Investment Rating - The report maintains an "Outperform the Market" rating for the social services sector [4][27]. Core Views - The pre-prepared food national standard draft has passed review, marking a significant regulatory shift in the industry, which is expected to enhance competitive advantages for companies with robust supply chains and quality management systems [3][17]. - The consumer services sector outperformed the market during the reporting period, with a 0.69% increase, surpassing the Shanghai and Shenzhen 300 Index's 0.56% rise by 0.13 percentage points [2][13]. Summary by Sections Market Performance - The consumer services sector saw notable stock performances, with top gainers including Yuhua Education (up 43.14%), New Higher Education Group (up 23.85%), and Zhongjiao Holdings (up 22.81%) [2][15][16]. - Conversely, stocks like Dongfang Zhenxuan and Naixue's Tea experienced significant declines, with losses of -16.65% and -16.33% respectively [2][15][16]. Industry and Company Dynamics - The introduction of the pre-prepared food safety national standard is expected to standardize the industry and increase entry barriers, benefiting compliant companies [3][17]. - High-frequency updates from Gaode Map's "Street Ranking" feature indicate a strong consumer engagement, with over 40 million users on the first day [3][18]. - Haier's launch of its Robotaxi strategy and the HR1 model aims for large-scale autonomous driving operations within two years, indicating a shift towards advanced mobility solutions [3][19]. - The rapid expansion of Lucky Coffee, surpassing 8,000 stores, reflects strong market penetration and sales performance, with average monthly sales per store reaching 500,000 CNY [3][22]. Investment Recommendations - The report suggests focusing on companies such as Atour, Ctrip Group-S, Xiaocaiyuan, BOSS Zhipin, and others, indicating a favorable outlook for these stocks in the current economic environment [4][27]. - Mid-term recommendations include China Duty Free, Meituan-W, and others, highlighting a diverse range of investment opportunities within the sector [4][27]. Stock Ownership Changes - Notable changes in stock ownership during the reporting period include an increase in holdings for key companies like Haidilao (up 1.49% to 24.48%) and Mijia Group (up 2.53% to 14.36%) [3][26].

Core Viewpoint - Luckin Coffee is rapidly expanding its presence in the coffee market, aiming to replicate the success of its parent brand, Mixue Ice Cream, by leveraging a low-cost model and aggressive franchise strategies [1][4][10]. Expansion and Growth - As of July 2025, Luckin Coffee has signed over 7,000 stores nationwide, a significant increase from approximately 4,000 at the end of 2024, with a target of exceeding 10,000 stores by the end of 2025 [1]. - The company reported a 164% year-on-year increase in new store signings in Q2 2025, with 1,291 new stores opened in July alone, representing a month-on-month growth of over 330% [1][2]. Market Strategy - Luckin Coffee has shifted its focus from lower-tier markets to first and second-tier cities, particularly targeting the Yangtze River Delta and Pearl River Delta regions, with commercial streets as key expansion points [2]. - The franchise model requires full ownership by franchisees, allowing for unified market management and operational transparency, which facilitates rapid store replication [6]. Pricing and Supply Chain - The pricing strategy includes a low-cost model, with an American-style coffee priced at 5.9 yuan, benefiting from the supply chain advantages shared with Mixue Ice Cream [1][4]. - The company has established direct sourcing channels for coffee beans in major producing countries, enhancing its procurement scale and cost efficiency [4]. Franchisee Performance - Despite rapid expansion, franchisee profitability varies, with some reporting significant challenges and losses, leading to store closures or transfers [8][10]. - A franchisee in a university area reported a winter daily revenue of only 1,200 yuan, far below initial projections, resulting in a loss of 250,000 yuan before transferring the store [8][9]. Competitive Landscape - Luckin Coffee faces stiff competition from established brands like Luckin and Kudi, with franchisees noting that brand recognition significantly influences consumer choices [8][10]. - The company’s low-price strategy may not be sufficient to attract a broader customer base, as many consumers still prefer more recognized brands despite the lower franchise costs [8][10].