Morgan Stanley: Downgrades JIUMAOJIU (09922) price target to 2.3 Hong Kong dollars, rating lowered to "underweight"

Morgan Stanley released a research report stating that it has lowered JIUMAOJIU (09922) target price by 39.5%, from 3.8 Hong Kong dollars to 2.3 Hong Kong dollars, and has downgraded it from "in line with the market" to "hold", mainly due to cutting 2025 profit forecast by 22%. Morgan Stanley stated that JIUMAOJIU's main brand "Tai Er" had new store closures in the fourth quarter, and thus expects store network and same-store operations to need time for optimization. The report mentioned that same-store sales of Tai Er in the fourth quarter decreased by 25% year-on-year, widening from the 18% year-on-year decline in the third quarter, with SSSG declining by 27%. Tai Er closed 20 stores from September to December last year. The closure of stores before the Chinese New Year indicates a challenging operating environment, and the company's focus is on improving existing business. Morgan Stanley believes that the "downward cycle" of JIUMAOJIU's store network will continue for some time, and the company is optimizing same-store operations.