Bocom International has released a research report, forecasting that BUSYMING (01768) will achieve a revenue compound annual growth rate (CAGR) of approximately 18% and an adjusted net profit CAGR of around 23% from 2025 to 2028. The profit growth is expected to outpace revenue growth, indicating the company's transition from a scale-expansion phase to a profitability-realization phase within its bulk-snack retail model. The adjusted net profit margin is projected to rise steadily from 4.1% in 2025 to 4.6% by 2028. Based on a 25x average price-to-earnings ratio for 2026-27, the firm has set a target price of HK$542.00, corresponding to a PEG ratio of 1.1x, which is deemed attractive among comparable companies. This marks the initiation of coverage with a "Buy" rating.
Bocom International's key viewpoints are as follows:
As a leading player in China's bulk snack retail sector, a duopoly structure is taking shape. The bank previously noted that China's snack industry is undergoing a restructuring driven by channel efficiency, with the bulk snack retail segment on a rapid growth trajectory. The industry has formed a duopoly dominated by BUSYMING and Wanchen Group, collectively holding over 70% market share. Looking ahead, the bank believes the industry's competitive logic is shifting from store expansion and market share battles to a dual focus on expansion and efficiency enhancement. As the industry leader, with approximately 22,000 stores by the end of 2025 and a market share of around 40%, the company is well-positioned to achieve rapid and high-quality growth during this phase, leveraging its scale advantages.
Ample room for store expansion and category extension to enhance per-store value. The company still has significant potential for store growth, with its market share likely to increase further. The bank estimates the number of stores will approach 31,000 by 2028, representing approximately 40% growth from current levels. Concurrently, the company is extending its product categories around snack consumption scenarios, introducing hot food, refrigerated, and frozen items to broaden consumption occasions and average transaction value, which is expected to further boost per-store value.
Efficiency-driven profit model with margins entering an improvement phase. The company's operational efficiency ranks among the best in the global retail industry, with a cash conversion cycle of only 5 days in 2025. The bank anticipates the company will enter a period of enhanced profitability driven by the release of economies of scale and an optimized competitive landscape. Benefiting from moderated industry competition, increased bargaining power with suppliers due to its scale of over ten thousand stores, and effective cost dilution through its digital systems, the bank forecasts the company's adjusted net profit margin will show a steady upward trend from 2026 to 2028. Coupled with high asset turnover, the company's future return on equity (ROE) is expected to maintain an excellent industry level exceeding 20%.
Risk reminders: Intensified price competition due to industry rivalry; challenges in managing franchisees at a scale of over ten thousand stores; uncertainties in supply chain development and managing operational complexity during category extension; macroeconomic fluctuations.