Industry Overview - The tavern industry has not yet recovered, with competition significantly higher than in 2019. The chain development process is slow. The "Tavern Development Report 2025" indicates that the national tavern market size is projected to reach 112 billion yuan in 2024, a year-on-year increase of 7.7%, but still below the 2019 level. It is expected to grow to 117.5 billion yuan in 2025, with a year-on-year increase of 4.9% [1] - As of March 2025, the number of tavern enterprises in the country exceeds 38,000, a year-on-year increase of 2.6%, and a 139.6% increase compared to 2019, indicating intensified competition amid weak demand [1] - The chain rate of taverns remains low, with most brands having five or fewer stores, accounting for 57.9%, while brands with over 100 stores only account for 5.1% [1] Company Performance - Helen's direct sales have rapidly declined, and the transition to a franchise model is still ongoing. In 2024, the company achieved revenue of 752 million yuan, a year-on-year decrease of 37.76%, and reported a net loss of 77.976 million yuan, reversing from a net profit of 180 million yuan last year. The adjusted net profit was 101 million yuan, down 65.5% year-on-year [2] - The decline in performance is attributed to the platform transformation leading to a drop in direct sales revenue. Since 2023, the company has significantly closed direct stores, with 511 stores shut down by March 19, 2025. The "Hi Beer Partner" franchise model has expanded to 424 stores, with a total of 499 signed agreements, while the number of licensed cooperative stores decreased from 92 to 42, with over 70% of the total 579 stores being franchise stores [2] - The company is in a transitional phase from direct sales to a franchise model, with its profit model still being refined. The rapid reduction of direct stores and the immature franchise system raise concerns about its cyclical resilience. The efficiency of store operations and product structure are still being adjusted, and the ability to enhance single-store repurchase rates and efficiency through multi-scenario combinations and mechanism optimization will be key to long-term performance [2] Profit Forecast and Investment Recommendation - The company forecasts earnings per share for 2025-2027 to be 0.05, 0.06, and 0.09 yuan respectively, down from the previous forecast of 0.21 yuan for 2025, mainly due to the rapid closure of direct stores and the increase in franchise proportion, leading to a decline in overall single-store profit contribution [2] - Based on comparable companies, the reasonable valuation level for the company is set at a 29 times price-to-earnings ratio for 2025, corresponding to a target price of 1.51 HKD (with 1 HKD = 0.9138 RMB), and the rating has been adjusted to "neutral" [2]

Investment Rating - The investment rating for the company is downgraded to "Neutral" [4][7][11] Core Views - The tavern industry is experiencing intensified competition, and the recovery for the company will take time [2][10] - The company is transitioning from a direct sales model to a franchise model, facing challenges during this shift [10] - The company's revenue for 2024 is projected to be 752 million yuan, a decrease of 37.76% year-on-year, with a net loss attributed to the transition [10][11] Financial Forecast and Investment Recommendations - Earnings per share are forecasted to be 0.05, 0.06, and 0.09 yuan for 2025-2027, respectively, down from a previous estimate of 0.21 yuan for 2025 due to rapid closure of direct stores and increased franchise contributions [4][11] - The reasonable valuation level for the company is estimated at a 29 times price-to-earnings ratio for 2025, corresponding to a target price of 1.51 HKD [4][11] Financial Information - The company's revenue is expected to decline from 1,209 million yuan in 2023 to 575 million yuan in 2025, with a projected growth of 8.3% in 2026 and 12.8% in 2027 [6][10] - The gross margin is expected to decrease from 70.2% in 2023 to 45.8% in 2025, while the net margin is projected to recover to 15.5% by 2027 [6][10] - The company’s net profit attributable to the parent company is forecasted to be 60 million yuan in 2025, recovering from a loss of 78 million yuan in 2024 [6][10]

