Core Viewpoint - The report from Founder Securities highlights that "Encounter Small Noodles" (02408) is a leading brand in the Sichuan-Chongqing style noodle restaurant sector, focusing on cost-effectiveness and has significant room for expansion both domestically and internationally [1] Group 1: Company Overview - Encounter Small Noodles is a Chinese restaurant chain primarily featuring Chongqing noodle dishes, with a product range that includes spicy and non-spicy options, covering noodles, rice, snacks, and beverages [1] - The company opened its first store in Guangzhou in 2014 and has since expanded to over 100 stores by 2021, utilizing a combination of direct operation and franchising for rapid growth [1] - The number of stores is projected to grow from 133 in 2021 to 360 by 2024, with plans to open its first restaurant in Hong Kong in 2024, totaling 410 restaurants in 22 cities in mainland China and 7 in Hong Kong by June 30, 2025 [1] Group 2: Market Potential - The Chinese noodle restaurant market is expected to reach a total transaction value of 510 billion yuan by 2029, with a compound annual growth rate (CAGR) of 10.9% from 2025 to 2029 [2] - The market is characterized by high fragmentation, with the top five companies accounting for only 2.9% of the total transaction value by 2024, indicating significant growth opportunities for Encounter Small Noodles [2] Group 3: Product and Operational Efficiency - The company offers a diverse menu with 30 to 40 SKUs per restaurant, with main dish prices ranging from 12 to 34 yuan as of June 30, 2025 [3] - The majority of the stores are located in the southeastern region of China, particularly in Guangdong, which accounts for over 60% of the total [3] - The company operates primarily through a direct operation model, which constitutes about 80% of its business, and has a high level of standardization and replicability in its operations, achieving a break-even point in approximately 2 months and an investment payback period of around 14.9 months for its direct restaurants [3] Group 4: Fundraising and Expansion Plans - According to the company's prospectus, the funds raised will be used for store expansion, digital upgrades, brand building, and strategic investments in the upstream supply chain [4] - The company plans to open approximately 520 to 610 new restaurants from 2026 to 2028, with annual targets of 150 to 180, 170 to 200, and 200 to 230 new direct and franchised restaurants [4]