CICC: Maintains "Outperform" rating on MIXUE GROUP (02097) with a target price of HK$555.

Zhongjin released a research report stating that they are optimistic about MIXUE GROUP (02097) achieving relatively stable performance growth under the backdrop of declining takeaway subsidies. They recommend paying attention to the testing effects of new product categories such as breakfast, the development potential of Lucky Coffee and Fulu Home, as well as the adjustments in overseas existing markets and the expansion of new markets. They maintain an outperform industry rating with a target price of HKD 555. Key points from Zhongjin: Despite the decline in takeaway subsidies, there is still potential for relatively stable performance growth Benefiting from takeaway subsidies, the company's estimated same-store sales in Q3 increased significantly year-on-year. In Q4, with the decline in takeaway subsidies, the growth rates of most brands are expected to decrease month-on-month, with varying performances (the estimated same-store sales growth rates of GUMING in October and November are maintained above 20% / double digits; CHABAIDAO in October and November has a high single digit / double digit growth rate; Nai Xue's same-store sales growth in October-November is approximately in the middle single digits). The company is optimistic about the company's ability to cope with the impact of declining takeaway subsidies through product innovation, offline marketing, and mini program traffic, with the overall pricing system remaining stable. In addition, Mixue is testing its breakfast business in some cities (launching a breakfast milk + bread combo priced at 7.9 yuan), and they recommend paying attention to the test results. In terms of store openings, the company estimates that the net increase in stores for Mixue's main brand in 2025 will be around 7,000, with the number of stores expected to grow steadily in the future. Focus on the development potential of new brands 1) Lucky Coffee has strengthened its fruit + coffee product innovation this year and introduced a store opening subsidy policy. As of November 24th, the number of signed global stores has exceeded 10,000 (data shows that Lucky Coffee currently has over 8,000 actual stores, with 69% in third-tier and below cities). The company continues to expand its upstream supply chain to support store expansion, currently cooperating with over 10,000 orchards (the largest strategic orchard covers an area of 20,000 mu), building a coffee factory in Hainan covering an area of 190,000 mu, with an annual production capacity exceeding 20,000 tons. 2) In October, the company announced the acquisition of 53% equity in Fresh Beer Fulu Home, which focuses on high-quality draft beer priced at 6-10 yuan / 500ml, with the company estimating annual sales of 50-60 thousand yuan per store; the number of stores has now exceeded 1,600, and the company plans to introduce a signing subsidy policy in 1Q26 (franchise management fee discount of about 35,000 yuan). The company believes that under the support of the company's integrated supply chain and improved franchise management capabilities, Fulu Home has certain development potential, but the consumption scenarios and market space for draft beer may not be as good as freshly made tea drinks and coffee. They recommend paying attention to the single store model and store expansion progress. Steady progress in overseas store expansion On August 21, the first Lucky Coffee store opened in Malaysia; on December 19, Lucky Coffee announced that it will open for franchise in China, Hong Kong, and Macau; on December 20, the first Meixue store in the Americas opened in Los Angeles, with product prices ranging from 1.19 to 4.99 USD. Maintaining profit forecasts and valuations Estimated profits for 2025 and 2026 are 5.93 billion and 6.74 billion yuan. The current stock price corresponds to a P/E ratio of 26/22 times in 2025 and 2026. They maintain an outperform industry rating with a target price of HKD 555, corresponding to P/E ratios of 33/28 times in 2025 and 2026, with an upside potential of 28%. Risk reminder: The impact of declining takeaway subsidies exceeds expectations; increased competition; failure to continuously meet consumer demands.