Chagee (NASDAQ: CHA) has quickly become one of the most talked-about beverage companies in the world, with 6,681 stores worldwide and bold ambitions to become the “Starbucks of tea.”

On April 17, 2025, Chagee went public at US$28 per share, raising US$411 million to fuel expansion. The founder, Zhang Junjie, is still relatively young, which makes the story of Chagee all the more interesting. But as investors, we must look beyond the hype and carefully analyze the numbers.

So, let’s break down Chagee’s financial health using the three golden lenses of value investing: profit & loss, cash flow, and balance sheet.

Chagee’s revenue trend is positive, with consistent growth over its three years of reported financials (2022–2024).

But here’s the caution: three years of data is still very limited. While the numbers are going up, it’s too early to conclude that the growth is sustainable.

And remember this important principle:

👉 Revenue is vanity, profit is sanity.

Out of the past three years, one year showed a net loss, while two years were profitable.

On a quarterly basis, the profits are trending upward, which suggests the business is moving in the right direction. Still, with such a short operating history, investors should remain cautious.

Profit alone doesn’t mean much if a company can’t generate cash.

Looking at Chagee’s cash flow from operations, we see a clear uptrend. This means real money is coming in when they sell tea, not just “accounting profits.” For value investors, this is a very good sign.

Chagee’s debt-to-equity ratio stands at just 0.13 — far below the safe threshold of 0.5.

What does this mean? For every $100 of shareholder capital, Chagee has borrowed only $13. This shows the company is not overly reliant on debt to grow, which reduces financial risk.

Here’s where it gets interesting.

Despite rising revenues and profits, Chagee’s share price has fallen 21.7% from its IPO price of $28 to about $23 (as of August 27, 2025).

This disconnect between fundamentals and market price is exactly where value investors start paying attention.

But is the stock really cheap?

One common yardstick is the Price-to-Earnings (PE) ratio. By comparing Chagee with industry peers like Starbucks and Luckin Coffee, we find:

• Chagee’s PE ratio is the lowest among the three.
• This could mean the market is undervaluing Chaji relative to its competitors.

But caution again: a low PE ratio alone does not make a stock attractive. We must always look at the bigger picture, growth potential, risks, and long-term sustainability.

• 📈 Revenue: Uptrend, but only three years of history
• 💰 Profit: 2 out of 3 years positive, trending upward
• 💵 Cash Flow: Positive and growing
• 🏦 Debt: Low and healthy (0.13 debt-to-equity ratio)
• 📉 Share Price: Down 21.7% from IPO
• ⚖️ Valuation: Lowest PE ratio vs Starbucks and Luckin Coffee

The numbers look promising, but as always, value investors must be patient. A great company does not always equal a great investment unless bought at the right price.