Guojin Securities initiated coverage on GUOQUAN (02517) with a "Buy" rating, recognizing its leadership in China's home meal solutions market. The company's competitive edge stems from its efficient supply chain, continuous product innovation, extensive network of over 10,000 stores, and strong brand recognition. With a focus on its community central kitchen strategy, GUOQUAN is actively expanding into lower-tier markets, leveraging its diverse product portfolio and store formats to drive growth.

GUOQUAN is a leading one-stop home meal solutions brand in China, offering ready-to-eat, ready-to-heat, ready-to-cook, and pre-prepared ingredients to cater to diverse dining scenarios. Its widespread community store network and robust digital supply chain enable broad consumer reach, delivering products that are "varied, fast, high-quality, and affordable."

From an industry perspective, China's home meal solutions market is growing steadily, with consolidation potential. As a market leader, GUOQUAN is well-positioned to benefit from this trend. According to its prospectus, the market size reached RMB 367.3 billion in 2022 and is projected to grow to RMB 940 billion by 2027, with a CAGR of 20.7%. The industry remains fragmented, with the top five players accounting for just 11.1% of the market in 2022. GUOQUAN ranked first among all retailers with a 3.0% market share, underscoring its leading position.

Key competitive strengths include: 1) **Supply Chain**: Efficient production and logistics with a single-product, single-factory model. By H1 2025, the company had seven self-owned factories, specializing in core products like meatballs, seafood, and hotpot bases. 2) **Product Innovation**: High cost-performance ratio and continuous category expansion. From 2020 to H1 2025, GUOQUAN launched 66 to 412 new SKUs annually, refreshing its product lineup to meet evolving consumer preferences. 3) **Distribution**: Expansion into lower-tier markets and regional growth, supported by a multi-format store strategy and a mature franchise model. By Q3 2025, store count reached 10,761. 4) **Branding**: Sustained investment in brand building, reinforcing its image as a national hotpot brand. Prepaid card balances surged 37.2% YoY to RMB 590 million in H1 2025.

Growth opportunities lie in the continued execution of its community central kitchen strategy, with lower-tier markets as a key focus. These markets offer significant potential, as traditional mom-and-pop stores lack the efficiency of GUOQUAN’s rural store formats. Further product and store format diversification is expected to drive same-store sales and store expansion.

**Risks**: Slower-than-expected store openings; weaker-than-expected franchisee profitability; delays in new store format development.