CICC has issued a research report stating that, considering GUOQUAN's (02517) store expansion and same-store sales guidance exceeded expectations, it has raised its forecast for core net profit attributable to parent company shareholders for 2026 and 2027 by 4% and 4%, respectively, to 572 million yuan and 686 million yuan. The current share price corresponds to a price-to-earnings ratio of 17 times for 2026 and 14 times for 2027. The firm maintains an Outperform rating and a target price of HK$4.9, implying P/E ratios of 21 times for 2026 and 17 times for 2027, representing a potential upside of 27%. Key points from CICC are as follows:
Second-half 2025 results were in line with the firm's expectations. The company reported its annual 2025 performance: revenue increased 20.7% year-on-year to 7.81 billion yuan; core operating profit rose 48.2% year-on-year to 461 million yuan; the firm estimates core net profit attributable to parent company shareholders grew 46.5% year-on-year to 440 million yuan, with the profit margin increasing by 1 percentage point year-on-year to 5.6%. The results met the firm's expectations. In 2025, GUOQUAN's net store additions reached 1,416, bringing the total number of stores to 11,566, including 3,010 stores in townships. The company distributed 290 million yuan in dividends for 2025, with a payout ratio of approximately 67%, and conducted 180 million yuan in share repurchases.
Focus is on the realization of 2026 same-store sales growth guidance. The firm estimates the company achieved high single-digit same-store sales growth in 2025. GUOQUAN plans to implement multiple measures in 2026 to drive continued high single-digit year-on-year growth in average store sales. Specific initiatives include: remodeling approximately 3,000 larger stores to expand product categories and consumption scenarios, increasing SKUs to around 600 and positioning them as community central kitchens for "four meals a day"; using barbecue categories to boost performance during the off-season; advancing unmanned retail; and strengthening membership and online channel development.
The company is simultaneously optimizing its organization and deepening its supply chain to solidify the foundation for efficient operations. Organizationally, it utilizes approximately 800 individual frontline units and 500 "store manager hubs" as operational centers, delegating management authority and providing operational funding support, while continuously optimizing incentive mechanisms for frontline staff. On the supply chain front, GUOQUAN adheres to an integrated production-supply-sales model. By the end of 2025, it operated seven major factories. Additionally, according to information from the company's earnings conference, the Danzhou industrial park in Hainan and the second factory of Daixiaji in Fujian are under construction. The proportion of external sales from its self-operated factories continues to grow.
Attention is also on store expansion potential and new business models. The company guides for net store additions exceeding 2,934 in 2026, with the firm expecting township markets and Southern China to be key focus areas. The store closure rate is projected to decrease by 1 percentage point year-on-year to below 4%. Regarding new models, the effectiveness of pilot tests for GUOQUAN stir-fry concept stores and camping-themed outlets will be monitored.
Risks include same-store sales and profit margins falling short of expectations, intensified competitive landscape, and new business models underperforming.