On May 28th, a major summer roadshow event was held in Shenzhen. The event gathered over 40 popular Hong Kong-listed companies from sectors including AI, hard tech, new energy, new consumer goods, and biopharma. Among them, the new consumer benchmark company PAGODA GP (02411) was invited to participate and deliver a compelling presentation.

At the event, the company comprehensively reviewed its overall operational posture, financial performance, and digital technology implementation results for 2025 and 2026. It also addressed key investor concerns regarding new business expansion, revenue and profit trends, and single-store refined management, clearly outlining the company's current development landscape and its medium to long-term strategic direction.

Operational Recovery Underway

In response to a sluggish consumer environment, the company proactively optimized its store network layout, leading to short-term pressure on store numbers. Following a full year of model optimization and operational adjustments, store expansion returned to a positive trajectory in the second half of 2025, achieving a net increase of 82 stores. Currently, the company operates over 4,000 offline stores across more than 170 cities in 22 provinces.

Influenced by the contraction in store scale, the company's overall revenue experienced a corresponding phased decline, recording a loss of 4 billion yuan in 2024. As a series of operational optimization measures took effect, the company's operating conditions continued to improve, achieving a slight profit in the second half of 2025, marking a fundamental turnaround in profitability. Based on current operational trends, the company's gross profit scale and gross margin are expected to have room for steady growth in 2026, with the profit recovery trend set to continue positively.

To reverse the operational downturn, the company focused on three key areas: reconstructing the single-store model, implementing digital technology, and upgrading internal management, thereby comprehensively strengthening store operational capabilities. In 2025, both customer traffic and gross profit per store achieved double growth. Coupled with operational efficiency gains from technological empowerment, overall expense levels were effectively reduced, and the results of cost reduction and efficiency improvement were gradually realized.

Coordinated Multi-Sector Development

At the level of daily store operations, the company's business structure continued to optimize. Although average daily sales per store saw a slight low-single-digit decline in 2025, both average daily customer traffic and average daily gross profit per store achieved mid-single-digit growth, indicating a significant improvement in store profitability quality. The company refined its product categorization, distinguishing between traffic-driving items and high-margin categories, matching them with differentiated pricing strategies and marketing plans to precisely balance customer flow and revenue.

Simultaneously, it continued to enrich its product matrix, with non-fresh fruit category sales per store increasing by 13% year-on-year, injecting new momentum into overall revenue growth. Offline stores accelerated their image and service upgrades, with themed stores being rolled out, accompanied by refined in-store services and a comprehensive after-sales system to enhance the end-consumer experience.

Private community operations have become a crucial tool for increasing store revenue and managing inventory. In 2025, the company's cumulative registered members exceeded 90 million, with over 30,000 WeChat communities established, amassing nearly 17 million community followers. Community user sales per store increased by 6% year-on-year. Utilizing communities for pre-sale models efficiently manages store inventory while regularly conducting food safety knowledge dissemination to strengthen quality control.

The gift business underwent a comprehensive iteration and upgrade. While deepening its presence in the traditional holiday gift market, the company also actively explored various emerging festivals (such as "520" and Women's Day), launching customized small-portion fruit gift boxes to precisely tap into the gift consumption market potential. Furthermore, the company leveraged its online mini-program for one-click ordering and direct home delivery, while simultaneously establishing after-sales channels.

To address post-gift communication challenges, the brand introduced a one-click complaint service, allowing gift recipients to directly provide feedback. In 2025, the gift business accounted for 14% of sales, with average daily sales per store growing 9.7% year-on-year, becoming a new revenue growth point.

In addition to deepening its presence in the B2C market, the company continued to increase its focus on the B2B segment, achieving approximately 12 billion yuan in B2B revenue in 2025. Beyond collaborating with traditional supermarkets, the B2B business also focuses on serving government and enterprise units, providing services like afternoon tea, holiday gift boxes, and meeting fruit supplies.

Leveraging scenario-based operations and supply chain capabilities to expand its premium client base, the company has partnered with numerous local trade unions and corporate welfare procurement platforms to serve employees, and collaborated with financial institutions to launch promotional activities, significantly boosting store traffic.

While the overseas business faced slight short-term pressure, the company will continue to optimize its layout in line with market changes. Category brand building continued to advance in depth, with 53 distinctive category brands already established. The company focuses on building category brands from the source, introducing new varieties and exporting cultivation and preservation technologies to help partners improve quality and yield, steadily advancing brand marketization.

