Kaiyuan Securities released a research report stating that GUMING (01364) has become a leading brand in the industry with over 10,000 stores, leveraging its "regional refinement" strategy and efficient supply chain synergy. The company focuses on lower-tier markets, with distribution costs below the industry average, supporting steady expansion of its franchise system. The firm is optimistic about GUMING's growth potential in the value-for-money segment and untapped regions nationwide, projecting a long-term store expansion capacity exceeding 40,000 locations. Kaiyuan Securities initiated coverage with a "Buy" rating. Key points from the report include:
**Regional Refinement + Supply Chain Strength: GUMING’s 10,000-Store Milestone** GUMING opened its first milk tea store in Wenling, Zhejiang, in 2010, launched its first franchise in 2011, and surpassed 10,000 stores in H1 2025. Given its solid position as the second-largest player in the ready-to-drink tea market and untapped opportunities in 17 provinces, the report forecasts significant nationwide expansion potential. With advantages in supply chain and channel management, Kaiyuan Securities projects 2025–2027 revenue of RMB 12.04/14.32/16.75 billion (YoY +37.0%/18.9%/17.0%) and net profit of RMB 2.58/2.81/3.08 billion (YoY +77.9%/9.0%/9.8%). EPS is estimated at RMB 1.08, 1.18, and 1.30, with a current P/E of 20.5x, 18.8x, and 17.1x, respectively.
**Industry Outlook: Value-for-Money and Lower-Tier Markets Drive Growth** According to CIC, China’s ready-to-drink beverage market exceeded RMB 600 billion in 2024 and is expected to surpass RMB 1 trillion by 2027. Ready-to-drink tea, the largest segment, reached RMB 313 billion in 2024, with a projected 2024–2028 CAGR of 15.8%. By price/region: (1) Mid- and budget-priced tea segments show higher growth potential (2023–2028 CAGR: 20.8%/20.1%); (2) Lower-tier markets exhibit broader opportunities, with 2018–2023 GMV CAGRs of 28.0%/33.2% in Tier 3/4+ cities. Long-term, ready-to-drink beverages account for 19.2% of U.S. water intake vs. 1.6% in China, indicating significant room for penetration growth.
**Future Prospects: Supply Chain Supports Expansion, 40,000+ Store Potential** GUMING’s store expansion is characterized by: (1) Focused regional refinement, starting from Zhejiang; (2) Deep penetration, with nearly 80% of stores in Tier 2-and-below cities. Key competitive edges include superior supply chain management and mature franchisee systems. The company achieves cost-efficient cold-chain delivery (twice weekly to 97% of stores) at sub-1% of GMV (vs. industry ~2%). Franchisees benefit from short payback periods, high multi-store ownership rates, and below-average closure rates. Extrapolating Zhejiang’s store density nationwide, the report estimates a long-term ceiling of over 40,000 stores.
**Risks**: Rising raw material costs, food safety issues, and intensifying competition.
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