Summary of the Conference Call on the Tea Beverage Industry and Companies Industry Overview - The tea beverage industry is experiencing growth, with significant developments expected in 2026, particularly in Southeast Asia, South America, and Japan/Korea markets, which are identified as key growth areas due to their market potential and increasing brand presence [25][21]. Company Insights Gu Ming - **2025 Performance**: Gu Ming's GMV (Gross Merchandise Volume) grew approximately 18% year-on-year, with December's takeaway orders dropping to 37% due to subsidy reductions and seasonal factors. The actual revenue rate for takeout was around 75%, down from nearly 70% during peak subsidy periods [1][3][5]. - **2026 Projections**: Gu Ming anticipates a total revenue (GMV) of 35 billion yuan in 2026, with company revenue expected to exceed 40% of GMV. Growth will primarily come from the addition of over 3,000 new stores, with daily average revenue per store projected to remain stable at around 7,500 to 8,000 yuan [1][7]. - **Sales Strategy**: The company plans to increase coffee product sales to 25% of total sales, promote breakfast and afternoon tea offerings, and introduce new products. The expected ROI for paid advertising is projected to be between 1:4 and 1:5 [1][9][10]. - **Store Performance**: In December, Gu Ming's average daily revenue per store was 209,000 yuan, with a stable average transaction value of 25.7 yuan [2]. Mi Xue Bing Cheng - **2025 Performance**: Mi Xue Bing Cheng reported a same-store sales growth of 3-4% in December, with a slight increase in actual revenue of about 1%. Online sales accounted for 36% of total sales, showing a year-on-year increase but a decline compared to the previous month [16][22]. - **2026 Expansion Plans**: The company plans to add 5,000 new stores in 2026, focusing on tourist attractions and transportation hubs, with a total of 8,000 new stores expected. The company aims to maintain its pricing strategy without increasing prices to achieve a 5% same-store growth [18][22]. - **Sales Strategy**: Mi Xue Bing Cheng is also looking to enhance its product offerings and has plans to open flagship stores to strengthen its brand presence in key locations [34]. Lucky Coffee - **2025 Performance**: Lucky Coffee's daily average sales reached approximately 3,300 yuan, with a significant increase in store numbers from 4,500 to 11,000 by the end of 2025. The company has focused on coffee products, which now account for 80% of its offerings, with 90% of sales coming from coffee-related products [26][27]. - **Future Growth**: The company expects a 10% growth in single-store performance for 2026, driven by increased foot traffic and optimized marketing strategies [28]. Key Challenges and Considerations - **Subsidy Reductions**: The reduction in takeout subsidies has led to a decline in revenue rates, which could impact overall sales performance across the industry [3][5]. - **Market Competition**: The potential for price wars due to reduced subsidies may affect consumer behavior and sales dynamics, particularly in the mid-tier beverage market [22]. - **Investment Models**: Different investment models among companies, such as Gu Ming's higher investment costs compared to Lucky Coffee's lower model, may influence their expansion strategies and franchisee recruitment [32]. Conclusion The tea beverage industry is poised for growth, with companies like Gu Ming, Mi Xue Bing Cheng, and Lucky Coffee implementing strategic plans to enhance their market presence and sales performance. However, challenges such as subsidy reductions and competitive pressures will require careful navigation to sustain growth trajectories in the coming years.

Company Dynamics - The company is expected to achieve relatively stable performance growth despite the decline in delivery subsidies, with a focus on testing new product categories such as breakfast items and the development potential of brands like Lucky Coffee and Fulu Family [1] - The company estimates significant year-on-year growth in single-store revenue for Q3, while Q4 may see a decline in same-store sales growth due to reduced delivery subsidies, with brands showing varied performance [1] - The company is optimistic about its ability to counter the impact of subsidy reductions through product innovation, offline marketing, and mini-program traffic, maintaining a stable overall pricing system [1] New Brand Development Potential - Lucky Coffee has strengthened its fruit and coffee product innovation and introduced store opening subsidy policies, with over 10,000 signed stores globally as of November 24, and more than 8,000 actual operating stores, predominantly in third-tier cities [2] - The company has announced the acquisition of a 53% stake in Fulu Family, which focuses on high-cost performance fresh beer, estimating annual sales per store at 500,000 to 600,000 yuan, with plans to introduce a signing subsidy policy in Q1 2026 [2] - The company is steadily expanding overseas, with Lucky Coffee's first overseas store opening in Malaysia on August 21, and plans for franchise expansion in Hong Kong and Macau, alongside the opening of its first store in Los Angeles [2] Profit Forecast and Valuation - The company maintains profit forecasts of 5.93 billion yuan for 2025 and 6.74 billion yuan for 2026, with current stock prices corresponding to P/E ratios of 26x for 2025 and 22x for 2026 [3] - The company maintains an outperform rating and a target price of 555 HKD, corresponding to P/E ratios of 33x for 2025 and 28x for 2026, indicating an upside potential of 28% [3]

Core Viewpoint - The current high demand for ready-to-drink beverages driven by delivery subsidies is leading to industry supply expansion, but concerns are rising about brand same-store performance under high base conditions by 2026 [1] Group 1: Market Overview - The overall supply growth rate is slowing down, with the total number of milk tea stores in China reaching 518,000 as of August 2025, a month-on-month increase of 2,000, and coffee stores totaling 190,000, a month-on-month increase of 4,000 [1] - The marginal reduction in delivery subsidies since July has led to a simultaneous slowdown in the store expansion speed of major brands [1] Group 2: Store Opening Trends - There is significant differentiation in store openings within the tea beverage segment, with leading brands in the mid-to-high-end market, such as Gu Ming and Ba Wang Tea Ji, maintaining a competitive edge, while low-end brand Mi Xue Bing Cheng has slowed its opening pace to protect existing store sales [2] - In the coffee segment, industry penetration is rapidly increasing, with brands like Luckin, Kudi, and Lucky Coffee expanding quickly, while Starbucks maintains a slow growth rate in store numbers [2] Group 3: Store Efficiency - The growth rate of store efficiency for leading brands is under pressure due to the reduction of third-party delivery subsidies, with August store efficiency growth for brands in the mid-price range (10-20 yuan) generally falling within the 10%-20% year-on-year growth range, although there is some internal differentiation [3] - High-end brands have limited participation in subsidy activities, which may affect their store efficiency differently [3]