Mixue shares extend slide after profit drop as ice cream-and-tea chain sees costs rise

Shares of Chinese ice cream and beverages chain Mixue Group fell more than 7% in Hong Kong on Friday, extending losses to a second straight session after the company reported a decline in first-half profit.

The stock closed 8.37% lower on Thursday, when Mixue reported that profit for the period fell 14.7% year on year to 2.32 billion yuan ($345.2 million) for the six months ended June. Revenue rose 2.3% to 15.22 billion yuan. 

The company also proposed a special dividend of 2.65 yuan per share, subject to shareholder approval.

Mixue's profitability came under pressure from rising costs and expenses. Cost of sales grew faster than revenue, primarily due to investments aimed at improving product quality, while selling and distribution expenses jumped 22.9% on higher marketing and staff costs, the company said. Administrative expenses also rose 39.4%, mainly due to higher staff costs. 

Mixue Group now has more stores globally than McDonald's and more than four times Dunkin's, with its store network totaling nearly 63,987 as of the end of June. The company is known for its affordable drinks and ice cream, including its signature King Cone vanilla ice cream. 

While most of its stores are in mainland China, the company had 4,378 stores overseas as of end-June and has been expanding into new markets, including central Asia and the Americas.  

Looking ahead, the company said it plans to deepen its presence in Southeast Asia and push further into central Asia and the Americas, while building a more localized supply chain to support its overseas expansion.

The company is also looking beyond drinks, with plans to turn its Snow King mascot into a global cultural brand through animated series, comics, movies, featured merchandise and even theme parks.