Core Viewpoint - The decline of Helen's, once a promising player in the low-cost bar market, highlights the challenges of maintaining a viable business model in a rapidly changing consumer landscape, contrasting sharply with the success of competitors like Mixue Ice Cream. Company Performance - Helen's market value plummeted from 30.2 billion HKD in 2021 to 1.8 billion HKD, a decline of over 94% [2] - In 2024, Helen's revenue dropped by 37.8% to 75.2 million HKD, with a net loss of 7.8 million HKD [4] - The number of Helen's stores decreased from a peak of 782 to 579 [4] Business Strategy - Helen's initially thrived on a low-cost model targeting young consumers, but faced a "scale trap" leading to significant losses [4] - The company closed over 500 stores in two years as part of a survival strategy, which temporarily resulted in a profit of 18 million HKD in 2023 [4] - In contrast, Mixue Ice Cream reported a revenue growth of 22.29% to 24.83 billion HKD in 2024, with a net profit increase of 41.41% to 4.44 billion HKD [8] Market Positioning - Helen's struggles stem from a mismatch between its low-price positioning and the emotional value sought in social spaces by consumers [5] - Only 34% of Helen's customers are willing to bring friends or partners, compared to 68% for competitors like Hu Tao Li [5] - The rise of alternative social venues, such as camping bars and home drinking experiences, has further diluted Helen's customer base [8] Operational Challenges - Helen's faces a heavy cost structure, with initial investments for franchise stores exceeding 600,000 CNY, compared to Mixue's 210,000 CNY [6] - Labor costs for Helen's surged by 72.5% to 1 billion CNY in 2022, adding to operational burdens [6] - The business model relies heavily on evening traffic, requiring high customer volume and turnover to be profitable [6] Competitive Landscape - The high-end market is dominated by craft beer and whiskey bars, while the low-end market is being encroached upon by convenience stores and e-commerce [6] - Mixue's success is attributed to its strategic focus on lower-tier cities and a product-driven approach that emphasizes high turnover and customer engagement [9] Future Directions - Helen's is attempting a difficult transition to a franchise model, with the "Hi Beer Partner" initiative launched in 2023, but faces challenges with declining sales in franchise stores [10] - The company has adjusted its franchise policies, which has raised concerns among franchisees regarding profitability [10] - The emergence of new social consumption spaces poses a significant threat to traditional bar models like Helen's, as consumer preferences evolve [11]

Industry Overview - The national tavern market size is projected to reach 112 billion yuan in 2024, reflecting a year-on-year growth of 7.7%, but still not recovering to 2019 levels [2] - As of March 2025, the number of tavern enterprises in China exceeds 38,000, representing a 139.6% increase since 2019 [2] - The new liquor market is undergoing structural adjustments, leading to intensified industry reshuffling [2] Company Performance: Helen's - Helen's, once a leader in the tavern sector, is experiencing a significant downturn, with revenue declining for three consecutive years, from 1.21 billion yuan to 752 million yuan in 2024, and a net profit loss of 78 million yuan [8][9] - The number of Helen's stores increased from 479 to 560, but the number of direct-operated stores halved from 255 to 112, while franchise stores surged from 132 to 406 [8] - Despite an 86% increase in franchise revenue to 195 million yuan, the drastic drop in direct store revenue by over 300 million yuan has led to an overall decline in performance [9] Market Dynamics - Franchise stores have a lower average daily sales of 5,000 yuan, down nearly 30% year-on-year, compared to 7,000 yuan for direct stores, indicating challenges in maintaining brand quality and service consistency [9] - Helen's has seen a reduction of 43 stores in first- and second-tier cities, while adding 123 stores in lower-tier cities, where average daily sales have also dropped significantly [9] - The company's stock price has plummeted by 93% from its peak, reflecting a shift in consumer demand towards more rational and price-sensitive purchasing behavior [11] Emerging Competitors - In contrast, Tang Sanliang, a new player in the market, has rapidly gained traction with a community-based liquor model and secured nearly 10 million yuan in angel funding [12] - Tang Sanliang's business model focuses on direct supply from