Guotai Haitong: Maintain Buy rating on GUOQUAN (02517) with a target price of HK$4.47.

Guotai Haitong released a research report predicting that GUOQUAN (02517) will have revenues of 7.612/8.832/10.175 billion RMB in 2025-2027, with growth rates of 18%/16%/15%, respectively. The predicted core operating profits for the company in 2025-2027 are 4.48/5.53/6.75 billion RMB, with growth rates of 44%/23%/22%. The net profits attributable to shareholders in 2025-2027 are predicted to be 4.35/5.37/6.55 billion RMB, with growth rates of 89%/23%/22%. With reference to comparable companies in the industry, the company is estimated to have a valuation of 20xPE for core operating profits in 2026, with a target market value of 12.3 billion HKD and a target price of 4.47 HKD (based on 1 HKD = 0.90 RMB), maintaining a "buy" rating. The main points of Guotai Haitong are as follows: Popular product combinations + member operations, restarting growth after the Seedling Plan 1. Popular product combinations: In late May 2024, the company launched the "99 RMB Omasum Hotpot Combo," which was well received by consumers. By the end of 2024, sales of this combo exceeded 500 million RMB. In 2025, they will continue to launch multiple high-cost-effective combos, increase exposure through a multi-level Douyin account matrix, and achieve high sales growth. 2. Member operations: GUOQUAN's membership strategy has evolved from traffic thinking to user asset management. On one hand, they continue to attract new members through well-known TV commercials, offline community advertising, and social e-commerce platforms, while improving membership plans to enhance member stickiness. In November 2025, GUOQUAN's registered members surpassed 60 million. Township markets have the potential to open stores, and category and time slot expansions improve store efficiency 1. Store opening: GUOQUAN is upgrading new township stores to better match the consumption demands of the sinking markets in terms of products and displays. Township stores have a good profit model, and with the strengthening of the supply chain, they are expected to have better product cost-effectiveness in the sinking markets in the future. 2. Store efficiency: In terms of category expansion, the company is gradually expanding into western cuisine, beverages, and frozen products, covering all three meals. In terms of time slot expansion, the company has introduced a 24-hour unmanned retail model, effectively increasing the revenue-generating capacity of the stores. Exploration of new types of GUOQUAN stir-fry and GUOQUAN camping stores, enhancing user stickiness and brand penetration through scene extension. On January 6, 2026, "GUOQUAN Stir-fry" will conduct its first trial operation, with an intelligent stir-frying machine as the core carrier, combined with GUOQUAN's core advantages in compound seasonings and food supply chain fields, striving to provide LBX Pharmacy Chain Joint Stock with efficient and tasty tailored Chinese meals in community scenes. "GUOQUAN Camping" will provide a one-stop outdoor dining solution. The new scene expansion enhances user stickiness and brand penetration, providing growth momentum for the company. Risk warning: Store openings falling short of expectations, franchisee management risks, intensified industry competition.