CICC has released a research report reiterating its outperform industry rating for BUSYMING (ASX: 01768) and maintaining a target price of HK$530.

The report projects the company's net profit attributable to shareholders for 2026 and 2027 to be RMB 3.7 billion and RMB 4.53 billion, respectively, with adjusted profits of approximately RMB 4.08 billion and RMB 4.78 billion.

The target price implies a forward price-to-earnings ratio of about 27 times for 2026 and 22 times for 2027. The current share price corresponds to a P/E of roughly 18.4 times for 2026 and 14.7 times for 2027, suggesting an upside potential of around 47%.

Key Points from the Report

The report highlights the company's recent public statement on June 2, 2026, titled "Against Inefficient Competition, Upholding Original Intentions, Building a Healthy Industry Ecosystem." As a player in the leisure food and beverage sector, BUSYMING, which operates the Snack Busy and Zhaoyiming Snacks brands, stated its commitment to complying with national policies aimed at curbing cutthroat competition, fostering a unified national market, and stimulating offline consumption. The company opposes unfair competition and disorderly market saturation, emphasizing compliant operations and rational growth.

Industry Outlook and Competitive Landscape

The analysis suggests the snack retail sector still has low penetration within traditional offline retail channels. With its high operational efficiency, this business model is poised to further replace segments of supermarkets and mom-and-pop stores. From a regional density perspective, while Hunan province has one store per 10,000 people, other provinces still have room for increased store presence. Current industry competition is viewed as healthy, with franchisees making rational expansion decisions based on reasonable payback periods under normal operations.

According to Amap data cited in the report, BUSYMING's store count exceeded 24,000 by the end of May, maintaining a rapid expansion pace. Same-store sales are also expected to improve.

Data from January to May shows that new Snack Busy store openings were concentrated in its established strongholds like Hunan, Hubei, Guizhou, and Yunnan for market densification. In contrast, new Zhaoyiming Snacks stores were more evenly distributed across regions such as Guangdong, Guangxi, Zhejiang, Jiangxi, and Jiangsu. Same-store performance is anticipated to grow year-on-year, supported by operational optimizations and improved merchandising efficiency.

Operational Focus and Profitability Potential

The company is focusing on store quality and operational efficiency enhancements. At the store level, it is implementing standardized practices like "full shelf stocking," "neat arrangement," and "correct product placement," while actively advancing digital infrastructure to optimize supply chain, inventory, and product management systems.

The report posits that the company is transitioning from a phase of growth driven by market opportunities to one fueled by operational excellence. As scale increases and operational efficiency improves, there is potential for medium-to-long-term margin expansion.

Potential Risks to Consider

The report also notes several risks, including intensified competition in certain regions, franchisee management challenges, and food safety concerns.