GREEN TEA GROUP(6831.HK)：1H25E PROFIT COMES AS SURPRISE WITH POSITIVE 2H25E OUTLOOK

Core Viewpoint - Green Tea has released a positive profit alert, forecasting a net profit growth of 32%-36% year-on-year in 1H25E, which is better than expected [1][2]. Financial Performance - The management anticipates a net profit of approximately RMB 230 million to RMB 237 million in 1H25E, reflecting a 32%-36% year-on-year growth. Adjusted net profit is expected to be around RMB 247 million to RMB 254 million, indicating a 38%-42% year-on-year growth after accounting for listing fees of RMB 15 million to RMB 20 million [2]. - Sales are projected to grow by 21%-25% year-on-year, reaching RMB 2.25 billion to RMB 2.33 billion in 1H25E [2]. - The net profit margin is expected to improve to about 10.2% in 1H25E, up from 9.4% in 1H24, which is significantly better than the forecasted 9.5% for FY25E [3]. Growth Drivers - Key growth drivers include accelerated sales growth, rapid store expansion with an estimated 25% increase in store count, and improved store-level profitability and operational efficiency [2]. - The same-store sales growth (SSSG) is resilient, with management indicating a low single-digit decline in 1H25E, consisting of a high single-digit drop in 1Q25E and a mid-single-digit increase in 2Q25E [3]. Market Outlook - The outlook for 2H25E remains positive, with store openings on track and strong SSSG expected to continue due to a low base effect [3]. - The company's strategies of opening smaller, more efficient stores and ramping up its delivery business are still effective [3]. Valuation - The recommendation is to maintain a BUY rating and raise the target price to HK$ 10.54, based on a 13x FY25E adjusted P/E, which reflects a 29% discount to the median of Greater China peers [4]. - The current valuation is considered attractive, trading at 10x FY25E adjusted P/E with an effective forward 12-month yield of approximately 9.6% [4].