Soochow Securities has issued a research report maintaining a "Buy" rating on ZHOU HEI YA. In light of business structure adjustments and operational efficiency improvements, the firm has slightly revised its net profit attributable to parent company forecasts for 2025-2027 to 160 million/196 million/237 million yuan, compared to previous estimates of 152 million/188 million/219 million yuan. This represents year-on-year growth of 62.97%, 22.61%, and 20.84% respectively, corresponding to a current price-to-earnings ratio of 17.34x, 14.14x, and 11.70x. The company is advancing through restructuring and innovation, with same-store sales improving and distribution channel layouts being optimized, considering the steady and positive performance across all existing business segments.
Key viewpoints from Soochow Securities are as follows: ZHOU HEI YA released a profit alert for 2025, projecting revenue between 2.52 billion and 2.55 billion yuan, a year-on-year increase of 2.8% to 4.0%. Profits are forecasted to be in the range of 150 million to 165 million yuan, marking a significant growth of 52.7% to 68.0%. This improvement is primarily attributed to operational optimizations implemented since the founder's return to leadership, focusing on product offerings, store operations, and staff incentives, which have enhanced store efficiency. Concurrently, the establishment of a dedicated channel division has shown promising development, contributing to growth through a dual-pronged approach.
The company is gradually resuming its store expansion trend while continuing refined operations. This includes strengthening frontline staff incentives, implementing staff livestreaming initiatives, and enhancing member management. ZHOU HEI YA is actively promoting brand upgrades and product innovation, aligning with the "quality-to-price ratio" consumption trend by introducing products in the low-to-mid price range. Additionally, packaging has been upgraded, and peripheral products have been added in stores to optimize the brand experience for the target demographic aged 10-20, addressing recognition gaps among the university student population.
Geographically, the company is focusing on high-potential regions and key areas in Central, Eastern, and Southern China, shifting performance evaluation metrics towards quality indicators such as rent-to-sales ratio, personnel efficiency, and profitability. It is projected that full-year 2025 same-store sales growth may be in the low single digits, with a favorable trend expected to continue into 2026.
The company has elevated its distribution channel strategy to a strategic level, establishing an independent division to operate alongside the store business. By the end of 2024, the development of distribution channels was prioritized, with a dedicated department led by experienced management. Tailored stock-keeping units have been developed for channels including membership warehouse clubs, comprehensive supermarkets, snack discount stores, and convenience stores. Online e-commerce operations have been integrated into this division, with expectations for substantial revenue contribution from distribution channels over the next three years. A notable development is the launch of new SKUs in collaboration with Sam's Club, specifically a fresh braised duck assortment.
Overseas business is progressing according to a "three-step" strategy. The company is actively exploring international markets to promote Chinese braised cuisine culture and establish new growth avenues. The first phase involves product exports through trade, the second phase focuses on opening overseas stores, and the third phase aims to build localized supply chains. The second phase is currently being accelerated. ZHOU HEI YA products are already available in 10 countries, with over 20 SKUs launched in Malaysia's Mix supermarket.
Risk factors include fluctuations in raw material prices, food safety concerns, and intensifying industry competition.
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