GF Securities released a research report projecting AUNTEA JENNY's (02589) adjusted net profits for 2025-2027 at RMB560 million, RMB640 million, and RMB760 million, respectively. The company's clear growth strategy, anchored by its core China market expansion, demonstrates robust store openings and same-store sales potential. Its dual growth drivers—Tea Waterfall and overseas markets—complement its customer base and enhance cyclical resilience.

Based on peer comparisons, GF Securities assigns an 18x 2026 P/E valuation, deriving a fair value of HK$121.32 per share and a "Buy" rating. Key highlights include:

1. **Rapid Growth in Mid-Priced Tea Segment**: Founded in 2013, AUNTEA JENNY has become the second mid-priced freshly made tea brand to surpass 10,000 stores. Since May 2025, it has benefited from food delivery competition, with strong same-store GMV performance. The report notes improved customer acquisition and retention, sustaining same-store resilience.

2. **Dominance in Northern China**: AUNTEA JENNY leads in northern China with 4,784 stores (52.1% regional share as of 2024), outpacing rivals by ~1,900 stores. Its low-cost franchise model (initial investment ~RMB275K vs. industry average RMB350K) boasts a 98% renewal rate, with 48.8% of new stores opened by existing franchisees.

3. **Product Innovation and Diversification**: The company launched 136 new products in 1H2025, with 15.8M quarterly active members and a 40.6% repurchase rate. Coffee offerings under AUNTEA JENNY and Tea Waterfall brands are expected to drive same-store sales alongside baked goods.

4. **Tea Waterfall and Overseas Expansion**: Tea Waterfall, priced below RMB10, emphasizes quality ingredients and value, gaining traction in rural and campus markets. It has surpassed 1,000 signed/operational stores. Overseas, AUNTEA JENNY’s U.S. and South Korea outlets show promising early performance, prioritizing developed economies.

**Risks**: Macroeconomic volatility, slower store expansion, and intensified competition.