Summary of MIXUE Group Conference Call Company Overview - **Company**: MIXUE Group - **Industry**: Freshly Made Beverages (FMB) - **Market Position**: Largest FMB company in China, accounting for 8.6% of total GMV in the FMB market and 11.3% of FMB companies' GMV in 2023 [12][24] Key Points Financial Performance and Valuation - **Earnings Downgrade**: MIXUE's net profit (NP) estimates for 2026-27 have been cut by 7%, which is 11-13% below consensus estimates, primarily due to gross profit margin (GPM) pressures [1][24] - **GPM Forecast**: Expected to compress to 29.7% in 2026, which is 1-2 percentage points lower than 2025 and 2.1 percentage points below consensus [1][11] - **Current Valuation**: MIXUE trades at 27x 2026E PE with a 16% CAGR for 2026-28E NP, which is considered fair compared to HK peers [1][15] - **Price Target**: Downgraded to HK$468.00 from HK$490.00, reflecting a WACC adjustment from 9.3% to 9.2% [10][4] Market Dynamics - **Same-Store Sales Growth (SSSG)**: Expected to decline from +8% in 2025E to -5% in 2026E due to a high base, reduced delivery subsidies, and increased competition [2][11] - **Delivery Mix**: The share of delivery orders has increased from 20-30% to 40-50%, contributing to GPM pressures [11][24] Competitive Landscape - **Intensifying Competition**: Competitors like Guming have successfully launched coffee drinks, increasing competitive pressure on MIXUE [2][11] - **Franchisee Support**: MIXUE may need to subsidize franchisees due to lower store profitability, further impacting GPM [2][11] Overseas Expansion - **Short-Term Challenges**: Anticipated store closures in the ASEAN market will continue into H126, while expansion into other markets will take time to scale [3][11] - **Long-Term Outlook**: Despite current headwinds, there is optimism about MIXUE's long-term overseas expansion potential, especially after entering the US market in December 2025 [3][11] Investor Considerations - **Lock-Up Period**: The expiry of the one-year lock-up period for pre-IPO investors on March 3, 2025, could lead to near-term selling pressure [1][16] - **Hedge Fund Activity**: Hedge fund ownership has been declining since June 2025, while mutual fund holdings have increased since October 2025, indicating changing investor sentiment [16][20] Financial Metrics - **Revenue Growth**: Projected revenues for 2026E are HK$35.7 billion, with a net profit of HK$5.7 billion [8][24] - **Profitability Ratios**: Expected EBIT margin for 2026E is 19.8%, down from previous estimates [24] Conclusion MIXUE Group faces significant near-term challenges, including GPM pressures and declining SSSG, leading to a downgrade in earnings estimates and a neutral rating. However, the long-term potential for expansion remains intact, particularly in overseas markets, despite current competitive pressures.

Summary of Mixue Group (2097.HK) Earnings Call Company Overview - **Company**: Mixue Group - **Ticker**: 2097.HK - **Market Cap**: HK$174.8 billion / $22.4 billion - **Enterprise Value**: HK$156.0 billion / $20.0 billion - **Industry**: Freshly-made drink (FMD) sector in China and globally Key Points from the Earnings Call 1. Business Performance and Strategy - Mixue aims to solidify its leadership in the China market through increased store penetration and overseas expansion, enhancing supply chain operations, and strengthening brand awareness of Snow King IP for sustainable growth [1][16][28] - The company has seen a boost in sales volume due to food delivery subsidies in 1H25, which positively impacted store-level profitability, although management expects these subsidies to normalize [1][19] - The Lucky Cup brand is set for rapid expansion, with plans to enhance product offerings and accelerate nationwide growth in the second half of the year [1][21] 2. Overseas Market Adjustments - The decline in overseas store count in 1H25 was attributed to operational adjustments in Vietnam and Indonesia, but per store sales showed positive growth [1][23] - Expansion into new markets, including Kazakhstan and various countries in the Americas, is underway, with a focus on improving store quality and operations [1][21][23] 3. Financial Outlook - Revenue projections for 2025-2027 have been adjusted upwards by an average of 2%, reflecting solid growth in the China business and positive signs from overseas adjustments [2][27] - The company maintains a long-term gross profit margin target of approximately 30%, with diversified raw material sourcing helping to mitigate price risks [1][25] 4. Supply Chain and Operational Efficiency - Mixue is enhancing its supply chain infrastructure and digitalization efforts to support growth, with five major domestic production bases established [1][21][24] - The company plans to locally source some raw materials in overseas markets to improve supply chain efficiency [1][24] 5. Market Position and Competitive Landscape - Mixue is positioned as the largest FMD company in China and globally by store count, with a strong brand and value-for-money offerings [28] - The competitive landscape in the freshly ground coffee market is still evolving, with Mixue leveraging its supply chain for differentiated advantages [22] 6. Risks and Challenges - Key risks identified include store network management, competition, food cost inflation, food safety, and challenges in overseas expansion [28][30] 7. Financial Metrics and Projections - **Revenue Growth**: Expected to grow from Rmb 24,828.9 million in 2024 to Rmb 44,104.8 million by 2027 [6][14] - **EBITDA Growth**: Projected to increase from Rmb 5,920.9 million in 2024 to Rmb 10,252.5 million by 2027 [6][14] - **EPS Growth**: Expected to rise from Rmb 11.84 in 2024 to Rmb 20.59 by 2027 [6][14] 8. Investment Rating - The company is rated as a "Buy" with a target price of HK$570, reflecting a potential upside of 23.8% from the current price of HK$460.40 [1][16][30] Conclusion Mixue Group is strategically positioned for growth in both domestic and international markets, with a focus on enhancing operational efficiency and brand strength. The company faces challenges but has a solid plan to navigate them while capitalizing on its market leadership in the freshly-made drink sector.