manufacturers, offering a wide range of liquor at competitive prices, with a franchise investment of around 200,000 yuan and a gross margin exceeding 50% [12][14] - Other brands like Zebra Hero and Hidden Brew are also entering the market, indicating a trend towards lower investment costs and higher profit margins compared to traditional taverns [14] Consumer Trends - The shift from experience-focused taverns to value-driven liquor outlets suggests a broader trend of consumer rationality and a demand for quality and cost-effectiveness [15] - Experts indicate that the success of taverns now hinges on emotional value and effective management, as younger consumers seek more engaging experiences [15] - The industry is moving towards a model that emphasizes product quality and convenience over mere social experiences, reflecting changing consumer preferences [15]

Financial Performance - The company reported a revenue increase of 15% year-over-year, reaching HKD 1.2 billion for the fiscal year ending December 31, 2024[9]. - The company provided a positive outlook for 2025, projecting a revenue growth of 10% to 12%[9]. - The company reported revenue of RMB 752 million for the year ended December 31, 2024, a decrease of 37.7% compared to RMB 1,209 million in 2023[20]. - Adjusted net profit for 2024 was RMB 100.6 million, down from RMB 291.1 million in 2023[20]. - The company’s franchise business revenue increased by 85.7% from RMB 105 million in 2023 to RMB 195 million in 2024[20]. - Revenue dropped by 37.8% from RMB 1,208.6 million in 2023 to RMB 752.2 million in 2024, primarily due to a weak consumer market[40]. - The loss before income tax for the year ending December 31, 2024, was RMB 76.6 million, compared to a profit of RMB 152.0 million for the year ended December 31, 2023[71]. - The adjusted net profit for the year ended December 31, 2024, was RMB 100.6 million, a decrease of 65.4% from RMB 291.1 million in 2023[74]. - The company reported a loss of RMB 78.0 million for the year ended December 31, 2024, compared to a profit of RMB 180.5 million in 2023[74]. Market Expansion and Strategy - The company is expanding its market presence in Southeast Asia, targeting a 25% increase in market share by 2026[9]. - New product launches contributed to 30% of total revenue, with three major products introduced in the last quarter[9]. - The company plans to invest HKD 200 million in marketing initiatives to boost brand awareness in new markets[9]. - A new partnership with a leading tech firm is expected to drive additional revenue streams, projected to contribute HKD 100 million in 2025[9]. - The company plans to continue expanding its "Hi Beer Partner" network and strengthen supply chain management capabilities[21]. - The company aims to further integrate supply chain and market resources, optimize product mix, and upgrade decor styles for differentiated and diversified operations[127]. Operational Metrics - User data showed a growth in active users by 20%, totaling 2 million users as of the end of 2024[9]. - The total number of stores increased from 479 at the end of 2023 to 560 by the end of 2024, with further growth to 579 stores by March 19, 2025[21]. - Total number of bars increased from 479 in 2023 to 579 in 2025, representing a growth of 20.8%[24]. - Average daily sales per bar in first-tier cities rose from RMB 7.5 thousand in 2023 to RMB 8.3 thousand in 2024, an increase of 10.7%[26]. - The average daily sales per "Hi Beer Partner" bar decreased from RMB 7.1 thousand in 2023 to RMB 5.0 thousand in 2024, a decline of 29.6%[26]. Financial Position and Assets - Total assets decreased from RMB 2,164.98 million in 2023 to RMB 1,375.98 million in 2024[15]. - The company’s equity attributable to owners decreased from RMB 1,821.41 million in 2023 to RMB 1,118.79 million in 2024[15]. - Non-current assets dropped significantly from RMB 740.83 million in 2023 to RMB 459.77 million in 2024[19]. - The company’s total liabilities decreased from RMB 343.58 million in 2023 to RMB 257.18 million in 2024[15]. - Cash and bank balances decreased from RMB 1,278.9 million as of December 31, 2023, to RMB 806.4 million as of December 31, 2024, primarily due to dividend payments in 2024[86]. Cost Management and Expenses - Research and development expenses increased by 18%, amounting to HKD 150 million, focusing on innovative technologies[9]. - Employee benefits and human resources expenses