On May 26, PAGODA GP (02411) delivered a clear signal to the market with a 14.79% surge in its share price, a trading volume of 5.6555 million shares, and a strong performance where buy orders significantly outnumbered sell orders. From the market perspective, the stock closed up 14.79% at HKD 1.630 for the day, hitting an intraday high of HKD 1.640, with an amplitude as high as 16.2%. A more critical signal lies in the trading volume—5.6555 million shares were traded on the day, with a turnover of HKD 8.8239 million. Among these, buy orders (active buying) reached 4.153 million shares, far exceeding the 1.0555 million sell orders. This data clearly indicates that buying interest dominated absolutely, with strong willingness for capital inflow, rather than a passive pull-up or last-minute rally.

From a technical pattern perspective, PAGODA GP's share price had been hovering around HKD 1.40 for an extended period, near its 52-week low. This volume-backed surge effectively broke through the resistance of multiple short-term moving averages, forming a typical "bottom breakout with high volume and a long bullish candle" pattern. This is not an ordinary rebound but a clear signal of accumulating bullish momentum and a trend reversal. Therefore, it is reasonable to infer that this significant rise in PAGODA GP is likely not a result of fleeting market sentiment speculation but a reversal trend backed by capital, logic, and sustainability.

The Core of the Rise: From "Turnaround from Distress" to "Rebirth from Ashes" The rise in PAGODA GP's share price is by no means without foundation. As early as the supplier conference in April this year, Yu Huiyong, founder and chairman of PAGODA GP, explicitly stated that 2025 had completed a comprehensive consolidation akin to "strengthening the foundation and nurturing vitality," and 2026 was formally designated as the "year of rebirth from ashes." The capital market's response to this underwent a lagged reaction from observation to confirmation, and the breakout on May 26 precisely represents a concentrated confirmation of the qualitative improvement in fundamentals.

First, the store model has successfully transitioned from aggressive expansion to quality restoration. During 2024-2025, PAGODA GP undertook a "counterintuitive" move—proactively closing over 1,600 underperforming stores, reducing the total store count from a peak of 6,081 to 4,468. While this might seem like a step backward in traditional retail logic, it was a precise surgical-like cleansing. Data serves as the best litmus test. In the second half of 2025, PAGODA GP achieved a net profit attributable to shareholders of approximately RMB 25 million, with a net increase of 82 stores, reversing the trend of continuous store closures. This indicates that the company's "consolidation" phase has passed, and the inflection point where the store network shifts from contraction to restoration has been established.

Simultaneously, PAGODA GP's franchise ecosystem has also been reshaped. The initial investment per store has decreased from the previous RMB 280,000-300,000 to about RMB 230,000, significantly lowering franchise costs. In the latter half of the year, the company's new stores achieved balanced distribution across high-tier, mid-tier, and lower-tier markets, validating that PAGODA GP's standardized model—characterized by community proximity, online-offline integration, and store-warehouse integration—possesses cross-regional adaptability.

Second, the "Good Fruit Repayment" initiative has established a virtuous cycle from traffic acquisition to efficient conversion and efficiency improvement. While optimizing its stores, PAGODA GP made core adjustments to its product and pricing strategies: based on product differentiation and consumer price sensitivity, core products were categorized into traffic-driving products and margin products, with targeted implementation of differentiated pricing and marketing systems. Among these, the monthly "Good Fruit Repayment" traffic-driving promotional event became a key lever for strategy execution. In 2025, this event cumulatively attracted over 25 million store visits, generating sales exceeding RMB 500 million. Driven by this traffic engine, the company's annual store order volume maintained mid-single-digit growth, with signature fruits and Grade A fruits accounting for 62% of retail sales. The total membership reached 95.3 million, with 32,000 private community groups contributing over RMB 4.5 billion in annual sales. The significance of this data lies in the fact that customer traffic has taken the lead in recovery and is forming a positive cycle of "traffic acquisition, efficient conversion, and efficiency improvement."

Third, the To B segment and "Fruit+" initiatives are gradually opening up the company's second growth curve. In traditional perception, PAGODA GP is merely a fruit retailer. However, the current growth logic has undergone a qualitative transformation. On one hand, PAGODA GP's To B supply chain is progressing steadily. In 2024, the company's To B revenue reached RMB 1.26 billion, a year-on-year increase of 21.7%. By 2026, the company plans to fully open its fruit supply chain, which will propel PAGODA GP's transition from a retail enterprise to a platform-based enterprise. On the other hand, PAGODA GP has begun trial operations of the "Fruit + Snacks" division, establishing joint ventures with local retail channels in major cities through the formation of non-wholly owned subsidiaries to rapidly test and optimize new store models. This layout will shift PAGODA GP from a single fruit retailer to a comprehensive service platform for multi-scenario food retail.

