New Stocks Interpretation | Why is it said that Mingming Group (01768) will be a scarce stock of definitive growth in the consumer sector?

When the spotlight of global capital focuses on high-end technology and upstream resources, and traditional retail is still pulling out all the stops to pursue single-digit growth, Mingming Hemang, which is currently in the IPO process (01768), has shown an extremely explosive "report card". In just over two years, the number of Mingming Hemang's stores has increased tenfold, approaching 20,000 stores, which is equivalent to opening nearly 20 stores daily; from 2022 to 2024, the company's compound annual growth rate of revenue and gross profit reached 203% and 206% respectively. Against the backdrop of overall consumption pressure, Mingming Hemang not only did not encounter the growth dilemma that offline peers generally face, instead, it grew in an almost accelerated manner. What is the underlying logic behind this? And for Hong Kong stock market investors who are about to embrace this shining new consumer star, how should they evaluate the long-term investment value of Mingming Hemang? Source of certainty: efficiency restructuring and systemic moat In recent years, due to various "black swan" and "grey rhino" events, market aversion to uncertainty has reached a new height. Correspondingly, assets with certainty have been highly sought after, from precious metals represented by gold, to dividend-paying utilities with long-term, stable mechanisms. The heat of these assets continues to rise, mainly because of their high certainty. In the view of GMTEight, Mingming Hemang, which is about to land on the Hong Kong Stock Exchange, is likely to be the next high certainty target. The certainty of Mingming Hemang does not come from a grand narrative, but is deeply rooted in the company's business model and the solid "moat" it has built with high-efficiency supply chain and digital capabilities that are difficult to replicate. The starting point of Mingming Hemang's business model is the combination of vertical category selection and franchise model. On the surface, Mingming Hemang seems to be a company supported by franchisees. As of the end of September 2025, 99.9% of the company's stores are franchise stores. However, in reality, Mingming Hemang's core competitive advantage does not solely come from franchisees, or at least not from collecting franchise fees. By analyzing Mingming Hemang's revenue structure, it can be found that revenue from selling goods accounts for 99.3% of total revenue, while other income including franchise fees only accounts for 0.7% of total revenue. Not relying on collecting franchise fees for revenue generation determines that Mingming Hemang's expansion largely depends on the expansion of franchise stores and the actual operation of these stores. To do this well, the key is to achieve the ultimate balance of quality and price and supply chain efficiency. In terms of vertical category selection, Mingming Hemang selects products that consumers prefer through its product team, with a large display and continuous rapid iteration. While ensuring product quality, the average selling price of goods in its stores is 25% lower than that of offline supermarket channels. It is believed that Mingming Hemang is able to lower prices to this extent, first benefiting from cleverly avoiding high rents in core business districts in its site selection, and often choosing locations near communities. Additionally, the flattened supply chain eliminates multiple intermediaries in traditional channels, and the direct procurement model reduces middle costs to a minimum. For Mingming Hemang, whose core revenue comes from the supply chain, the efficiency of the supply chain is crucial. As of the end of September 2025, Mingming Hemang has 23 self-operated warehouses and 25 third-party warehouses, with store locations within 300 kilometers of the nearest warehouse, enabling most stores to achieve delivery within 24 hours. Although logistics are managed by third parties, the use of WMS and TMS systems allows for full monitoring of warehouse management and transportation services. By combining self-operated and outsourced supply chain, Mingming Hemang achieves high efficiency and low cost compatibility. In 2024, Mingming Hemang's inventory turnover days were 11.6 days, while even the best domestic and foreign supermarkets generally have to double these days. What is particularly rare is that extreme high turnover is not at the expense of heavy assets; on the contrary, Mingming Hemang's ability to control warehousing and logistics costs is also among the industry's top tier. Data shows that in the first nine months of 2022 to 2025, Mingming Hemang's overall warehousing and logistics costs were 1.5%, 1.6%, 1.7%, and 1.7% of total revenue. From business value to investment value: pricing consideration of scarcity When the certainty of the business model is verified, the focus of the capital market naturally shifts to the sustainability of its growth and future long-term investment value. What Mingming Hemang has shown is a clear path to continuously improve market share through efficiency reform in a vast and fragmented trillion-dollar market. This also provides two pillars for its future investment value: high visibility of scale growth and profit elasticity that still does not see a "ceiling". Firstly, it can be asserted that Mingming Hemang's growth space is far from being capped. The scale of China's leisure food retail market exceeds 3.7 trillion yuan, but the landscape is extremely fragmented, with the top five companies collectively accounting for only about 6% of the market share. As a leading player, Mingming Hemang's market share is only about 1.5%. This means that the historical window for industry consolidation has just opened. Secondly, Mingming Hemang's profitability optimization path has been opened. The market once thought that its gross profit margin hovering around 7%-8% made it a low-profit "poor business", and some even believed that if there were operational risks at any point, the company would fall into huge losses. However, it is necessary to clarify that "low gross margin" is precisely the competitive barrier that Mingming Hemang actively chooses. Fundamentally, to stand out from the competitive retail market, Mingming Hemang relies mainly on a systemic "moat", from controlling costs through scaled direct procurement, to data-driven product selection that precisely matches demand, and to standardized store operations that ensure efficient conversion. This combination allows Mingming Hemang to turn small snacks into a "hard currency" in people's lives. Looking ahead, once the scale advantage translates into absolute leadership in market share, Mingming Hemang's cost control capability is expected to further strengthen, and the optimization of the company's gross margin will also be natural. Additionally, the push for differentiated products may also be an important lever for Mingming Hemang to enhance profitability in the future. It is also highly anticipated that Mingming Hemang will continue to enhance its profitability. As of the end of September 2025, the company's gross margin had increased by 2.5 percentage points to 9.7% compared to the same period in the previous year. Finally, looking back at Mingming Hemang's IPO, the company will globally issue 14.1 million H-shares, with an IPO price range of HK$229.6-236.6 per share. Considering Mingming Hemang's continued high-speed growth trend in 2025, its dynamic price-earnings ratio is roughly around 20 times based on the midpoint of the IPO price. As a "potential stock" in the consumer sector with scarcity and high growth visibility and elasticity, Mingming Hemang clearly deserves an appropriate premium valuation. It is also because of this that the company's post-IPO performance is highly anticipated, and this may also explain why Mingming Hemang has attracted star institutions such as Tencent, Temasek, BlackRock, and Fidelity to compete as cornerstone investors.