Core Viewpoint - The report from CICC indicates a strong long-term competitive advantage for Gu Ming (01364), leading to an upward revision of adjusted net profit estimates for 2025 and 2026 by 9% and 7% to 2.2 billion and 2.5 billion HKD respectively [1] Group 1: Revenue Growth and Store Expansion - The company is expected to achieve approximately 30% revenue growth in the first half of 2025, driven by both same-store sales and new store openings [2] - The number of stores is projected to reach around 11,000 by the end of the first half of 2025, with about 1,100 new stores added [2] - The company signed nearly 2,000 new stores from January to May, although some openings are delayed due to renovation capacity constraints [2] Group 2: Profitability and Margin Improvement - The company is anticipated to see a recovery in profit margins, with a projected increase in non-GAAP net profit to around 1 billion HKD in the first half of 2025 [2] - The gross margin is expected to expand due to increased cup volume, although lower margins from coffee machines may offset some of this gain [2] - The company plans to enhance coffee product marketing, which is expected to increase coffee cup volume to over 10% by June [2] Group 3: Future Outlook and Competitive Position - The outlook for same-store sales in the second half of the year remains positive, with expectations for accelerated store openings due to the easing of renovation constraints [3] - The company is leveraging delivery subsidies for new customer acquisition and product promotion, particularly for coffee products [3] - The long-term competitive advantage of Gu Ming is expected to be maintained, focusing on brand value and customer experience rather than solely on short-term promotions [3]

Core Viewpoint - The company has a solid long-term competitive advantage, leading to an upward revision of adjusted net profit for 2025 and 2026 by 9% and 7% to 2.2 billion and 2.5 billion respectively [1] Group 1: Revenue Growth - The company is expected to achieve approximately 30% revenue growth in the first half of 2025, driven by both same-store sales and an increase in the number of stores [2] - The number of stores is projected to reach around 11,000 by the end of the first half of 2025, with about 1,100 new stores added [2] - The company signed nearly 2,000 new stores from January to May, although some were delayed due to renovation capacity constraints, which are expected to ease by June [2] Group 2: Profitability - The company is anticipated to see a recovery in profit margins, with a projected non-GAAP net profit of around 1 billion in the first half of 2025 [3] - The gross margin is expected to expand due to increased cup volume, although the lower margin from coffee machines may offset some of this increase [3] - The company plans to enhance marketing efforts for coffee products, which may lead to a rise in coffee cup volume to over 10% by June [3] Group 3: Future Outlook - The company is expected to accelerate store openings in the second half of the year, potentially exceeding 3,000 new stores for the entire year [4] - Same-store performance may normalize in the second half due to base effects and a reduction in delivery subsidies, but it is still expected to outperform the industry [4] - The company has established a foundation that does not rely solely on a single platform for survival, which may enhance its long-term competitive advantage despite the reduction in delivery subsidies [4]

Investment Rating - The report assigns a "Buy" rating for the company [5][14]. Core Insights - The current landscape of the tea beverage industry is thriving, driven by the delivery battle and the peak season, with the company positioned as a leading player in the ready-to-drink tea market. The company is expected to achieve significant revenue growth, with projected revenues of 110.3 billion, 127.5 billion, and 147.0 billion yuan for 2025-2027, and net profits of 19.4 billion, 22.8 billion, and 26.5 billion yuan respectively [5]. Company Overview - The company, founded in 2010 in Zhejiang, has established itself as a leader in the ready-to-drink tea market, focusing on supply chain efficiency to support store expansion. As of 2024, the company achieved revenues of 87.91 billion yuan, a year-on-year increase of 14.54%, with adjusted net profits reaching 14.93 billion yuan, up 5.69% [9][21]. Market Position - The ready-to-drink tea market has evolved beyond basic product functionality, becoming a medium for young consumers to express lifestyle and values. The company holds a 9% and 18% market share in the overall and mass market segments respectively, ranking second overall and first in the mass market [10]. Competitive Advantages - The company has built a robust competitive edge through comprehensive support for franchisees and optimized supply chain management, allowing for profitable expansion without sacrificing quality. The company boasts the largest cold chain logistics infrastructure in the industry, with an average delivery cost of 0.9% of GMV, lower than the industry average of 2% [11]. Future Growth Potential - The company employs a regional density strategy, aiming for 500 stores per province as a key scale node. It currently operates in eight provinces, capturing 25% of the mass ready-to-drink tea market. The company has significant room for expansion, with estimates suggesting over 9,866 potential new stores in a neutral scenario and up to 19,314 if it continues to expand into currently unentered cities [12]. Financial Overview - The company has demonstrated resilient financial performance, with revenues of 87.91 billion yuan in 2024, driven by store expansion and increased demand for products. The revenue structure remains stable, with product sales accounting for nearly 80% of total revenue [38]. The adjusted net profit margin has shown fluctuations but remains competitive within the industry [43].

