Goldman Sachs: First gives MIXUE GROUP (02097) a "buy" rating with a target price of HK$484.

Goldman Sachs released a research report stating that it has initiated coverage on MIXUE GROUP (02097) with a buy rating. Based on a 26x P/E ratio for 2026, a 12-month target price of HK$484 was provided. The target P/E ratio set by the bank is in line with the average P/E ratio of global leading peers (including Starbucks and NONGFU SPRING), but due to MEXUE ICE CITY's leading position, faster growth rate, and price advantage, it is higher than other food service companies covered by the bank. The bank expects that China's largest freshly-made drinks (FMD) company, MEXUE ICE CITY Group (MEXUE ICE CITY), will achieve a sales/adjusted net profit CAGR of 20%/19% respectively in the period 2024-2027. This is attributed to a compound annual growth rate of 16% in the number of stores (adding 7,800-9,200 new stores each year) and a 2% compound annual growth rate in single store GMV (Gross Merchandise Value). The company's strategy to share the benefits of supply chain efficiency improvements with franchisees/consumers will further strengthen its cost advantage and franchisee profitability, which in the long term will drive store growth and increase single store sales. As of 2023, MEXUE ICE CITY holds market shares of 11.3%/20.2%/57.1% in the GMV of freshly-made drinks/freshly-made tea drinks/popular market freshly-made tea drink stores in China. The bank believes that with the overall rapid growth in freshly-made drinks consumption, as well as its differentiated advantages in price competitiveness (average price per item is about 6 RMB, similar to ready-to-drink products), supply chain (over 60% of materials/over 100% of core materials are self-produced; can be delivered to over 90% of county-level areas in China within 12 hours), brand awareness (well-known "Snow King" IP), and mutually beneficial franchise model (franchise store investment payback period of about 12-13 months), there is still room for further market penetration. The bank's store analysis shows that by the end of 2024, MEXUE ICE CITY's total number of stores in China could reach 132,000, compared to the current 41,600. MEXUE ICE CITY also performs strongly in overseas markets (with overseas sales accounting for approximately 5% in 2024), especially in Southeast Asia, where the bank expects its overseas business proportion to continue to increase (estimated to reach 7% by 2027).