Soochow: Maintain "Buy" rating on GUOQUAN (02517) with continuous performance exceeding expectations and possessing a safety margin.

Soochow released a research report stating that considering GUOQUAN's (02517) performance in 2025Q3 slightly exceeded the bank's previous expectations, the bank has raised its profit forecast. It is expected that the company's net profit attributable to shareholders from 2025 to 2027 will be 4.4/5.6/6.8 billion yuan (previously expected to be 4.2/5.0/5.8 billion yuan), with a year-on-year increase of +93%/27%/21%; corresponding PE ratios are 21/17/14X. The "buy" rating is maintained. Key points from Soochow: Event: The company announced the business situation in 2025Q3: a net increase of 361 stores in 2025Q3, with a total of 10,761 stores by the end of 2025Q3. The revenue in 2025Q3 reached 18.5~20.5 billion yuan, a year-on-year increase of +13.6%~25.8%; core operating profit in 2025Q3 reached 0.65~0.75 billion yuan, a year-on-year increase of +44.4%~66.7%. Fast progress in store openings in Q3, with an increase in core operating profit margin Considering that Q4 is generally a peak season for store openings, it is expected that there will be more store openings compared to Q3. The bank predicts that the company may achieve its goal of adding 1000 new stores ahead of schedule this year. Based on the median calculation, the core operating profit margin in 2025Q3 is 3.6%. In addition, it can be inferred that the core operating profit margins in 2024Q3 and Q4 were 2.8% and 6.6% respectively; in comparison with the same period last year, the core operating profit margin in 2025Q3 increased by 0.8 percentage points, and the logic of profit margin improvement has been continuously verified since the beginning of this year. Realization of store openings and profit margin improvement, continued key recommendation The company has continued to improve same-store sales performance this year, with an increase in the motivation for franchisees to open stores, and the rural store model has taken shape and possesses strong competitiveness. Looking at the performance from Q1-3, there is no worry about meeting the store opening target this year. With expanding income, continuous optimization of the supply chain, and the release of economies of scale, the logic of profit margin improvement has been realized smoothly. The company's performance continues to exceed expectations, and with the company's valuation for 2026 being less than 20X, it has a safety margin and is still a key recommendation. Risks: Food safety issues, intensified industry competition, consumer spending improvements falling short of expectations.