Haitong International released a research report stating that GUMING (01364) recently held its 2026 Partner Conference. The report indicates that short-term high-base pressure is gradually materializing for the company, but its medium to long-term growth strategy is clear and well-defined, with significant expansion potential remaining. The firm maintains a valuation of 20x PE for the company in 2026, corresponding to a reasonable target market capitalization of HK$73.6 billion. The target price has been raised from HK$30.8 to HK$31.7, with an "Outperform" rating reaffirmed.
Regarding GUMING's short-term operational performance, overall operations remain within a normal range, though same-store sales pressure objectively exists. The period from May to August is considered critical. The company will employ multiple strategies to control the decline in same-store sales. From April to May, same-store sales growth slowed sequentially due to factors like weather and a pullback in food delivery orders. Franchisee profits also saw a slight decrease. However, the company has improved the actual collection rate across online and offline channels by strategies such as emphasizing dine-in services and reducing price differentials for delivery orders through adjusted pricing. Currently, franchisee profits remain attractive. The pullback in delivery orders has been faster than previously expected, with the current delivery mix at approximately 50% to 55%.
In terms of product categories, coffee has become a significant incremental category. In the first quarter, coffee accounted for a stable 15% to 20% of total cups sold. Daily coffee cup sales per store were about 60 to 80 cups, currently around 80 to 90 cups, with a year-end target of 120 cups. Additionally, the breakfast occasion represents a purely incremental business. Haitong believes the layout of the sixth-generation store format aligns with changing consumer habits and the company's future business plans.
The report notes short-term cost-side disturbances from factors like oil prices and warehousing/logistics, but these are considered overall manageable. The raw material structure is relatively diversified. Furthermore, cost reductions for some materials, such as jasmine flowers, coupled with ongoing cost-saving and efficiency improvement measures, provide a hedge. To promote its three main business lines for the full year, the company will increase subsidies from RMB 230 million in 2025 to RMB 300 million in 2026 in areas including franchise discounts/renovation subsidies, delivery promotion, coffee expansion, and new product/event launches. Brand promotion and user growth investments will rise from RMB 300 million in 2025 to RMB 400 million in 2026. The full-year profit guidance remains stable.
Regarding industry competition, the tea beverage market remains a landscape of multiple price segments and brands coexisting. Competition among leading players is relatively stable. Mid-tier brands are transitioning from surpassing a thousand stores to aiming for ten thousand stores, which will significantly increase challenges in supply chain management, regional expansion, and operational management. 2026 is seen as the first year of intense competition in coffee. Short-term coffee prices are not expected to rebound, but the overall market is expected to expand, and product offerings will become more diverse. The company holds a certain first-mover advantage in the coffee segment.
Haitong International largely maintains its revenue forecasts for 2026-2028 at RMB 16.5 billion, RMB 20.5 billion, and RMB 24.5 billion, representing year-on-year growth of 28%, 24%, and 20%, respectively. Adjusted net profit is forecast at RMB 3.24 billion, RMB 4.01 billion, and RMB 5.01 billion for the same periods, reflecting year-on-year growth of 26%, 24%, and 25%, respectively. The corresponding adjusted net profit margins are 19.6%, 19.6%, and 20.4%.
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