Summary of Jiamaojiu Group Conference Call Company Overview - Jiamaojiu Group has closed 132 underperforming direct-operated stores, currently operating a total of 510 stores, including 22 franchise stores and 33 located in Hong Kong, Macau, and overseas, aiming to optimize store structure [2][3] Key Points and Arguments New Store Model Implementation - The company has launched the 5.0 Fresh Model for its Tai Er brand, focusing on family dining options and upgraded environments and services, with over 160 new model stores opened [2][3] - New model stores have seen a 10% year-on-year increase in revenue and over 15% growth in dine-in revenue [2][5] - The average customer spending has increased by 2-3 RMB due to menu adjustments and improved service, attracting more customers [2][6] Cost Management and Profitability - Despite an increase in workforce by 3-4 employees per new model store, the company has effectively controlled labor costs through training and supply chain optimization [7][9] - The company aims for a gross margin of 64%, with labor costs at 20%-21% and rent below 10%, targeting an operating profit margin of over 18% by 2027 [9][10] - The company is optimistic about future profit recovery, expecting to achieve a stable state for new model stores by 2027 [9][10] Sales Performance and Market Outlook - Same-store sales turned positive starting from the last week of November 2025, with expectations for December to show significant recovery [12] - The new model stores have outperformed traditional stores, particularly in first-tier cities like Beijing and Shanghai, with a 15% increase in dine-in sales compared to a 10% decline in traditional models [15] Future Expansion Plans - The company plans to complete the renovation of over 200 stores by mid-2026, with no specific annual opening targets but focusing on locations with a two-year payback period [13][25] - The company is exploring new brand opportunities, including a new barbecue brand "Zhao Zhao Na Bian," with plans to open its first store in Guangzhou [21] Financial Performance Expectations - The company anticipates a more favorable financial report for 2026, with all unprofitable stores closed by the end of 2025 and a significant reduction in impairment losses [23][24] - The dividend payout ratio is expected to remain at a minimum of 40%, with adjustments based on actual performance [27] Additional Important Insights - The company is focusing on using fresh ingredients sourced directly from suppliers to balance procurement costs and enhance product quality [10] - The transition to a fresh model has not negatively impacted store efficiency; instead, it has improved overall store performance [17] - The company has established central kitchens in Guangzhou, Shanghai, and Chongqing, with further expansions planned [19] This summary encapsulates the key insights from Jiamaojiu Group's conference call, highlighting their strategic adjustments, financial expectations, and market outlook.

Core Insights - The public relations crisis surrounding Xibei has subsided, but consumer backlash against pre-prepared dishes continues, creating a divide in the restaurant industry [1][2] - Restaurants like Laoxiangji and Dami Xiansheng are favored by workers despite using pre-prepared ingredients, while others face scrutiny for charging fresh dish prices for pre-prepared meals [2][3] Group 1: Industry Dynamics - The restaurant industry is experiencing a split, with some brands thriving while others, particularly those similar to Xibei, are under fire for their pricing strategies [2][4] - The "middle ground" restaurants, characterized by moderate pricing and a specific number of outlets, are facing challenges in maintaining customer loyalty and operational efficiency [4][17] Group 2: Business Models - The "middle ground" restaurants typically have a customer price range around 100 yuan and about 500 outlets, with examples including Xibei, Xiaocaiyuan, and Tai Er Suancaiyu [4][24] - The operational model of low-priced fast food relies on standardization and franchise expansion, while high-end dining focuses on high prices and direct management [5][7] Group 3: Market Challenges - The "middle ground" restaurants are encountering a ceiling in growth, struggling with stagnant customer prices and declining turnover rates [17][21] - The expansion strategy that worked in urban areas is facing competition from local brands in lower-tier cities, which offer high-quality, cost-effective options [23][24] Group 4: Consumer Perception - Consumer sentiment towards mid-range dining is shifting, with a growing expectation for value, leading to backlash against perceived overpriced pre-prepared dishes [30][31] - The cultural emphasis on fresh ingredients in China complicates the acceptance of pre-prepared meals, particularly at higher price points [31][32]

