Sealand Securities released a research report initiating coverage on GUMING (01364) with a "Buy" rating. GUMING is further strengthening its regional densification strategy by introducing preferential policies that encourage existing franchisees to open more stores, thereby enhancing brand influence and operational efficiency. The company continuously expands into categories like coffee and breakfast by leveraging rapid new product launches, high quality-to-price ratio offerings, and platform-based R&D capabilities. With over 13,000 stores currently operating and a deep presence in key provinces, the company still possesses vast market penetration potential domestically and abundant growth prospects. The main views of Sealand Securities are as follows.
Recent developments include GUMING's new franchise policy encouraging existing franchisees currently managing 1-2 stores personally to open more locations. Franchisees with 1-2 stores who sign new contracts before May 31, 2026, will receive a waiver of the 25,000 yuan franchise fee. The policy adopts a cautious approach towards multi-store franchisees, encouraging optimization; those with 3 or more stores who complete relocations or expansions at their original site before May 31, 2026, will receive a 25,000 yuan decoration fee reduction.
The company demonstrates fast product iteration, high quality-to-price ratio, and utilizes platform-based development to create a "shelf retail" model. Expanding into coffee and breakfast by 2026 is seen as a key driver for same-store sales growth. The R&D team, composed of front-end gourmets and back-end engineers, numbered approximately 120 people as of September 30, 2024. Supported by its supply chain layout, this structure enables rapid new product launches, effective trend-catching, and high cost-performance. 52 new products were launched in the first half of 2025, with new series like the slow-brewed tea gaining significant popularity in the second half. Regarding category expansion, coffee布局 made effective progress in 2025; by the end of the first half of 2025, over 8,000 stores were equipped with coffee machines, and 16 new coffee beverages were launched in H1 2025. Baking products have been introduced in some stores, and the breakfast daypart is expected to become a major lever for same-store growth by 2026.
Supply chain布局 in key环节 ensures product consistency and cost control. On the production side, the company sources fruits directly from origins and uses self-built factories to process key ingredients like fruits that affect taste. Regarding warehousing and logistics, as of the end of H1 2025, the company operated 22 self-owned warehouses and 362 transport vehicles. 75% of stores are located within 150 kilometers of a warehouse, with 98% of stores receiving冷链 deliveries every two days. In H1 2025, distribution costs from warehouse to store were less than 1% of total GMV. Combined with the regional store densification strategy, this results in high supply chain efficiency, ensuring stability and cost control.
The effectiveness of the regional densification strategy is being gradually validated, indicating ample future store expansion space. The company adheres to its regional densification strategy, and this recent franchise policy adjustment also encourages existing franchisees to open more stores. The report identifies two main benefits of this strategy: 1) Enhanced consumer reach, as stores act like billboards, and dense clustering significantly boosts local brand awareness; 2) Improved management efficiency; for instance, with the same number of stores, concentrated locations make it easier to control spoilage for short-shelf-life products and reduce costs, while supervisors can conduct store visits more frequently. According to The Paper, as of 2025, GUMING is the second-largest tea chain in China by store count. Data from Jiuqian indicates that as of November 2025, the total number of GUMING stores was 13,117, a year-on-year increase of 34%. 20% are located in Zhejiang province, 65% in eight other key provinces each with over 500 stores, and the remaining 16% across 10 provinces, indicating solid medium-term expansion potential. Long-term, the company has yet to enter 11 provinces (excluding Hong Kong, Macau, and Taiwan), suggesting substantial future market expansion space. Given its mature store-opening capabilities, the prospects for further penetration are promising.
Risk warnings include intensifying industry price wars, high reliance on regional markets, risks associated with category expansion, stock liquidity risks, and risks related to the lifting of sales restrictions on locked-up shares.
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