UBS has released a research report maintaining its "Neutral" rating on XIAOCAIYUAN (00999), while raising the target price from HK$7.2 to HK$8.2, representing a 13.9% increase. The brokerage has trimmed its 2026 earnings per share forecast by 4%, factoring in weaker-than-expected first-half margins and delayed store expansions, though these headwinds were partially offset by a recovery in same-store sales growth (SSSG).

In the first half of the year, XIAOCAIYUAN (00999) reported revenue of RMB 2.9 billion, up 7% year-on-year, with the decline in same-store sales narrowing sequentially, driven largely by a rebound in dine-in customer traffic. Net profit fell 24% year-on-year to RMB 290 million, coming in 3% below UBS's projection due to higher-than-anticipated labor costs, which were partly counterbalanced by a lower-than-expected tax rate.

During the 2026 first half, the company added a net 17 new XIAOCAIYUAN (00999) outlets, bringing the total store count to 824. The original target of reaching 1,000 stores by the end of 2026 has been postponed to next year, reflecting a greater emphasis on the economic viability of new store operations and return thresholds. In the first half of 2026, delivery revenue accounted for 33% of total revenue, down from 39% in the same period of 2025. Management has indicated that going forward, they intend to maintain the delivery revenue mix within a range of 33% to 35%.

Management has reiterated its full-year 2026 guidance for low single-digit year-on-year revenue growth and a net profit margin of 10%-12%, compared to 13.4% in 2025. UBS anticipates that revenue growth will likely approach the upper end of the guidance range, while the net profit margin may trend toward the lower boundary.