CICC: Maintains outperform rating on GUOQUAN (02517), with a target price of HKD 4.9

CICC publishes research report stating that GUOQUAN (02517) store openings and same-store sales guidance exceeded expectations, raising core net profit for 26-27 by 4% and 4% to 572 million and 686 million respectively. The current stock price corresponds to a P/E ratio of 17 times for 26-27 and 14 times for 26-27. Maintain an outperform industry rating with a target price of 4.9 Hong Kong dollars, corresponding to a P/E ratio of 21 times for 26-27 and 17 times for 26-27, with an upside potential of 27%. Key points from CICC: 2H25 performance meets expectations The company announced its 25 results: revenue increased by 20.7% year-on-year to 7.81 billion yuan; core operating profit increased by 48.2% year-on-year to 461 million yuan; CICC estimated core net profit attributable to owners of the parent increased by 46.5% year-on-year to 440 million yuan (profit margin increased by 1 percentage point to 5.6%). The performance met CICC's expectations. The net increase in GUOQUAN stores in 25 was 1,416, reaching a total of 11,566 stores (including 3,010 township stores). Dividends of 290 million yuan were distributed in 25 (dividend payout ratio of approximately 67%), and the company repurchased shares of 180 million yuan. Focus on realization of 26 same-store sales growth guidance CICC estimates that the company achieved high single-digit growth in same-store sales in 25, and plans to continue achieving high single-digit year-on-year growth in store efficiency in 26 through multiple measures. Specific measures include: approximately 3,000 large stores changed to expand categories and consumer scenes (SKU increased to approximately 600, positioning "four meals a day" central kitchen in the community), using barbecue categories as a lever to continue improving off-season performance (barbecue GMV in 3-8M25 increased by 19% year-on-year, driving hot pot GMV off-season increased by 15% year-on-year), unmanned retail (over 3,000 stores completed transformation in 25, planning to continue transforming 3,000 stores in 26), member and online channel construction (online channel and Douyin GMV reached approximately 4.7 billion yuan and 1.5 billion yuan, respectively, in 25). Organizational optimization and deepening of supply chain, consolidating efficient operational foundation Organizationally, the company has about 800 individual employees and 500 "Store Manager Homes" as the frontline operation center, decentralizing management authority and providing operational funding support, and continuously optimizing frontline staff incentive mechanisms. On the supply chain side, the company adheres to the integrated production-supply-marketing model, with 7 major factories by the end of 25. In addition, according to company performance meeting information, the industrial park in Danzhou, Hainan, and the second factory of Daixiaji in Fujian are under construction; the proportion of exports from own factories continues to increase (the proportion of exports from Daixiaji, Heyi, and Chengming factories is about 75%, close to 40%, and 50%, respectively). Focus on store expansion and potential of new models The company's guidance for 26 is a net increase of over 2,934 stores (CICC predicts that the township market and southern China will be key focus areas), with a same-store closing rate of less than 4% year-on-year. In terms of new models, focus on the trial effects of GUOQUAN Stir-fry and Camping stores. Risk warning: Same-store sales and profit margins lower than expected; deterioration of competitive landscape; new models fall short of expectations.