Core Viewpoint - The public relations crisis surrounding Xibei has subsided, but consumer backlash against pre-made dishes continues, highlighting a divide in the restaurant industry between different types of dining establishments [1] Group 1: Industry Dynamics - The restaurant industry is experiencing a split, with brands like Laoxiangji and Dami Xiansheng being favored by workers despite their use of pre-made dishes, while others similar to Xibei are facing public scrutiny [1] - The "middle ground" in the restaurant sector is characterized by brands with moderate pricing and a specific number of outlets, typically around 500, such as Xibei (470+ stores, average spending of 98 yuan) and Xiaocaiyuan (700+ stores, average spending of 60 yuan) [3][4] - High-end dining establishments like Xinrongji, which focus on quality and exclusivity, contrast sharply with budget-friendly fast food chains like Laoxiangji, which prioritize standardization and rapid expansion [4][7] Group 2: Business Models - The operational model of budget restaurants relies on "standardized pre-made dishes and franchise expansion," allowing for rapid growth while minimizing cooking processes at the store level [5] - In contrast, high-end restaurants like Xinrongji operate on a "high average spending and non-standardized direct management" model, focusing on quality control and customer experience [7][9] - The "middle ground" restaurants attempt to balance the benefits of both models, leveraging standardized expansion while also enjoying higher profit margins associated with direct management [11] Group 3: Market Challenges - The restaurant industry has faced challenges in maintaining customer turnover rates, with many brands in the "middle ground" experiencing a disconnect between store expansion and operational efficiency [23] - The expansion strategy of these mid-tier restaurants, which often mirrors that of Haidilao, has encountered limitations in lower-tier cities where local brands dominate [25] - Despite attempts to increase average spending, many restaurants have seen a decline in customer spending, with brands like Tai Er experiencing a drop from 79 yuan to 70 yuan over four years [29][32]

Market Overview - The market sentiment improved significantly due to favorable news from the Central Economic Work Conference, with the Hang Seng Index rising by 1.75% and returning to 26,000 points [1] - Major technology stocks collectively increased, with NetEase rising over 4%, Tencent and Alibaba up over 2%, and other tech companies like Xiaomi, Baidu, JD.com, and Kuaishou also seeing gains [1][3] Sector Performance - **Electric Power Equipment**: Strong performance with Dongfang Electric up over 13% and other companies like Harbin Electric and Shanghai Electric also showing significant gains [1][5] - **Financial Sector**: All major financial stocks, including China Pacific Insurance and CITIC Securities, saw increases, with HSBC reaching a market value of over HKD 2 trillion [1][8] - **Precious Metals**: Gold and silver prices surged, leading to active trading in gold stocks, with China Silver Group rising nearly 6% [1][6] - **Consumer Sector**: Restaurant stocks were active, with companies like Da Shi and Haidilao seeing notable increases, driven by policies aimed at boosting consumption [10] - **Real Estate**: Property stocks rose, with Longguang Group increasing over 4%, supported by policies to stabilize the real estate market [12] Individual Stock Highlights - **NetEase**: Stock price increased by 4.20% to HKD 218.40 [4] - **Dongfang Electric**: Stock price surged by 13.59% to HKD 24.90 [5] - **China Pacific Insurance**: Stock price rose by 5.68% to HKD 34.60 [9] - **China Silver Group**: Stock price increased by 5.80% to HKD 0.730 [7] - **Xuan Bamboo Bio**: Stock price increased by 25.19% to HKD 96.90, reaching a new high [16][19] Economic Policy Impact - The Central Economic Work Conference emphasized the importance of domestic demand and consumer spending, with plans to implement measures to boost consumption and stabilize the real estate market [10][12]

Group 1 - The restaurant stocks are performing well, with notable increases: Jiumaojiu (09922) up 4.82%, Haidilao (06862) up 4.14%, Yum China (09987) up 2.63%, Xiaobai (00520) up 2.50%, Xiaocaiyuan (00999) up 2.54%, and Nayuki (02150) up 1.92% [1][2] - The National Bureau of Statistics reported that the Consumer Price Index (CPI) rose by 0.7% year-on-year in November, marking the highest increase since March 2024, with a 0.5 percentage point increase from the previous month [1][2] - The rise in CPI is primarily driven by a turnaround in food prices, with household appliances and clothing prices increasing by 4.9% and 2.0%, respectively, while prices for air tickets, domestic services, and dining out rose by 7.0%, 2.4%, and 1.2% [1][2] Group 2 - Wanlian Securities forecasts that the share of domestic service consumption in total household consumption has recovered to 46%, nearing the critical structural threshold of 50%, indicating a potential rapid growth phase for the industry [1][2] - Service consumption is expected to become a key driver for domestic demand and consumption recovery, offering higher growth elasticity and user stickiness compared to goods consumption due to its personalized interaction and unique experiences [1][2] - The report suggests focusing on chain restaurants and tea beverage companies, highlighting that those with brand advantages and supply chain strengths will have greater development potential, particularly those with scale effects and performance elasticity [1][2]

Core Viewpoint - The Hong Kong restaurant sector showed active performance with significant gains in various stocks following the Central Economic Work Conference, which emphasized domestic demand and consumer spending recovery [1][2]. Group 1: Market Performance - Shanghai Xiaonan Guo increased by over 7% [2] - Jiumaojiu rose nearly 5% [2] - Other notable gains included Yum China, Nayuki Tea, and Haidilao, each rising close to 3% [1][2] - Xiabuxiabu saw a 2.5% increase, while Xiaocaiyuan and Hite International also experienced upward movement [1] Group 2: Policy Implications - The Central Economic Work Conference, held on December 10-11, outlined key policies aimed at boosting domestic consumption and addressing income growth for urban and rural residents [1] - The meeting's positive signals are expected to facilitate the ongoing recovery of restaurant consumption, benefiting the sector as the overall consumer environment shows signs of gradual improvement [1] - Analysts from Galaxy Securities highlighted the importance of focusing on the medium to long-term consumption goals outlined in the 14th Five-Year Plan, with a short-term focus on specific policies related to consumption expected to be implemented by 2026 [1]

