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Fair Value Measurement
 12 Months Ended
Dec. 31, 2024
Fair Value Measurement [Abstract]  
Fair Value Measurement
26.Fair Value Measurement

 

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023:

 

   As of December 31, 2024   Total Fair 
   Level 1   Level 2   Level 3   Value 
   RMB   RMB   RMB   RMB 
Liabilities                
Current                
Convertible Senior Notes due December 10, 2026 (“Senior Convertible Note”)   
      -
    
          -
    473,715,560    473,715,560 
Liability-settled share-based payment to non-employee   
-
    
-
    1,581,448    1,581,448 
Non-current                    
Convertible Notes due June 28, 2027(“Convertible Junior Note”)   
-
    
-
    464,847,231    464,847,231 
                     
Total   
-
    
-
    940,144,239    940,144,239 

 

   As of December 31, 2023   Total Fair 
   Level 1   Level 2   Level 3   Value 
   RMB   RMB   RMB   RMB 
Liabilities                
Current                
Liability-settled share-based payment to non-employee   
       -
    
         -
    2,833,080    2,833,080 
Non-current                    
Convertible notes   
-
    
-
    420,712,380    420,712,380 
Deferred contingent consideration   
-
    
-
    94,199,910    94,199,910 
                     
Total   
-
    
-
    517,745,370    517,745,370 

The table below reflects the reconciliation from the opening balances to the closing balances for recuring fair value measurement of the fair value hierarchy for the years ended December 31, 2024, 2023 and 2022:

 

   Convertible Senior
Note		   Convertible Junior
Note		   Liability -settled
share -based
payment to
non-employee		   Deferred contingent
consideration		 
Balance as of January 1, 2024   420,712,380    
-
    2,833,080    94,199,910 
Additions   
-
    439,723,560    
-
      
Changes in fair value, excluding impact of instrument-specific credit risk   44,764,043    21,110,267    (1,277,140)   16,941,248 
Changes in fair value due to instrument specific credit risk   1,494,507    
-
    
-
    
-
 
Foreign currency translation adjustment   6,744,630    4,013,404    25,508    602,346 
Settlement of deferred contingent consideration        
-
    
-
    (111,743,504)
Balance as December 31, 2024   473,715,560    464,847,231    1,581,448    
-
 

 

   Convertible Senior
Note		   Short-term
investments		   Warrant liabilities   ESA derivative
liabilities		   Liability-settled share-based
payment to
non-employee		   Deferred
contingent
consideration		 
Balance as of January 1, 2023   354,080,264    372,375,701    19,083,004    269,251,436    4,039,468    
-
 
Additions   
 
                   
-
    65,968,319 
Changes in fair value, excluding impact of instrument-specific credit risk   58,280,908    3,584,872    83,966,126    (19,654,006)   (1,386,708)   26,106,460 
Realized gain recognized in interest income   
-
    (5,718,400)   
-
    
-
    
-
    
-
 
Changes in fair value due to instrument specific credit risk   2,116,740    
-
    
-
         
-
    
-
 
Foreign currency translation adjustment   6,234,468    (944,458)   2,882,251    (126,498)   180,320    2,125,131 
Exercise of Public and Private warrants   
-
    
-
    (105,931,381)   
-
    
-
    
-
 
Settlement of Liability-settled share-based payment to employee   
-
    
-
    
-
    
-
    
-
    
-
 
Settlement of 1st, 2nd and 3rd tranches of ESA Agreement   
-
    (369,297,715)   
-
    (249,470,932)   
-
    
-
 
Balance as of December 31, 2023   420,712,380    
-
    
-
    
-
    2,833,080    94,199,910 
   Convertible Senior
Note		   Short-term
investments		   Warrant liabilities   ESA derivative
liabilities		   Liability-settled
share-based
payment to
non-employee		 
Balance as of January 1, 2022   318,466,215    
-
    
-
    
-
    
-
 
Additions   
-
    370,242,173    65,418,439    88,172,680    11,519,334 
Changes in fair value, excluding impact of instrument-specific credit risk   4,493,605    2,133,528    (45,903,468)   186,598,308    (7,390,032)
Changes in fair value due to instrument specific credit risk   1,520,393    
-
    
-
    
-
    
-
 
Foreign currency translation adjustment   29,600,051    
-
    (431,967)   (5,519,552)   (89,834)
Balance as of December 31, 2022   354,080,264    372,375,701    19,083,004    269,251,436    4,039,468 

 

The convertible notes were measured at fair value using the Binomial Option Pricing Model. The Liability-settled share-based payment to non-employee were measured at fair value using the Black-Scholes Option Pricing Model.