These new ventures are not mere "pie in the sky" but natural extensions based on PAGODA GP's over two decades of deep cultivation in global supply chain capabilities. When the leverage effect of the supply chain is unleashed, its value ceiling will be completely opened.

From proactive contraction and cleansing to stop the bleeding, to model optimization and traffic restoration, and further to boundary expansion and incremental growth emergence, PAGODA GP's most challenging adjustment period has evidently passed. Capital markets ultimately reward companies that make correct decisions in adversity. Therefore, PAGODA GP's volume-backed long bullish candle is not the end of the story but the beginning of a new cycle.

Industry Tailwind: From "Large but Fragmented" to "The Strong Get Stronger" Fruit retail is a super track characterized by rigid demand, high frequency, and a scale exceeding trillions of yuan, currently undergoing a structural upgrade from "low quality and low price" to "brand and quality." As industry concentration accelerates and the company itself undergoes triple improvements in store restoration, traffic closure, and the start of its second growth curve, PAGODA GP's share price rise is supported by both "industry dividends" and "fundamental inflection points."

Specifically, as a fundamental component of consumer spending, fruit retail is a trillion-yuan track of rigid demand. According to data from Qianzhan Industry Research Institute, China's total fruit retail sales reached RMB 1.5125 trillion in 2025 and are still expanding steadily at a growth rate of 5%-6%. Simultaneously, per capita fresh fruit consumption has risen to 68 kg/year, with a compound annual growth rate of nearly 6%. More critically, consumer demand is undergoing a qualitative change—shifting from quantity satisfaction to health, quality, and convenience. This means that the "street stall" fruit sales model, previously dominated by farmers' markets and roadside stalls, will be phased out at an accelerated pace. Consumers are willing to pay a premium for quality, brand, and convenience.

Within this context, due to low industry concentration, leading retailers like PAGODA GP will fully capitalize on industry dividends through their brand barriers and economies of scale. According to information obtained, China's fruit chain retail industry currently presents a "large but fragmented" landscape. In 2025, the industry's CR3 was only 5.67%, and CR7 was merely 6.86%. This indicates that the industry is still in its early stages of "fragmented competition," with significant room for consolidation. Meanwhile, large-scale chain fruit specialty stores are rising rapidly, leveraging advantages such as diverse product varieties, professional selection, and good consumer experiences. As the industry shifts from "incremental competition" to "stock competition," the brand barriers and scale effects of leading enterprises will become the most robust moats.

This is well validated in the case of PAGODA GP. As of the end of 2025, PAGODA GP had approximately 4,468 stores, firmly ranking first in the industry and establishing a hard-to-surpass advantage in channel density. Additionally, from source to consumption, PAGODA GP has built end-to-end control capabilities spanning cultivation, post-harvest, and retail. In 2025, the company further launched systematic solutions such as BLOF ecological cultivation technology and variety licensing empowerment, fully opening its core capabilities to upstream and downstream partners. This depth of supply chain is likely difficult for any competitor to replicate in the short term.

Simultaneously, the long-term adherence to high-quality, high-value-for-money business philosophy has continuously solidified PAGODA GP's differentiated brand perception deeply in consumers' minds, thereby achieving resonance across three barriers: channel, supply chain, and brand.

Clearly, when industry dividends meet a company's inflection point, a rise is not accidental but inevitable. As consumers' demands for quality and brand increase and operational pressures on small and medium-sized fruit stores intensify, the industry will accelerate its concentration towards leading players. As a leader, PAGODA GP is poised to "capture" the largest share in each round of industry reshuffling. The company's own successful navigation through store model consolidation and restoration, traffic closure, and the gradual opening of its To B and "Fruit+" second growth curves provides a solid fundamental basis for this share conversion.

Institutional judgments also corroborate this logic. As early as April, CITIC Securities upgraded PAGODA GP's rating to "Buy," with a target price of HKD 2.9, explicitly stating that the investment theme for 2026-2027 has shifted from "whether it can survive" to "how fast profits can recover and how far valuations can shift." Galaxy Securities similarly assigned an "Overweight" rating. The consensus among leading institutions speaks volumes.

In summary, the significant rise on May 26 is not a brief spike but a confirmation of PAGODA GP's fundamental inflection point after two years of strategic consolidation. As store model quality is restored, new business formats are gradually implemented, and the trillion-yuan fruit track experiences structural dividends from brand concentration, the upward shift in PAGODA GP's valuation benchmark is just beginning.