Core Insights - Company achieved revenue of 5.7 billion yuan in 1H25, a year-on-year increase of 41%, and adjusted core profit of 1.1 billion yuan, up 49% year-on-year, exceeding expectations due to store count and single-store revenue performance [1] - The target price has been raised from 21.2 HKD to 28 HKD, indicating a potential upside of 24%, while maintaining a buy rating [1] Store Expansion - The company added 1,265 new stores in the first half of the year, bringing the total store count to 11,179, a year-on-year increase of 18% [1] - The proportion of stores in tier two and below cities increased by 2 percentage points to 81%, with town stores accounting for 43%, up 4 percentage points year-on-year [1] - Over 3,000 stores have been opened or are under contract but not yet opened [1] Single-Store Performance - Average daily GMV per store increased by 21% to 7,600 yuan, with same-store revenue growth slightly faster, particularly in dine-in, which grew over 10% [1] - Same-store revenue growth exceeded 20% in July and August, benefiting from substantial takeaway subsidies [1] Coffee Business Development - Over 8,000 stores have been equipped with coffee machines as of 1H25, with 16 new coffee beverages launched [2] - The company began promoting coffee in late June, achieving stable daily sales of approximately 60-80 cups per store, attracting new customer segments [2] Investment Outlook - The company is viewed positively due to its regional encryption strategy, supply chain efficiency, product innovation capabilities, and store opening potential [2]

Investment Rating - The report maintains a "Buy" rating for the company [2][5][12] Core Insights - The company reported a revenue of RMB 5.7 billion for 1H25, representing a year-on-year growth of 41%, and an adjusted core profit of RMB 1.1 billion, up 49% year-on-year, with an improved adjusted core profit margin of 20.1% [5][8] - The target price has been raised from HK$ 21.2 to HK$ 28, indicating a potential upside of 24% [5][8] - The company has seen significant growth in store numbers and same-store sales, with a net addition of 1,265 stores in 1H25, bringing the total to 11,179, and a same-store sales growth exceeding 20% in July and August [7][9][10] Financial Data and Earnings Forecast - Revenue projections for the next few years are as follows: - 2023: RMB 7,676 million - 2024: RMB 8,791 million - 2025E: RMB 12,152 million - 2026E: RMB 13,527 million - 2027E: RMB 15,725 million - Adjusted core profit forecasts are: - 2023: RMB 1,459 million - 2024: RMB 1,542 million - 2025E: RMB 2,232 million - 2026E: RMB 2,450 million - 2027E: RMB 2,854 million - Earnings per share (EPS) estimates have been adjusted upward for the coming years [6][15] Store Expansion and Performance - The company has focused on expanding its presence in lower-tier cities, with 81% of stores located in tier-2 and below cities, and 43% in townships [7][9] - The average daily GMV per store increased by 21% year-on-year to approximately RMB 7,600 [10] - The coffee business has also progressed, with over 8,000 stores equipped with coffee machines and new coffee products launched [11] Conclusion - The report expresses confidence in the company's supply chain efficiency, product innovation capabilities, and strong potential for store openings, maintaining a positive outlook on its growth trajectory [12]

Core Insights - The company, Gu Ming, achieved strong growth in core profitability due to rapid expansion in lower-tier markets and improved store operational efficiency [1][2][4] Financial Performance - Revenue for the six months ending June 30, 2025, reached RMB 5.66 billion, a year-on-year increase of 41.2% [4] - Gross profit was RMB 1.79 billion, up 41.0% compared to the previous year [4] - Net profit was RMB 1.63 billion, a significant increase of 119.8%, primarily due to a one-time gain of RMB 557 million from the fair value change of financial liabilities [2][4] - Adjusted profit, excluding one-time gains and listing expenses, was RMB 1.09 billion, reflecting a 42.4% year-on-year growth [2][4] - Adjusted profit margin slightly increased from 19.0% to 19.2% [2] Store Expansion and Efficiency - The total number of stores reached 11,179, a 17.5% increase from 9,516 stores in the same period last year [3][4] - The company opened 1,570 new stores in the first half of the year, more than double the 765 stores opened in the same period last year [3] - The strategy of "regional densification" has been effective, with stores in second-tier and lower cities increasing from 79% to 81% of total stores [3] - Total GMV for the first half of the year was RMB 14.09 billion, with average daily GMV per store rising from RMB 6,200 to RMB 7,600 [3] Supply Chain and Product Innovation - The company operates 22 warehouses with a total area of approximately 230,000 square meters and has a self-owned fleet of 362 vehicles [6] - Cold chain logistics infrastructure allows for two-day delivery to about 98% of stores, with delivery costs accounting for less than 1% of total GMV [6] - The company launched 52 new products in the first half of the year and expanded its coffee offerings, equipping over 8,000 stores with coffee machines [6] - As of June 30, 2025, the number of registered members on the company's mini-program reached approximately 178 million, with about 50 million active members quarterly [6]

Core Viewpoint - The new tea beverage industry is experiencing significant activity with multiple leading companies going public, particularly highlighting the impressive performance of Gu Ming, which has seen its stock price surge since its listing [1][2]. Company Overview - Gu Ming is a rapidly growing Chinese beverage company, holding a 17.7% market share as the largest mass-market fresh tea beverage brand in China by GMV in 2023 [2]. - The company operates a light-asset franchise model, with approximately 99.9% of its GMV coming from franchise stores, managing only 7 directly operated stores [2][6]. - As of the end of 2024, Gu Ming has opened 9,914 stores across 17 provinces, primarily in East and South China, and has not yet expanded internationally [2]. Business Strategy - Gu Ming employs a "regional encryption" strategy, expanding into neighboring provinces only after surpassing 500 stores in a single province, with eight provinces contributing 83% of GMV [2]. - The company focuses on lower-tier cities, with 51% of its stores located in tier-three cities and below, and 41% of its stores in rural areas, the highest among the top five mass-market fresh tea brands in China [3][6]. Financial Performance - Gu Ming's revenue has shown steady growth, with figures of 4.38 billion, 5.56 billion, 7.68 billion, and 8.79 billion yuan from 2021 to 2024, although the growth rate has slowed [6]. - The company's gross margin was 30.6% in 2024, down 0.7 percentage points year-on-year, attributed to increased support for franchisee profitability [7]. - Adjusted net profit for 2024 grew by 5.7% to 1.542 billion yuan, supported by the franchise model, improved supply chain efficiency, and effective cost control [8]. Competitive Landscape - The new tea beverage industry is facing intense competition, with market growth rates expected to decline from 44.3% in 2023 to 12.4% by 2025, and over 20,000 store closures anticipated in 2024 [9]. - Gu Ming acknowledges fierce competition in product development, quality, pricing, and customer experience, with challenges in differentiating products amid a homogenized market [9][10]. Future Outlook - Gu Ming plans to enhance its marketing efforts and increase capital investment in response to intensified competition, with a sales expense ratio rising to 5.5% in 2024 [10]. - The company aims to focus on dine-in services and introduce student discount cards to boost customer retention, while also expanding its product offerings to include coffee and baked goods [10]. - Maintaining long-term competitive advantages and addressing product differentiation will be critical challenges for Gu Ming moving forward [11].