CMSC released a research report initiating coverage on BUSYMING (01768) with a "Strong Buy" rating. The snack retail channel demonstrates significantly superior efficiency, and the industry's scale is expected to continue growing; concurrently, as the industry leader, the company possesses a high-quality team and leads in multiple dimensions including supply chain, warehousing and distribution, expansion, and branding. Under the effect of economies of scale, it is anticipated that the strong will grow stronger, further increasing market share and gradually releasing profits. The company's adjusted net profits for 2025E/26E/27E are forecasted to be 2.52 billion/3.39 billion/4.37 billion yuan, respectively. CMSC's main views are as follows: The company is a leader in the domestic snack retail market, with a powerful dual-brand strategy enabling rapid growth. The company's portfolio includes the two major brands Snack Hen Mang and Zhao Yiming Snacks. Snack Hen Mang was founded in 2017 in Changsha, Hunan, and was merged with Zhao Yiming Snacks in 2023, renaming the group BUSYMING. The company's shareholding structure is stable, with the two founders, Mr. Yan and Mr. Zhao, holding approximately 36% and 29% of shares respectively, while Haoxiangni/Sequoia/Black Ant hold 6%/7%/4% respectively. The management team is experienced, young, and dynamic, well-suited to the demands of the snack industry. As of November 30, 2025, the company's total number of stores reached 21,041. GMV for 25Q1-Q3 reached 66.1 billion yuan, a 73% increase year-on-year, while revenue was 46.4 billion yuan, up 75% year-on-year. Adjusted net profit was 1.81 billion yuan, surging 241% year-on-year. The penetration rate of the highly efficient snack retail format continues to rise, with the industry leader strengthening its position. The leisure food and beverage industry is valued at approximately 40 trillion yuan, with the broader snack category accounting for about 1.8 trillion yuan. From a channel perspective, the market share of inefficient channels like traditional supermarkets and mom-and-pop stores continues to decline. In contrast, the snack retail format leads comprehensively in terms of variety, speed, quality, and value. Supported by an enjoyable shopping experience and cost-effectiveness, it efficiently stimulates and fulfills demand, leading to continuous growth in both scale and channel share. The snack retail market size reached 129.7 billion yuan in 2024, with a CAGR of 77.9% from 2019 to 2024. Based on our multi-faceted calculations benchmarking against the Hunan market, Mixue Bingcheng, and e-commerce, the potential long-term store count for the snack retail format could reach 80,000 to 100,000 stores. Regarding market structure, BUSYMING currently holds about 43% market share, while Wanchen holds approximately 32%. Driven by first-mover and scale advantages of the leaders, the CR2 concentration ratio continues to increase. The two leading players have complementary stronghold markets, suggesting a stable duopoly structure is likely. The company leads in multiple dimensions including supply chain, operations, and expansion, indicating the strong will grow stronger. From a supply chain perspective, the company offers a wide variety of products, makes precise selections, iterates SKUs rapidly, and maintains strict quality control. It collaborates with high-quality suppliers, engaging in a high proportion of direct supply and customized products. Coupled with an efficient warehousing and logistics system, this enables a highly efficient supply chain layout. In terms of expansion and franchising, the company leads in both store scale and opening speed. Professional site selection, operations, and training teams empower franchisees, enhancing the quality of new store openings. Operationally, the company possesses strong capabilities in refined management, with comprehensive standards and strict implementation, leading to high store operating quality. Regarding brand promotion, the company continuously invests in brand building through a combination of online and offline efforts, resulting in leading brand momentum. Risks include store expansion speed and same-store sales growth falling short of expectations, intensified industry competition, and food safety risks.
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