Mixue Likely to Face Headwinds

Dow Jones
08/28

0756 GMT - Mixue is expected to face headwinds in the near term, according to Deutsche Bank's Han Zhang. The analyst says the Chinese food-and-beverage chain's 1H miss "revealed short-term weakness amid strategy execution," noting the drag from average sales per store. "Contributions from ingredient upgrades and the coffee business rollout still take a long time to bear fruit, which presents downside risk to margins in the near term," the analyst adds in a note. Mixue is also facing intensified industry competition, as peers are expanding operations into both the tea and coffee businesses, Deutsche Bank notes. It keeps a buy rating on the stock but cuts the target price to HK$203.00 from HK$240.60. Shares fall 6.3% to HK$213.40.

 

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