decreased by 41.9% from RMB 298.8 million in 2023 to RMB 173.7 million in 2024 due to a reduction in workforce[48]. - The depreciation of right-of-use assets decreased by 44.8% from RMB 110.2 million for the year ended December 31, 2023, to RMB 60.8 million for the year ending December 31, 2024, mainly due to the termination of several direct-operated restaurant lease agreements[49]. - Utility expenses decreased by 44.3% from RMB 34.8 million for the year ended December 31, 2023, to RMB 19.4 million for the year ending December 31, 2024, as a result of the reduction in the number of restaurants[53]. Corporate Governance and Management - The management team includes experienced executives with over 20 years in the tavern operation market and over 12 years in the restaurant service industry[110][111]. - The CFO has a strong background in capital operations and financial management, having previously worked in investment banking[112]. - The independent non-executive directors bring extensive experience in strategic investment, mergers and acquisitions, and corporate governance[116][117]. - The board of directors is committed to high standards of corporate governance and will continue to review and monitor governance practices[199]. - The company has established a remuneration committee to determine the compensation policy for directors and senior management based on their experience and qualifications[141]. Compliance and Risk Management - The company has implemented food safety and quality assurance measures to mitigate risks associated with its industry[105]. - The company emphasizes the importance of employee training and competitive compensation to retain talent, with annual reviews of employee remuneration[188]. - The company has established compliance policies to ensure adherence to applicable laws and regulations, with no significant non-compliance issues reported during the period[186]. - The audit committee reviewed the audited consolidated financial statements for the year ending December 31, 2024, confirming compliance with applicable accounting standards and regulations[193]. Shareholder Information - The board proposed a final dividend of RMB 0.1146 per share for the year ending December 31, 2024, compared to RMB 0.3153 per share in 2023[128]. - The final dividend will be subject to approval at the annual general meeting on May 14, 2025[128]. - The final dividend will be paid in HKD to Hong Kong shareholders and in SGD to Singapore shareholders based on the official exchange rate on May 14, 2025[131]. - As of December 31, 2024, the chairman holds 861 million shares, representing 68.04% of the issued share capital[150]. - The company has no treasury shares as of December 31, 2024[177].

Core Viewpoint - Helen's performance in 2024 is disappointing, with a significant revenue decline of nearly 40% year-on-year, marking the third consecutive year of revenue drop, and the company has shifted from profit to loss [1][2] Revenue and Profit Analysis - The company reported a revenue of 752 million yuan in 2024, down 37.8% from 1.209 billion yuan in 2023, with a loss of approximately 78 million yuan compared to a profit of 180 million yuan in the previous year [2][3] - Adjusted net profit decreased by 65.29% to 101 million yuan [2] Store Closure and Transformation Strategy - Since 2023, the company has closed over 500 direct-operated stores while launching a franchise model, opening over 400 "Hi Beer Partner" franchise stores [1][2] - As of March 19, 2025, the number of direct-operated stores decreased from 255 to 113, while franchise stores increased to 424 [2][3] Sales Performance - Franchise business revenue grew by 85.7% to 195 million yuan in 2024, but average daily sales per store declined significantly [3] - Average daily sales for direct-operated and franchise stores fell from 7,300 yuan in 2023 to 7,000 yuan in 2024, and for "Hi Beer Partner" stores, it dropped from 7,100 yuan to 5,000 yuan, a nearly 30% decline [3] Same-Store Sales Decline - Same-store sales decreased by 21.3% from 670 million yuan in 2023 to 528 million yuan in 2024, with average daily sales per store dropping from approximately 1.2 million yuan to 950,000 yuan [4] - The company attributes this decline to the complex and changing domestic economic market [4] Market Position and Consumer Trends - Helen's low-price strategy has not translated into improved same-store sales, raising questions about the sustainability of its business model [7][8] - The company faces increasing competition from alternative social venues, which may affect its appeal as a low-cost social space [8] Operational Challenges - The shift to a franchise model has reduced operational costs but has not proven to be a sustainable solution for profitability [7] - The company is exploring various measures to enhance store performance, including optimizing operations and improving customer experience [4][6]

