According to Zhitong Finance APP, Tianfeng Securities released a research report stating that DPC DASH (01405) is a leading company in the pizza sector with strong growth potential, expected to achieve continuous expansion in the Chinese market. The firm is optimistic about subsequent store expansion, cost reduction and efficiency improvement, and profitability enhancement through headquarters expense dilution. Based on 25H1 performance, the firm maintains its 25-27 earnings forecast, expecting adjusted net profit of 170/270/380 million yuan for 25-27, and maintains an "overweight" rating.

Main viewpoints from Tianfeng Securities are as follows:

**Company Released 25H1 Performance Announcement** For 25H1, revenue reached 2.59 billion yuan, up 27.0% year-on-year. Store-level operating profit was 380 million yuan, up 28.0% year-on-year. Store-level operating profit margin was 14.6%, up 0.1pct year-on-year compared to 24H1 and up 0.2pct sequentially compared to 24H2. Adjusted net profit was 90 million yuan, up 79.6% year-on-year. Adjusted net profit margin was 3.5%, up 1.0pct year-on-year compared to 24H1 and flat sequentially compared to 24H2.

**Store Opening and Operations: Full-year store opening target 98% secured, mature markets maintain positive same-store growth**

1) Store expansion: Total store count reached 1,198 at the end of 25H1, up 31.1% year-on-year. Net new stores in 25H1 were 190. As of August 15, an additional 43 net new stores were opened, with 27 stores under construction and 35 stores signed. The company is expected to achieve its 2025 target of 300 new stores (full-year store opening target is about 98% secured). By city classification, first-tier cities had 515 stores at the end of 25H1, up 3.4% year-on-year, accounting for 43% of total stores, with 6 net new stores in 25H1. Non-first-tier cities had 683 stores at the end of 25H1, up 64.2% year-on-year, accounting for 57% of total stores, with 184 net new stores in 25H1. The company has entered 48 cities by the end of 25H1, entering 9 new cities in 25H1.

2) Same-store sales: 25H1 same-store sales declined 1.0% year-on-year, mainly due to the high base effect from strong initial sales momentum of stores that entered new markets after December 2022. Breaking it down, first-tier cities maintained positive same-store growth in 25H1, and markets entered before December 2022 also showed positive same-store growth. Average daily sales per store were 13,000 yuan.

3) Revenue by city: In 25H1, first-tier market revenue was 1.08 billion yuan, up 7.2% year-on-year, with same-store sales maintaining positive growth. Non-first-tier market revenue was 1.51 billion yuan, up 46.6% year-on-year, with revenue proportion increasing to 58.2%, up 8pct year-on-year, benefiting from store expansion and strong performance of new stores in newly entered markets.

4) Membership: Member count reached 30.1 million by the end of 25H1, up 55% year-on-year. Member contribution to revenue reached 66.0% in 25H1, up 2.4pct year-on-year.

**Costs and Expenses: Salary expense ratio optimized** Raw material cost ratio was 27.3% in 25H1, flat year-on-year. Total employee compensation expense ratio was 33.8%, down 1.1pct year-on-year. Among this, store-level employee cash compensation expense ratio was 27.7%, up 0.3pct year-on-year due to increased average headcount per store for new market preparation. Headquarters employee cash compensation expense ratio was 5.1%, down 0.4pct year-on-year, mainly due to economies of scale. Share-based compensation expense ratio was 1.0%, down 1.0pct year-on-year, mainly due to reduced number of share options granted. Rental expense ratio of 10.0%, depreciation expense ratio of 4.8%, and advertising and promotion expense ratio of 5.3% all remained relatively stable year-on-year.