Mixue's Gross Margin Could be Sustained at Around 30% This Year

Dow Jones10-15

0414 GMT - Mixue Group's gross margin is likely to be sustained at around 30% this year despite a likely significant earnings decline due to a high base, say DBS Group Research's Mavis Hui and Alison Fok in a note. They expect product upgrades and resumption of faster expansion overseas after the rightsizing of Indonesia and Vietnam operations to contribute to brighter prospects next year. The Chinese freshly-made beverage-shop operator's shares have fallen 59% year-to-date, likely pricing in most challenges. DBS raises its rating to buy from hold. Still, the current subdued consumer environment and stronger-than-expected base effect leads the analysts to trim their target prices to 214.48 Hong Kong dollars from HK$359.00. Shares fall 2.1% to HK$165.00.

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