GTHT has released a research report, stating that considering the short-term rise in costs such as beef, it has lowered its EPS forecast for Suzhou Weizhixiang Food Co.,Ltd. for 2026-2027 to RMB 0.73 (down by RMB 0.15) and RMB 0.89 (down by RMB 0.16), respectively, and added a 2028 EPS forecast of RMB 1.07. Referencing comparable companies and considering demand recovery and cost improvements, the company's business model, which primarily focuses on C-end sales, is expected to show more significant elasticity in performance recovery compared to peers. Additionally, the company's penetration rate in the C-end prepared food business is relatively low, offering substantial room for growth. The report assigns the company a 2026 P/E ratio of 39x, lowering the target price to RMB 28.5 (previously RMB 30.8) and maintaining an "Overweight" rating. The main points from GTHT are as follows:
**2025 Adjustment and Preparation, Sequential Improvement in Q1 2026** In 2025, the company achieved revenue of RMB 7.02 billion, a year-on-year increase of 4.48%, with net profit attributable to shareholders of RMB 0.69 billion, a year-on-year decrease of 21.46%, and non-GAAP net profit of RMB 0.55 billion, a year-on-year decrease of 32.75%. For Q4 2025 alone, revenue was RMB 1.71 billion, up 6.16% year-on-year, net profit attributable to shareholders was RMB 0.16 billion, down 19.95% year-on-year, and non-GAAP net profit was RMB 0.11 billion, down 29.62% year-on-year. In Q1 2026, revenue reached RMB 1.76 billion, up 1.54% year-on-year, net profit attributable to shareholders was RMB 0.23 billion, up 16.51% year-on-year, and non-GAAP net profit was RMB 0.19 billion, up 21.57% year-on-year.
**Pressure from Raw Material Costs Persists, Cost Reduction and Efficiency Gains Drive Gradual Profit Recovery** In Q1 2026, gross margin increased by 1.7 percentage points year-on-year to 24.6%. The sales/management/R&D/financial expense ratios changed by +0.1/-0.2/+0.3/+0.4 percentage points year-on-year, respectively. The net profit margin increased by 1.7 percentage points year-on-year to 12.9%. The impact of rising beef costs and changes in channel structure on gross margin since 2025 continues. The company is actively mitigating this through internal cost control and advantages in bulk purchasing and price locking due to economies of scale, maintaining relative competitive advantages.
By product category, in Q1 2026, revenue from beef/poultry/pork/lamb/fish/shrimp products changed by +5.2%/+5.0%/+6.2%/-10.6%/-0.7%/-2.6% year-on-year, respectively. By sales channel, revenue from franchise stores/distributor stores/supermarkets/wholesale/direct sales/e-commerce channels changed by -1.6%/-3.1%/+9.0%/+6.4%/+7.3%/+53.5% year-on-year, respectively. The trend of stabilization in same-store sales at the company's physical stores continued in Q1 2026, with the net decrease in stores narrowing in Q1, which is not a peak period for new store openings. The B-end business maintained growth.
**New C-End Store Formats Coupled with Continued B-End Expansion, Gradual Improvement Expected** The company is actively testing new store formats featuring freshly cooked ready-to-eat foods and adjusting existing store layouts. After optimizing store formats, a gradual rollout and acceleration of store openings are expected. Combined with regional expansion and market penetration, simultaneous growth in the number of C-end stores and store efficiency is anticipated. On the B-end, the company is strengthening product customization for supermarkets while actively developing regional community chain clients and group catering customers, which is expected to drive gradual performance improvement.
Risk warnings include intensified market competition, rising raw material costs, and store format adjustments falling short of expectations.
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