GTHT Securities released a research report initiating coverage on AUNTEA JENNY (02589) with a "Buy" rating and a target price of HK$116.56. The company operates three major brands—"AUNTEA JENNY," "Tea Waterfall," and "Huka Coffee"—forming a multi-brand matrix catering to different price segments and consumer demographics.
AUNTEA JENNY has rapidly expanded its market presence through efficient R&D and a franchise model, particularly dominating in northern China. The company's "One Core, Two Wings" strategy enhances its multi-brand growth potential. Key insights from GTHT Securities include:
1. **Leading Fresh Beverage Player with Nationwide Franchise Expansion**: AUNTEA JENNY’s portfolio spans fresh tea brands ("AUNTEA JENNY," "Tea Waterfall") and freshly ground coffee ("Huka Coffee"), targeting diverse consumer groups with differentiated pricing. Its mature product development system enables industry-leading innovation, aligning with healthier and tastier beverage trends.
2. **Expanding Market Opportunities and Consolidation**: China’s per capita consumption of fresh beverages has significant growth potential, especially in lower-tier cities. Short-term demand surges from food delivery competition are accelerating market penetration. While the tea beverage sector remains fragmented and competitive, AUNTEA JENNY leads in northern markets. Industry consolidation favors chain brands over independent stores due to scale, supply chain, and operational advantages.
3. **Multi-Brand Strategy and Coffee Integration**: The "One Core, Two Wings" approach focuses on the flagship "AUNTEA JENNY" brand (with an estimated 18,000-store domestic potential), supplemented by "Tea Waterfall" (over 5,000 stores) and overseas expansion (currently in Malaysia and the U.S.). Coffee operations, now integrated under the main brand, are expected to boost store efficiency.
**Risks**: Include slower-than-expected store expansion, franchise management challenges, and intensifying industry competition.
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