Core Viewpoint - The Hong Kong restaurant sector is experiencing active performance, with notable gains in stocks such as Shanghai Xiaonan Guo, Jiumaojiu, and others, driven by positive signals from the Central Economic Work Conference regarding consumer spending recovery [1] Group 1: Market Performance - Shanghai Xiaonan Guo increased by over 7% - Jiumaojiu rose nearly 5% - Other companies like Yum China, Nayuki, and Haidilao saw gains of nearly 3%, while Xiabuxiabu increased by 2.5% [1] Group 2: Policy Impact - The Central Economic Work Conference held on December 10-11 emphasized the importance of domestic demand and building a strong domestic market - Key policies include implementing actions to boost consumption, formulating plans to increase income for urban and rural residents, and removing unreasonable restrictions in the consumption sector [1] Group 3: Industry Outlook - Analysts suggest that the positive signals from the conference pave the way for the continued recovery of restaurant consumption - The overall sector is expected to benefit from a mild recovery in the consumer environment, indicating potential for valuation recovery [1] - Galaxy Securities highlights the need to focus on the medium to long-term goals of consumption outlined in the 14th Five-Year Plan, with short-term attention on specific policies related to consumption expected to be implemented by 2026 [1]

Core Viewpoint - The consumer concept stocks have generally risen, reflecting positive market sentiment following the Central Economic Work Conference held in Beijing, which emphasized the importance of domestic demand and consumption [1] Group 1: Stock Performance - Jiumaojiu (09922) increased by 5.42%, trading at HKD 1.75 [1] - Haidilao (06862) rose by 4.42%, trading at HKD 14.64 [1] - Chabaidao (02555) saw a 6.06% increase, trading at HKD 7.18 [1] - Mengniu Dairy (02319) gained 2.53%, trading at HKD 14.6 [1] - Li Ning (02331) went up by 1.8%, trading at HKD 17.56 [1] Group 2: Policy Insights - The Central Economic Work Conference, held on December 10-11, outlined a focus on domestic demand and the construction of a robust domestic market [1] - Key policies include the implementation of special actions to boost consumption and the development of plans to increase income for urban and rural residents [1] - The conference also emphasized the need to eliminate unreasonable restrictions in the consumption sector to unlock service consumption potential [1] Group 3: Investment Strategies - Galaxy Securities highlights the importance of the medium to long-term goals for consumption outlined in the 14th Five-Year Plan, with a short-term focus on specific policies related to consumption expected to be implemented by 2026 [1] - CMB International suggests three investment directions based on consumption types: 1) Survival consumption, emphasizing frugality, low prices, and high cost-performance [1] 2) Compensatory consumption, focusing on small pleasures and affordable entertainment [1] 3) Defensive consumption, which has risk-averse attributes [1]

Group 1 - The majority of Hong Kong consumer concept stocks are rising, indicating positive market sentiment [1] - Jiumaojiu (09922.HK) increased by 5.42%, reaching HKD 1.75 [1] - Haidilao (06862.HK) rose by 4.42%, trading at HKD 14.64 [1] - Chabaidao (02555.HK) saw a 6.06% increase, priced at HKD 7.18 [1] - Mengniu Dairy (02319.HK) gained 2.53%, with a share price of HKD 14.6 [1] - Li Ning (02331.HK) experienced a 1.8% rise, now at HKD 17.56 [1]

Core Viewpoint - The consumer sector is experiencing a positive trend, driven by government policies aimed at boosting domestic consumption and addressing income growth for urban and rural residents [1] Group 1: Market Performance - Consumer concept stocks are mostly rising, with notable increases: Jiumaojiu (09922) up 5.42% to HKD 1.75, Haidilao (06862) up 4.42% to HKD 14.64, Chabaidao (02555) up 6.06% to HKD 7.18, Mengniu Dairy (02319) up 2.53% to HKD 14.6, and Li Ning (02331) up 1.8% to HKD 17.56 [1] Group 2: Government Policies - The Central Economic Work Conference held on December 10-11 in Beijing emphasized the importance of domestic demand and the construction of a strong domestic market [1] - Key policies include the implementation of special actions to boost consumption, the formulation of income growth plans for urban and rural residents, the removal of unreasonable restrictions in the consumption sector, and the promotion of high-quality urban renewal [1] Group 3: Investment Insights - Galaxy Securities highlights the need to focus on the medium to long-term goals of consumption outlined in the 14th Five-Year Plan, with short-term attention on specific policies related to consumption expected to be implemented by 2026 [1] - CMB International suggests three investment directions based on consumption types: 1) survival consumption emphasizing frugality, low prices, and high cost-performance, 2) compensatory consumption focusing on small pleasures and affordable entertainment, and 3) defensive consumption with risk-averse attributes [1]