Zhongjin: Continued differentiation of catering brands by 2025, optimistic about top brands of freshly made beverages.

CICC released a research report stating that the differentiation of catering brands will continue in 2025, with the performance of freshly-made beverages outperforming expectations under the backdrop of a decline in delivery services in the fourth quarter of 2025, and some dine-in restaurants showing marginal improvements. The bank is optimistic about the leading performance of top freshly-made beverage brands in terms of both same-store sales and new store openings within the industry, and is paying attention to the effects of adjustments made by some brands and the potential of new brands. The bank maintains its investment rating, profit forecasts, and valuation of covered targets unchanged. Key points from CICC are as follows: Differentiation continues, with the performance of freshly-made beverages better than expected under the decline in deliveries in the fourth quarter of 2025, and some dine-in restaurants seeing marginal improvements The bank estimates that in the fourth quarter of 2025, the same-store revenues of SHUSHI/GUMING/CHABAIDAO/Luckin/Naixue increased by over 20%/nearly 20%/double digits/10%/3% year-on-year; GUOQUAN saw high single-digit growth in same-store sales; HAIDILAO benefited from a decrease in base number and adjustment measures, with same-store turnovers remaining flat year-on-year; DPC DASH saw positive same-store growth in first-tier cities; TAITOO benefited from the adjustment of new store types, with same-store sales turning positive at the end of November and posting high single-digit growth in December, resulting in an overall 6 percentage point decrease in same-store sales in the fourth quarter compared to the previous quarter. In 2026, the same-store sales of freshly-made beverage industry face pressure from high base numbers, and the bank is optimistic about top brands maintaining a leading performance in same-store sales and new store openings GUMING plans to extend hours for coffee and breakfast, hold dining marketing activities, and upgrade its sixth generation store model to boost same-store sales and increase the share of dining sales. The bank expects same-store revenues in 2026 to remain flat year-on-year. The bank predicts that GUMING will add nearly 3500 stores in 2025, with the net increase in new stores in 2026 expected to maintain the level of 2025. In addition, the bank recommends focusing on the continuous marginal improvements of brands such as CHABAIDAO and AUNTEA JENNY: CHABAIDAO's new product mechanism adjustment has achieved certain results in 2025, and plans to broaden its product price range in 2026 and continue to optimize its operations; AUNTEA JENNY plans to open 2000-3000 new stores in 2026. Suggestions to pay attention to the effects of adjustments made by some dine-in restaurant brands and the potential of new brands 1) TAITOO is focusing on "freshness" as the main adjustment direction, and the company expects to complete most of the store adjustments by the first half of 2026 (over 240 adjustments have been completed by the end of 2025). The bank estimates that the current new model's same-store performance is about 10 percentage points higher than the old model, coupled with the large-scale marketing campaign launched by the company since the end of December, it is recommended to pay attention to the sustainability of same-store improvements. In terms of profit, the bank expects that one-time adjustment costs and additional raw material/labor costs may temporarily drag down profits, but with the completion of adjustments and operational optimization, there is further room for profit margin improvement (the company expects TAITOO restaurant-level OPM to be around 18% under steady state conditions). 2) HAIDILAO announced that from January 13, 2026, Chairman and Executive Director Zhang Yong will serve as CEO. The bank believes that this move is expected to further enhance the company's strategic implementation and decision-making efficiency, and continue to actively promote the development of the Red Pomegranate Plan. It is suggested to pay attention to the development of high-end self-service hotpot (nearly 40 stores have been set up by the end of November, with continuous additions in December), such as Sushi (currently profitable, with an average of 6 table turnovers), seafood stalls, deliveries, etc. Risks Same-store performance falls below expectations; worsening competitive landscape; adjustments and new models fail to meet expectations.