On the evening of August 18, BAMA TEA (06980.HK) released its interim results for fiscal year 2026. During the first half, the company generated revenue of RMB 1.402 billion, a year-on-year increase of 31.8%; gross profit reached RMB 765 million, up 30.3%; and profit attributable to shareholders of the company stood at RMB 198 million, marking a robust growth of 65.3%.

The profit growth rate significantly outpaced revenue expansion, yet the improvement was not driven by a stronger gross margin. The company's gross margin for the period was 54.6%, a decrease of 0.7 percentage points year-on-year. According to the announcement, this decline was attributed to transportation and warehousing costs rising at a faster pace than revenue.

The enhanced profitability was largely due to period expenses growing more slowly than revenue. Selling and marketing expenses amounted to RMB 397 million, an increase of 19.6% year-on-year, with their share of revenue dropping from 31.2% to 28.4%. Administrative expenses grew by 8.2% to RMB 98.92 million, with their proportion falling from 8.6% to 7.1%. Notably, advertising and promotional outlays climbed to RMB 193 million, a surge of approximately 39.5%, exceeding the revenue growth rate.

From a channel perspective, offline revenue totaled RMB 886 million, up 29.7% year-on-year, accounting for 63.2% of total revenue. Online revenue reached RMB 512 million, growing 36.1% and lifting its share to 36.5%. The company noted that offline growth was primarily fueled by increased purchases from franchisees and customized procurement by major clients, while online performance was boosted by e-commerce platforms, live-streaming sessions, and influencer endorsements.

As of the end of June, BAMA TEA operated 3,845 stores, a net increase of 260 stores year-on-year, comprising 3,619 franchised outlets and 226 directly operated stores. It is important to clarify that during the first half, the total store count grew by 72 on a net basis: franchised stores added 81, while direct stores contracted by nine, underscoring that network expansion remains predominantly franchise-led.

By product category, tea product revenue reached RMB 1.29 billion, up 34.5% year-on-year, representing 92% of total revenue. Among these, oolong tea revenue climbed 52.3% to RMB 465 million, and black tea revenue grew 37.7% to RMB 282 million. However, green tea and white tea revenues declined by 0.9% and 5.8%, respectively. The core BAMA TEA brand generated RMB 1.266 billion in revenue, a 35.0% increase, accounting for roughly 90% of total sales. The "Xin Ji Hao" and "Wan Shan Hong" brands grew by 9.9% and 1.5%, respectively, indicating that the multi-brand business remains relatively limited in scale.

On the supply side, revenue from self-manufactured products rose 43.0% to RMB 850 million, with their share of sales increasing from 56.1% to 60.8%. Revenue from third-party OEM products grew 17.9% to RMB 548 million. As of the end of June, the company held RMB 1.079 billion in cash and cash equivalents with no bank borrowings, and its capital expenditure for the first half totaled RMB 40.3 million.

This interim report reveals that BAMA TEA's growth is being propelled by franchise procurement, online channels, and core product categories, while declining expense ratios have further amplified the profit increase.

However, the announcement did not disclose same-store sales or terminal retail data from franchise stores. As such, the rise in franchisee procurement cannot be directly equated with a simultaneous improvement in end-market sell-through. Looking ahead to the second half, store efficiency, the conversion of marketing investments, and gross margin trends remain critical metrics for assessing the sustainability of this growth trajectory.