Huachuang Securities issued a research report stating that considering the resilience demonstrated by DPC DASH's (01405) store model under pressure, combined with sustained rapid profit growth in the coming years, the firm expects the company's net profit for 2025-2027 to be RMB 141/247/345 million (previously RMB 225/328 million for 2025-26), with adjusted net profit of RMB 191/292/385 million. Referencing comparable companies, the firm assigns a 45x PE multiple to 2026 adjusted net profit, with a target price of HK$109.08, maintaining a "Recommend" rating.
Key findings from Huachuang Securities:
Results Overview: For H1 2025, the company achieved revenue of RMB 2.59 billion, up 27.0% year-over-year; operating profit of RMB 380 million, up 28.0% year-over-year; adjusted EBITDA of RMB 320 million, up 38.3% year-over-year; and adjusted net profit of RMB 90 million, up 79.6% year-over-year. During the first half, the company added a net 190 stores to reach 1,198 stores total, with 6 net additions in tier-one cities and 184 net additions in new growth markets. Same-store sales declined 1.0% overall, with Beijing and Shanghai showing positive growth. Average daily sales per store decreased 4.4% year-over-year to RMB 12,915, while store operating profit margin increased to 14.6%.
New Store Expansion Progressing Well with Significant Long-term Growth Potential The company estimates that China's pizza industry currently has approximately 40,000 stores, with industry store count continuing to grow annually. As of mid-year, the company operated 1,198 stores across only 48 cities. The company's city penetration and store count remain significantly below Pizza Hut (present in 900 cities with 3,864 stores). The company plans to open approximately 300 new stores in 2025. Considering factors such as regional brand strength, consumer demand, supply chain and operational capabilities, and potential store returns, the company will balance densifying existing markets with expanding to new cities. The company plans to allocate 20%-30% of new stores to cities entered before end-2022, 40%-50% to cities entered between end-2022 and 2025, with remaining stores in newly entered cities.
Slight 1% Same-Store Decline Shows Store Model Resilience Due to the company's strong brand power, stores in newly entered cities achieve very high initial sales that gradually normalize over time. For example, the first store in Handan, which opened on August 3, generated over RMB 540,000 in first-day sales with 6,020 orders. Cities entered after end-2022 are generally high-quality markets (such as Chengdu, Jinan, Qingdao), creating same-store pressure starting in H2 2024 and becoming more pronounced in H1 2025. Considering that new city stores enter the same-store pool from the 19th month and the high same-store base from these new city stores' exceptional early sales, the company's current same-store performance demonstrates strong operational resilience. Meanwhile, among the 64 stores opened in 15 new cities entered from December 2024 to H1 2025, 24 stores have already achieved full cash recovery. The company estimates these 64 stores have an average payback period of only 11 months, demonstrating strong competitiveness.
Continued Operating Leverage Benefits Drive Sustained Rapid Net Profit Growth Management is committed to long-term development, having built headquarters and factory infrastructure capable of serving thousands of stores since inception. Therefore, during the company's continued growth, headquarters expense ratios continue declining: H1 headquarters personnel costs as a percentage of revenue fell to 5.1%, D&A expense ratio dropped to 1.1%, and administrative expense ratio decreased to 1.9%, declining faster than management expectations. Consequently, the company's adjusted net profit margin increased to 3.5% in H1. The firm expects that with continued store expansion and rapid revenue growth, the company will benefit from economies of scale driving headquarters expense ratio reductions and net profit margin improvements, resulting in net profit growth significantly outpacing revenue growth in coming years.