Building category brands is a long-term, ongoing effort. This is also a crucial medium to long-term strategy for the company, which consistently adheres to the philosophy that "good fruit is grown," focusing on deep cultivation of category brands at the source.

Driven by Technology and Responsibility

Digital and intelligent transformation has become a core focus for the company at this stage. It actively embraces cutting-edge technologies like AI to build a full-chain intelligent operation system. A new-generation POS system, an AI intelligent ordering system, and an AI store operation diagnosis system have been successively implemented, alongside the launch of a dedicated fruit knowledge large language model.

These intelligent tools cover the entire process from ordering and checkout to store diagnosis and product service, significantly simplifying operational workflows, improving overall operational efficiency, further reducing operating costs, and empowering the core retail business with technology.

Simultaneously, with food safety as the foundation for a fruit retailer, the company always prioritizes quality control management. For violations in franchise store operations, the company has established a comprehensive control mechanism, employing tiered handling methods such as specialized training, issue review, and penalty for violations; for franchisees who seriously violate food safety and operational standards, their franchise qualifications are directly revoked, strictly guarding the food safety red line and protecting brand reputation.

Furthermore, facing the trend of diversified retail formats and the expansion of formats like discount snacks into the fresh produce category, the company is presented with significant collaboration opportunities. As an enterprise with over two decades of supply chain experience and 26 distribution centers nationwide, it can meet daily delivery demands. For businesses newly entering this field with small fruit demand and difficulty sourcing high-quality fruit, the company is the optimal choice. Therefore, the company is fully opening its supply chain to make its products ubiquitous.

Despite intense industry competition, fruit, as one of the healthiest snacks, has limitless market potential. Looking towards 2026 and beyond, the company has defined three core strategic directions. First, continuously optimize the single-store operating model, shorten the investment payback period for franchisees, enhance the attractiveness of end stores, and steadily expand the offline store network. Second, deepen the full-scenario application of AI technology, continuously unleashing the potential of technology for cost reduction and efficiency improvement. Third, fully open the supply chain system, collaborating with industry partners to build a healthy ecosystem for fruit retail, leveraging full-chain advantages to achieve win-win outcomes for multiple parties and propel the company into a new stage of high-quality development.

Q&A Session Highlights

Question: The company invested 250 million in a subsidiary to develop the fruit snack business. Does this signify a formal entry into the discount retail industry?

Answer: Yes, the company has indeed made moves in this area. In early 2026, the company collaborated with some regional brands and established a controlling subsidiary. The company hopes to jointly promote the development of snack and fruit formats with local partners. This also marks an expansion of the company's future growth trajectory, not limited to the fruit industry but also aiming to empower snack stores through fruit.

Question: A new business format called "fresh food snacks" has recently emerged in the market. What is the company's view on this new format, and are there corresponding layout plans?

Answer: I briefly mentioned the "fresh food snack" format earlier. It is currently very popular. Major retailers are experimenting in this direction. These stores typically rely on larger store models supported by innovation funds, usually 200 to 300 square meters in area, with relatively high consumption levels. Nevertheless, the company still considers this a good market opportunity to meet the needs of some young people. The company might trial a strategy focusing on fruit and short-shelf-life food snacks, such as baked goods and marinated products, in some stores, for instance, in CBD areas or street-side shops. In Jiangsu, the company will also trial this strategy in specific stores. This is closely related to the characteristics of each commercial district. This trend also validates the broad application of fruit. For the company, this precisely provides an opportunity to leverage its supply chain advantages, making it more efficient and extreme.

Question: When does the company expect to achieve profitability?

Answer: Looking at the situation from the first half of this year, particularly from January to April, the company achieved a slight profit, with no losses in settlement. Therefore, it is anticipated that the full-year performance for this year may be break-even, starting to stem losses and turn a profit, although a specific profit level for this year cannot be predicted yet. At the beginning-of-year results briefing, the company stated that a more important task this year is to build a new profit model. Therefore, the company is still adjusting its franchise model this year, while store expansion scale is relatively limited. The company expects to add roughly over two hundred new stores this year. Previously, to support stores and boost traffic, the company implemented significant discounts and subsidies for stores and consumers, leading to phased pressure on profits in 2024 and 2025. Now, as the effects of earlier investments materialize, same-store metrics have stabilized and rebounded. The company has proactively reduced subsidy intensity this year. With store network expansion and the recovery of same-store operations, revenue and profit are expected to enter an upward trajectory.