Core Insights - The demand for food cold chain logistics in China is expected to reach approximately 192 million tons in the first half of the year, reflecting a year-on-year growth of 4.35% [1] - The total logistics value for this sector is projected to be around 4.7 trillion yuan, also showing a year-on-year increase of 4.21% [1] - The global cold chain logistics market is estimated to be about 363.8 billion USD in 2024, with China accounting for over 20% of this market [1] Industry Overview - The development of the cold chain supply chain in China is currently in a favorable trend, with increasing overall competitiveness [1] - The backdrop of global trade and the restructuring of industrial and supply chains presents new opportunities for the cold chain sector in China [1]

Core Viewpoint - Shenyin Wanguo has initiated coverage on Gu Ming (01364) with a "buy" rating, highlighting its valuation potential compared to other players in the market, particularly its cold chain supply chain advantages and expansion opportunities in untapped provinces [1] Group 1: Market Position and Expansion Potential - Gu Ming is the leading brand in China's ready-to-drink tea market by sales and store count, and the second-largest overall in the ready-to-drink tea segment [2] - The company has a significant presence in lower-tier cities, with 80% of its stores located in second-tier cities and below, and 41% in townships, indicating strong market penetration in these areas [2] - There is potential for further expansion, with 14 provinces in China yet to be tapped, which could drive future store openings [1][2] Group 2: Product Innovation and R&D - Gu Ming emphasizes rapid product innovation, launching numerous new products annually, with a high success rate; two to three new products have consistently been among the top ten bestsellers over the past three years [3] - The company has recently introduced fruit and vegetable juice products and is expanding into coffee, with over 5,000 stores already equipped with coffee machines, which is expected to contribute 20% of revenue in the long term [3] Group 3: Supply Chain and Logistics - Gu Ming boasts the largest cold chain supply chain in the ready-to-drink tea industry in China, providing frequent deliveries of fresh ingredients to lower-tier cities, which is a competitive advantage over other brands [4] - In 2023, the total value of cold chain deliveries completed by Gu Ming exceeded 4 billion yuan, leading the industry [4] Group 4: Franchise Model and Profitability - The average profit per store for Gu Ming's franchisees reached 376,000 yuan in 2023, with a profit margin of 20.2%, significantly higher than the market average of below 15% [5] - A strong franchisee retention rate is evident, with 71% of franchisees operating two or more stores, indicating high franchisee satisfaction and profitability [5] Group 5: Financial Projections - Revenue is projected to grow by 17% year-on-year to 10.3 billion yuan in 2025, driven by the opening of 2,000 new franchise stores, bringing the total to 11,914 stores [6] - Adjusted net profit is expected to increase by 23% year-on-year to 1.9 billion yuan, with a net profit margin improvement of 1 percentage point to 19% [6]