Core Viewpoint - The company has introduced a new franchise policy to encourage existing franchisees to open more stores, with incentives such as fee waivers for new signings and renovations, aiming to expand its market presence by 2026 [1][3]. Group 1: Investment Highlights - The company is focused on rapid product innovation and high cost-performance ratio, with plans to expand its product categories, particularly in coffee and breakfast items, by 2026 [1]. - As of September 30, 2024, the research and development team consists of approximately 120 members, enhancing the company's ability to quickly launch new products and respond to market trends [1]. - The company plans to introduce 52 new products in the first half of 2025, with a strong emphasis on coffee offerings, including 16 new coffee drinks and baked goods in select stores [1]. Group 2: Supply Chain Efficiency - The company has established a robust supply chain, sourcing fruits directly and operating its own factories to ensure quality control [2]. - As of mid-2025, the company operates 22 self-owned warehouses and 362 transportation vehicles, with 75% of stores located within 150 kilometers of a warehouse, ensuring efficient logistics and low delivery costs [2]. Group 3: Market Expansion Strategy - The company is implementing a regional clustering strategy, which enhances brand visibility and management efficiency by concentrating stores in specific areas [3]. - By November 2025, the company is projected to have 13,117 stores, a 34% year-on-year increase, with significant presence in key provinces [3]. - There remains substantial market expansion potential, as the company has not yet entered 11 provinces in mainland China, indicating future growth opportunities [3]. Group 4: Financial Projections - Revenue forecasts for 2025 to 2027 are estimated at 134 billion, 163 billion, and 198 billion RMB, with net profits projected at 27.5 billion, 28.4 billion, and 35.4 billion RMB, reflecting year-on-year growth rates of 86%, 3%, and 24% respectively [3]. - The company is rated with a price-to-earnings ratio of 22, 21, and 17 for the respective years, indicating strong financial performance in the beverage industry [3].

Core Viewpoint - Gu Ming (01364) has been given a "buy" rating by Guohai Securities, which highlights the company's strategy to encourage existing franchisees to open more stores, thereby enhancing brand influence and operational efficiency [1] Recent Events - Gu Ming has recently launched a new franchise policy that incentivizes existing franchisees with 1-2 stores to open additional locations by waiving a franchise fee of 25,000 yuan if they sign new agreements by May 31, 2026 [1] - Franchisees with 3 or more stores can also benefit from a 25,000 yuan reduction in renovation costs if they complete relocations or expansions by the same date [1] Product Development and Innovation - The company has a rapid product development cycle and high cost-performance ratio, with a platform-based approach to product development [2] - As of September 30, 2024, the R&D team will consist of approximately 120 members, focusing on quick product launches and capturing market trends [2] - In the first half of 2025, Gu Ming plans to introduce 52 new products, including 16 new coffee beverages, and is also venturing into baked goods [2] Supply Chain Efficiency - Gu Ming has established a robust supply chain, directly sourcing fruits and operating its own factories to ensure quality [3] - By the end of the first half of 2025, the company will have 22 self-operated warehouses and 362 transportation vehicles, with 75% of stores located within 150 kilometers of a warehouse [3] - The logistics strategy allows for efficient cold chain delivery, with distribution costs accounting for less than 1% of the total GMV [3] Regional Strategy and Market Potential - The company's regional encryption strategy is proving effective, encouraging existing franchisees to open more stores, which enhances local visibility and management efficiency [4] - As of 2025, Gu Ming is projected to be the second-largest tea beverage brand in terms of store count in China, with a total of 13,117 stores, reflecting a year-on-year growth of 34% [4] - The company has significant expansion potential, with 11 provinces in mainland China yet to be penetrated, indicating ample market opportunities for future growth [4]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [2][11]. Core Insights - The company, 古茗 (Gu Ming), is positioned in the tea beverage sector with significant growth potential, driven by rapid product innovation and a strong supply chain [3][7]. - The company has implemented a new franchise policy to encourage existing franchisees to open more stores, which is expected to enhance local brand visibility and operational efficiency [6][8]. - The company has a robust research and development team, with approximately 120 members, focusing on product development and supply chain optimization [7]. Financial Performance and Projections - The company is projected to achieve revenues of RMB 134 billion, RMB 163 billion, and RMB 198 billion for the years 2025, 2026, and 2027 respectively, with a net profit of RMB 27.5 billion, RMB 28.4 billion, and RMB 35.4 billion [9][10]. - The expected growth rates for revenue are 101% in 2025, 76% in 2026, and 71% in 2027, while net profit growth is anticipated at 86% in 2025, 3% in 2026, and 24% in 2027 [10][11]. - The company’s price-to-earnings (P/E) ratio is projected to decrease from 22 in 2025 to 17 in 2027, indicating potential value appreciation [10][11]. Market Position and Strategy - As of November 2025, the company has 13,117 stores, representing a year-on-year increase of 34%, with significant presence in key provinces [9]. - The company’s strategy of regional clustering for store openings is expected to enhance consumer reach and operational management [8][9]. - The company has established a strong supply chain with direct sourcing and self-operated logistics, ensuring product quality and cost control [7].