 

As of December 31, 2024, the assumptions were as follow:

 

   Convertible Senior
Note		   Convertible Junior
Note		   Liability-settled share-based
payment to
non-employee		 
Expected volatility   82.00%   22.00%   93.00%
Risk-free interest rate (per annum)   4.25%   4.27%   5.53%
Expected dividend yield   0.00%   0.00%   0.00%
Fair value of the underlying ordinary share  US$3.55   US$  3.55   US$     3.55 
Bond yield   10.52%   10.33%    N/A 

 

As of December 31, 2023, the assumptions were as follow:

 

   Convertible Senior
Note		   Liability-settled
share-based
payment to
non-employee		   Deferred contingent
consideration		 
Expected volatility   22.00%   64.00%   22.00%
Risk-free interest rate (per annum)   4.00%   5.23%   4.20%
Expected dividend yield   0.00%   0.00%   0.00%
Fair value of the underlying ordinary share  US$1.75   US$             1.75    US$   1.75 
Bond yield   10.60%   N/A    N/A 
Discount rate   N/A    N/A    23.00%
Annual per store revenue growth rate   N/A    N/A    2.00%

 

The fair value of the Convertible notes and Liability-settled share-based payment to non-employee as of December 31, 2024 and 2023 were estimated by management with the assistance of an independent valuation firm.

 

The expected volatility was estimated based on the historical volatility of the Company or comparable peer public companies with a time horizon close to the expected term of the Convertible Senior Note.

 

The expected volatility was estimated based on the historical volatility of comparable peer public companies with a time horizon close to the expected term of the Convertible Junior Note.

 

The expected volatility was estimated based on the historical volatility of the Company with a time horizon close to the expected term of the liability-settled share-based payment to non-employee.

The risk-free interest rate was estimated based on the yield to maturity of U.S. treasury bonds denominated in US$ for a term consistent with the expected term of the Notes in effect at the valuation date of Convertible Senior Note, Convertible Junior Note, and liability-settled share-based payment to non-employee. The expected dividend yield is zero as the Company has never declared or paid any cash dividends on its shares and the Company does not intend to pay dividend before the Company becomes profitable. The bond yield was based on the market yield of comparable bonds with similar credit rating. The fair value of the Company’s ordinary shares was obtained from the listed trading price of THIL.

 

The inputs used in the analysis for December 31, 2024 and 2023 were classified as Level 3 inputs within the fair value hierarchy due to the lack of observable market data and activity.

 

As of June 28, 2024, the assumptions were as follow:

 

   Convertible
Junior Note		   Deferred contingent
consideration		 
Expected volatility   22.00%   21.00%
Risk-free interest rate (per annum)   4.52%   3.10%
Expected dividend yield   0.00%   0.00%
Fair value of the underlying ordinary share  US$3.75   US$   3.75 
Bond yield   10.80%   N/A 
Discount rate   N/A    21.00%

 

The expected volatility was estimated based on the historical volatility of comparable peer public companies with a time horizon close to the expected term of the Convertible Junior Notes and Deferred contingent consideration.

 

The risk-free interest rate was estimated based on the yield to maturity of U.S. treasury bonds denominated in US$ for a term consistent with the expected term of the Notes in effect at the valuation date of Convertible Junior Notes and Deferred contingent consideration.

 

The expected dividend yield is zero as the Company has never declared or paid any cash dividends on its shares and the Company does not intend to pay dividend before the Company becomes profitable.

 

The bond yield was based on the market yield of comparable bonds with similar credit rating. The fair value of the Company’s ordinary shares was obtained from the listed trading price of the Company.

 

The cashflow forecast of Deferred contingent consideration is based on management plan of Popeyes restaurants to be opened during the forecast period and expected average revenue per store, which consider the store opening milestones stipulated in the Popeyes master development agreement and historical experience of per store revenue with comparable store size and type of food menu.

 

The inputs used in the analysis for June 28, 2024 were classified as Level 3 inputs within the fair value hierarchy due to the lack of observable market data and activity.

 

Nonrecurring Fair Value Measurements

 

The Company measures its property and equipment at fair value on a nonrecurring basis whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable.

 

Long-lived assets within asset groups were measured at fair value on a nonrecurring basis as of the end of each quarter during 2024 and 2023 due to impairment recognized on those assets at that date (see Note 9). Fair value of the asset groups as of December 31, 2024 were estimated by RMB10,095,796 using quoted selling price for identical assets of the kitchen equipment within asset group under the market approach classified in Level 2 of the fair value hierarchy.