CICC: Maintains outperform rating on GUMING (01364) with a target price of HK$36

Zhongjin released a research report stating that it maintains GUMING (01364) outperform industry rating with a target price of HK$36, representing a 36% upside potential. The stock is currently trading at 16.6/13.4 times 2026/2027 P/E. Based on better than expected same-store sales, the bank has raised its profit forecasts for 2026/2027 by 5.4%/6.3% to HK$3.38/4.12 billion. The company announced its 2025 performance, with revenue of HK$12.9 billion, a year-on-year increase of 47%; net profit of HK$3.1 billion, a year-on-year increase of 110%; and core profit (excluding fair value changes, exchange losses, and tax prepayments) of HK$2.8 billion, a year-on-year increase of 78%. In the second half of 2025, revenue increased by 52%, and adjusted core profit increased by 111% year-on-year. The performance exceeded expectations, mainly due to better than expected gross profit margin. The company's gross profit margin in 2025 reached 33%, with a gross profit margin of 34.2% in the second half of 2025, an increase of 4.4ppt year-on-year, mainly benefiting from optimization in transportation planning, formulation, and reduction in franchisee subsidies. Sales expense ratio remained stable at 5.4%, benefiting from scale effect management/research and development expense ratio reducing by 0.7ppt/-0.9ppt. After adjustments, the core net profit margin for the year reached 21.7%, showing supply chain advantages. To address the risk of a decline in takeaway orders, the company proactively raised takeaway prices by HK$3-4 in 2025 to protect franchisees actual income rate. After the decline in takeaway orders in the fourth quarter of 2025, single store profits for franchisees continued to rise, and current takeaway actual income rates have returned to a benign level. Same-store sales in the first quarter of 2026 are expected to achieve double-digit growth, while coffee is expected to continue to contribute additional increment in the first to third quarters, 6th-generation store upgrades will boost single-store performance, and the impact of last year's takeaway subsidy increase is limited to around 5%. The bank expects the company's same-store performance to have good support throughout the year. The company is expected to maintain its pace of new store openings in 2025, actively expanding in provinces and further solidifying its competitiveness in lower-tier markets.