registration with the SEC. It covers potential future issuance of Class A ordinary shares or ADSs and possible resales by certain shareholders. A shelf does not mean an offering is imminent; it simply makes future capital raising or resale transactions easier. For investors, that flexibility is useful if growth opportunities arise, but any primary issuance would increase the share count unless offset by earnings growth or repurchases.

Loading local price history

Revenue

2025

Net income

2025

Free cash flow

2025

Total cash / debt

CashTotal debt

2024

2025

Financial statements

	2025	2025	2024	2023
Revenue	$1.85B	—	—	—
Operating expenses	$1.65B	—	—	—
Operating income	$192.7M	—	—	—
Operating margin	10.44%	—	—	—
EBITDA	$213.6M	—	—	—
EBITDA margin	11.57%	—	—	—
Net income	$167.5M	—	—	—
Net profit margin	9.07%	—	—	—
Basic EPSper basic share	$0.90	—	—	—
Diluted EPSper diluted share	$0.88	—	—	—