Core Viewpoint - Helen's, known as the "first stock of small taverns," has disappointed the market with significant revenue and profit declines, indicating a failure in its strategic transformation to target lower-tier markets [1][2][4] Financial Performance - In 2024, Helen's reported total revenue of 752 million yuan, a year-on-year decrease of 37.8%, and an adjusted net profit of 101 million yuan, down 65.5% from 2023 [1] - The company has accumulated a net loss of 1.729 billion yuan over the reporting periods, approximately 10.87 times the total net profit before its IPO [1] - The stock price has plummeted from a peak of 20.61 HKD per share to a low of 1.21 HKD, with a market value drop of 93.3% since its IPO [1] Strategic Shift - In response to the pandemic, Helen's shifted focus from high-rent first and second-tier cities to lower-tier markets, increasing the proportion of stores in third-tier cities from 30% to 52.6% [2][4] - The number of stores in first and second-tier cities decreased by 43, while the number of stores in third-tier cities increased by 48.8% [2] Market Challenges - Despite the increase in lower-tier stores, the average daily sales per store in these areas fell by 9.5% to 6,700 yuan, marking a six-year low [4] - The company's standardized tavern model struggles to meet the diverse needs of consumers in lower-tier cities, where local preferences and income levels differ significantly [7] Franchise Model Issues - The shift to a franchise model led to a drastic reduction in company-owned stores, with franchise revenue only accounting for 25.9% of total revenue in 2024 [8] - Franchise stores reported an average daily sales of only 5,000 yuan, a nearly 30% decline compared to previous years [8] - The investment recovery period for franchisees has extended to 3-4 years, making it less attractive compared to competitors [13] Cost Reduction Efforts - Helen's has repeatedly lowered the investment threshold for franchisees, including reducing initial investment costs and eliminating profit-sharing arrangements [10][11] - New store models have been introduced to attract franchisees, but the expected growth in store numbers has not materialized as planned [14]

Core Viewpoint - Helen's, known as "the first stock of Chinese taverns," is facing significant challenges in 2024, including a drastic decline in direct sales, over 20% drop in same-store sales, and a shift from profit to loss [1][2][3] Financial Performance - In 2024, Helen's total revenue plummeted by 37.8% from 12.09 billion yuan in 2023 to 7.52 billion yuan [2] - Direct sales revenue fell approximately 50%, from 11.03 billion yuan in 2023 to 5.58 billion yuan in 2024 [2] - The franchise business, however, saw explosive growth, with revenue increasing by about 85% from 1.05 billion yuan in 2023 to 1.95 billion yuan in 2024, raising its revenue share from 8.7% to 25.9% [2] Profitability - Helen's reported a net loss of 77.976 million yuan in 2024, compared to a profit of 180 million yuan in 2023, marking a significant shift from profit to loss [3] - Adjusted net profit decreased by 65.46%, from 291 million yuan in 2023 to 100.6 million yuan in 2024 [3] Store Operations - As of March 19, 2025, Helen's had a total of 579 stores across 274 cities in China, with a notable reduction in direct and franchise stores [3] - Same-store sales dropped by 21.3% in 2024, with average daily sales per store decreasing by 21.5% [3] Market Challenges - The overall consumption market showed weakness in 2024, with a 1.4% decline in alcohol consumption prices [5] - The shift to lower-tier cities has posed challenges, as these markets generally have lower customer spending and brand recognition [6] Market Valuation - Since its IPO in September 2021, Helen's market value has decreased by over 90%, from a peak of over 30 billion HKD to approximately 2 billion HKD by April 8, 2025 [7] - The company was