Core Insights - The trend of "Palace Cuisine" is expanding beyond major cities like Beijing and Shanghai, reaching lower-tier cities and becoming a popular dining experience [1][2][6] - The concept combines cultural immersion with dining, allowing customers to participate in a theatrical experience while enjoying traditional dishes [4][6] - The success of brands like Beijing Palace Banquet has inspired many similar establishments across the country, indicating a replicable business model [2][6] Market Expansion - Since its inception in 2019, Beijing Palace Banquet has set a precedent for "Palace Cuisine" by integrating cultural elements and immersive experiences into dining [2][4] - The Beijing location has 108 seats priced at 498 yuan per person, featuring a menu of 14 dishes linked to cultural performances, catering to consumer demand for cultural identity [4][6] - The brand has expanded to Shanghai and Hangzhou, with the Shanghai location accommodating 160 diners and utilizing 160 projectors for a full immersive experience [4][6] Consumer Engagement - The discussion around "Palace Cuisine" on social media has reached millions, with a reported 40% repurchase rate, highlighting the competitive edge and market potential of cultural dining [6] - New entrants in the market are adapting the concept to local tastes, with variations in pricing and themes to better connect with regional consumers [9][11] Regional Adaptation - Different regions are developing unique strategies based on local culture and consumer preferences, with some brands offering lower-priced options to attract local clientele [11][13] - For instance, the Palace Banquet in Hangzhou focuses on Song Dynasty cuisine, while other brands like Lanqi Banquet in Qingdao offer a more affordable experience at 298 yuan per person [11][13] Challenges and Consumer Feedback - As the number of "Palace Cuisine" establishments grows, consumer complaints about quality and experience have also increased, indicating a disconnect between pricing and perceived value [16][18] - The immersive experience relies heavily on the quality of food, performance, and service; any shortcomings can lead to negative reviews and reduced customer satisfaction [16][17] - The sustainability of these establishments in lower-tier markets is questioned, as they may struggle to maintain quality and attract repeat customers without strong local engagement [18][21] Conclusion - The expansion of "Palace Cuisine" represents a significant test for cultural dining in various markets, emphasizing the need for a balance between localization and quality [21] - Future success will depend on the ability to meet local demands while maintaining high standards, ensuring that the experience remains valuable to consumers [21]

Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 6.83 CNY per share based on a projected PE of 30x for 2026 [5]. Core Insights - The company is positioned as a representative of the commercialization of Eastern aesthetic brands, focusing on diverse consumer sectors, with a significant emphasis on jewelry and cultural dining [2][15]. - The expansion of the commercial area, particularly the second and third phases of the Yuyuan project, is expected to significantly enhance the company's rental and management income [3][29]. - The company is actively pursuing international expansion of its dining brands, with the first overseas store of Songhe Lou set to open in London, which is anticipated to exceed growth expectations [3][41]. Summary by Sections Company Overview - The company operates primarily in three business segments: consumption industry operations (76.1% of revenue), commercial comprehensive operations and property services (17.2%), and real estate development and sales (6.7%) [2][15]. - Jewelry accounts for 88% of the consumption industry operations revenue, with additional segments including dining, health, and alcohol [2][19]. Investment Logic - The company is undergoing significant changes in its commercial area, with the second and third phases of the Yuyuan project expected to double the area of the first phase, enhancing rental income [3][34]. - The dining business is expanding internationally, with a focus on traditional brands, which is expected to create new growth opportunities [3][41]. Financial Performance - The jewelry segment has faced challenges but is expected to recover due to store adjustments and product innovation, with a revenue of 12.79 billion CNY in the first half of 2025 [4][22]. - The real estate segment is gradually improving as inventory is cleared, with a revenue increase of 4.84% year-on-year in the first half of 2025 [4][22]. Profit Forecast and Valuation - Revenue projections for 2025-2027 are estimated at 467.21 billion CNY, 489.30 billion CNY, and 508.30 billion CNY, respectively, with net profits expected to rise significantly [5][9]. - The company is expected to benefit from a cultural export boom, leveraging its rich IP resources [5][54]. Brand and Cultural Assets - The company has a robust portfolio of traditional brands and cultural heritage, which supports its commercial activities and enhances brand visibility [54][56]. - The introduction of new brands like "Dongjia Gold" aims to tap into the high-end market, further diversifying the company's offerings [52][54].