Group 1 - The new consumption concept stocks in the Hong Kong market experienced a decline, with notable drops in specific companies [1] - Old Poo Gold (06181.HK) fell over 6%, indicating significant market reaction [1] - Other companies such as Gu Ming (01364.HK), Bluco (00325.HK), and Juzi Bio (02367.HK) also saw declines exceeding 4% [1]

Group 1 - Beijing's public transport association initially announced a ban on fuel vehicles for ride-hailing platforms, but later deleted the statement and issued an apology due to verification issues [2] - Zhengzhou's market regulation bureau held talks with major food delivery platforms, including Ele.me, Meituan, and JD, addressing compliance issues and emphasizing the need for fair competition [4] - Taobao Shanguo denied rumors about launching a "1 cent self-pickup" product and stated it has never set internal order targets [4] Group 2 - China Ruyi announced plans to acquire a 30% stake in Kuaiqian Financial for 240 million yuan [5] - JD plans to build 10,000 "Seven Fresh Kitchen" locations nationwide within three years, investing 10 billion yuan to recruit partners for signature dishes [5] - Meituan's "Pin Hao Fan" launched a "Ten Thousand Brands" initiative to support 10,000 well-known restaurant brands [7] Group 3 - Sanofi is set to acquire Vicebio for up to $1.6 billion, focusing on respiratory virus vaccine development [27] - Flexjet completed an $800 million equity financing round, led by L Catterton, to expand its private aviation services [27] - Turing Quantum raised a significant amount in a strategic round of financing to develop photonic chip products [27] Group 4 - Universal Music Group filed for a confidential IPO in the U.S., having previously listed in the Netherlands [25] - Amazon acquired AI wearable device maker Bee, which produces a $50 AI assistant wristband [25] - Tesla opened its first Supercharger diner in Los Angeles, featuring a futuristic design and robot staff [19]

Investment Rating - The overall investment rating for the food and beverage industry is positive, with expectations of returns exceeding the CSI 300 index by more than 5% in the next six months [23]. Core Insights - The food and beverage sector has shown signs of stabilization and recovery, with soft drinks, liquor, and dairy products leading in growth. The sector index increased by 0.97%, ranking 14th among 31 sub-industries [4][13]. - The liquor segment is experiencing a rebound, with the SW liquor index rising by 0.88%. The sector is in a bottoming phase, with a focus on the upcoming demand during the Mid-Autumn Festival and National Day [5][17]. - The beverage market is seeing mixed short-term performances due to external events, but there is a long-term positive outlook for companies with upward momentum [6][18]. Summary by Sections Liquor Sector - The liquor sector is recommended for investment, with specific companies like Guizhou Moutai, Luzhou Laojiao, Shanxi Fenjiu, and Jianshiyuan receiving "Buy" ratings. The sector is currently at a historical low valuation, suggesting a potential recovery [3][5][21]. - The price of Moutai (bottle) is reported at 1890 RMB, showing a slight increase, while the price of Wuliangye remains stable at 870 RMB [5][17]. Beverage Sector - The beverage sector is experiencing fluctuations due to public sentiment affecting certain brands. Companies like Nongfu Spring and China Resources Beverage have shown resilience, with Nongfu Spring's market share recovering significantly [6][20]. - Recommendations include Youyou Foods, Dongpeng Beverage, and Dashi Co., with a focus on companies that can capitalize on market share recovery [6][18][21]. Food Sector - The food sector has seen some companies facing challenges due to external events, but there are still opportunities for growth in the long term. The focus remains on companies with strong mid-year performance [6][18].

Group 1 - The new consumption concept stocks in the Hong Kong market experienced a decline, with companies such as Shangmei Holdings (02145.HK) and Pop Mart (09992.HK) both dropping nearly 3.5% [1] - Other companies like Mixue Group (02097.HK) and Guming (01364.HK) saw declines exceeding 3%, while Nayuki's Tea (02150.HK) fell by 2.5% [1] - Additional declines were noted for Cha Baidao (02555.HK), NIO (09866.HK), Laopu Gold (06181.HK), and Xiaomi Group (01810.HK), all of which dropped over 1.5% [1]