removed from the Hang Seng Composite Index and the Hong Kong Stock Connect, leading to decreased trading activity and liquidity issues [7] International Expansion - Helen's aims to enhance its international brand presence through a secondary listing in Singapore, but has seen minimal growth in overseas store numbers [8] - Cultural differences and operational challenges may hinder the company's overseas business from becoming a significant growth driver in the short term [8] Strategic Outlook - Balancing expansion with profitability and adapting to new consumer trends are critical challenges for Helen's moving forward [9] - 2025 is seen as a pivotal year for assessing the effectiveness of Helen's strategic transformation [9]

Core Viewpoint - The article highlights the contrasting performance of two beverage companies targeting young consumers in the Hong Kong stock market: Mixue Ice City and Helen's. While Mixue Ice City has shown significant growth post-IPO, Helen's has faced substantial declines in revenue and profitability, raising concerns about its business model sustainability in a competitive market. Group 1: Financial Performance - Mixue Ice City achieved a revenue growth of 22.29% in 2024, reaching 24.83 billion yuan, with a net profit increase of 41.41% to 4.44 billion yuan [1] - Helen's reported a revenue of 0.752 billion yuan in 2024, a significant decline of 37.8%, with alcohol beverage revenue dropping over 54% [3][5] - Helen's net profit for 2024 was a loss of 0.078 billion yuan, marking a stark contrast to its previous profitable years [3] Group 2: Market Position and Strategy - Helen's has expanded its store count to 579 by adding 81 new stores in 2024, with a significant portion located in lower-tier cities [5] - The company has shifted from a direct ownership model to a partnership model, indicating challenges in maintaining its previous direct control strategy due to rising costs [5] - The average daily sales per store have declined, with direct and franchise stores averaging 7,000 yuan, down 300 yuan year-on-year [5] Group 3: Competitive Landscape - The small bar segment, where Helen's operates, has become increasingly competitive, with traditional breweries and new market entrants diluting its customer base [7] - Helen's price advantage is being eroded by competition from convenience store cocktails and craft beer bars, leading to a loss of its unique selling proposition [7] - The company's market capitalization has plummeted over 90% from its peak, reflecting investor concerns about its future viability [1][8] Group 4: Investor Sentiment - Helen's stock price has seen a drastic decline from its initial listing value of 31.88 yuan to just 1.50 yuan, indicating a loss of investor confidence [8] - The removal of Helen's from the Hong Kong Stock Connect list in March 2024 further underscores the waning trust in its business model [10]

Core Viewpoint - Helen's performance in 2024 showed a decline in revenue due to a weak consumer market, but the company successfully expanded its franchise business and maintained profitability through strategic adjustments [2][3]. Financial Performance - The company reported revenue of RMB 752 million in 2024, a decrease from RMB 1,209 million in 2023, primarily due to a decline in direct sales revenue as a result of market conditions [2]. - Despite the revenue drop, adjusted net profit for 2024 was RMB 100.6 million, indicating effective cost management and operational efficiency [3]. Business Strategy - Helen's franchise business, "Hi Beer Partner," saw significant growth, with revenue increasing by 85.7% from RMB 105 million in 2023 to RMB 195 million in 2024 [3]. - The company is focusing on platform-based development and expanding its bar network, increasing the total number of stores from 479 at the end of 2023 to 560 by the end of 2024 [3]. Profitability Metrics - The gross profit margin for the store level remained stable at 69%, with the proprietary beverage gross profit margin increasing from 75.7% in 2023 to 76.6% in 2024 [3]. - The proportion of high-margin beverage alcohol in proprietary beverage revenue rose from 79.8% in 2023 to 82.4% in 2024, reflecting consumer preference for new product offerings [3]. Future Outlook - The company plans to continue expanding its bar network through the "Hi Beer Partner" program and enhance supply chain management and environmental design capabilities [3].