Market Overview - Hong Kong stocks experienced a pullback after an initial rise, with the Hang Seng Index closing down 0.29% at 24,517.76 points and a total trading volume of 258.95 billion HKD [1] - The Hang Seng China Enterprises Index fell 0.18% to 8,861.39 points, while the Hang Seng Tech Index decreased by 0.24% to 5,418.4 points [1] - Shenwan Hongyuan remains optimistic about investment opportunities in Hong Kong and A-share markets, predicting that Hong Kong will play a crucial role in the restructuring of the global financial order [1] Blue Chip Performance - Anta Sports (02020) led blue-chip stocks, rising 2.28% to 91.85 HKD, contributing 4.55 points to the Hang Seng Index [2] - Other notable performers included Kuaishou-W (01024) up 2.13% and Trip.com Group-S (09961) up 1.59%, while Shenzhou International (02313) and Zhongsheng Holdings (00881) saw declines of 2.75% and 2.67%, respectively [2] Sector Highlights - Large tech stocks showed mixed results, with Kuaishou rising over 2% and Baidu nearly 1%, while Tencent fell 0.19% [3] - The humanoid robot sector is gaining traction, with Shengye rising nearly 15% following positive developments [3] - The innovative drug sector remains active, with Lijun Pharmaceutical rising 13% amid ongoing interest in new drug procurement [4][5] Innovative Drug Sector - The 11th batch of national drug procurement has started, focusing on mature "old drugs" while excluding innovative drugs [5] - Analysts believe that the current innovative drug market is driven by value reassessment, with domestic investors increasing their positions through Hong Kong Stock Connect [5] Stablecoin Activity - China San San Media (08087) surged 72.73% after announcing plans to apply for a stablecoin license in Hong Kong, which will officially take effect on August 1 [6] - The global regulatory framework for stablecoins is expected to lead to significant industry growth [6] New Consumption Trends - New consumption stocks showed varied performance, with Guoquan (02517) up 7.29% and Hu Shang Ayi (02589) up 1.99%, while Gu Ming (01364) fell 4.26% [7] - Guoquan expects a net profit of approximately 180 to 210 million RMB for the first half of 2025, representing a year-on-year increase of 111% to 146% [7] Notable Stock Movements - Weiyali (00854) saw a dramatic increase of 288.34% after resuming trading, reaching a peak of 33.2 HKD [8] - Chongqing Machinery (02722) rose 14.06% following news of NVIDIA resuming sales of its H20 chip in China [9] - Jiufang Zhitu Holdings (09636) increased by 10.06% as it plans to issue shares for strategic investments [10] - Quzhi Group (00917) fell 12.06% after announcing a share placement at a discount to its market price [11]

Group 1 - The new consumption concept stocks in the Hong Kong market are experiencing a volatile pullback [1] - Pop Mart (09992.HK) has seen a decline of over 5% [1] - Gu Ming (01364.HK) has dropped nearly 3% [1] Group 2 - Wei Long (09985.HK) has decreased by more than 2% [1] - Mao Ge Ping (01318.HK) and Miniso (09896.HK) both fell by over 1.5% [1]

Investment Rating - The report maintains a neutral investment rating for the food and beverage industry, indicating that the overall return is expected to be within -5% to 5% relative to the CSI 300 index over the next six months [24]. Core Views - The food and beverage sector is experiencing a valuation shift during the earnings window, with a focus on opportunities in undervalued stocks and potential rebounds following recent corrections [4][11]. - The SW food and beverage index increased by 0.8%, ranking 26th among 31 sub-industries, with notable gains in the liquor, health products, and beer sectors, while soft drinks and dairy products saw declines [4][11]. - The report highlights the rebound in the liquor sector, particularly the SW liquor index, which rose by 1.41%, suggesting a recovery from previous overly pessimistic expectations [16][20]. Summary by Sections Liquor Sector - The liquor sector is currently in a bottoming phase, with a focus on the upcoming demand during the Mid-Autumn Festival and National Day [20]. - Key brands such as Guizhou Moutai and Luzhou Laojiao are recommended for investment due to their stable pricing and market performance [20][23]. Consumer Goods Sector - The consumer goods sector is facing a correction due to downward adjustments in earnings expectations for leading companies, particularly in soft drinks and snacks [21]. - Innovative product launches in the snack segment are highlighted, with companies like Youyou Foods and Weidong introducing new items to capture market share [21][22]. - The report emphasizes the growth potential in ready-to-drink beverages and the increasing competition in the tea drink market, with a positive outlook for brands like Mixue and Gu Ming [21][22]. Recommended Companies - The report recommends several companies for investment, including: - Luzhou Laojiao: Buy rating with expected EPS growth [23] - Shanxi Fenjiu: Hold rating with stable performance [23] - Dongpeng Beverage: Buy rating with significant revenue growth forecast [22][23] - Youyou Foods: Buy rating with strong market recovery potential [23] - Nongfu Spring: Buy rating with expected market share recovery [23]