HELENS (09869) is firmly pursuing its platform-based strategic transformation, continuously optimizing existing stores, rapidly expanding partner stores, beginning to validate its community space composite model, and demonstrating strong supply chain capabilities. The company is expected to support rapid performance growth once the consumption environment improves and new business models are proven successful. Given the current consumption environment where daily store sales are under pressure, the company's operating revenue is projected to reach 650 million yuan, 790 million yuan, and 950 million yuan for 2025-2027 respectively, with net profit attributable to shareholders of 100 million yuan, 130 million yuan, and 160 million yuan respectively. The "Overweight" rating is maintained.

Event: On August 29, the company released its interim results for 2025. In H1 2025, the company achieved revenue of 290 million yuan (down 34.0% year-on-year), net profit attributable to shareholders of 50 million yuan (down 27.8% year-on-year), and same-store daily sales declined 17.6% year-on-year. An interim dividend of 146 million yuan was declared.

Main observations:

**Platform Transformation Strategy Continues, Hi-Beer Partner Stores Expand, Direct-Operated Store Plan Restarted**

1) In terms of store count, the company's total store network increased from 560 stores at the end of 2024 to 580 stores in H1 2025.

2) By store type, direct-operated, franchise cooperative, and Hi-Beer partner taverns numbered 109, 39, and 432 respectively at the end of the reporting period, representing changes of -3, -3, and +26 respectively during the period. Partner stores accounted for 74.5% of the total network at period-end, serving as the main driver of network expansion.

3) By geographic distribution, first-tier, second-tier, third-tier and below cities, and regions outside mainland China saw net changes of +1, -6, +24, and +1 stores respectively, reaching 36, 140, 399, and 5 stores. Third-tier and below cities were the primary expansion areas.

4) The company restarted its direct-operated store plan in May 2025, opening new stores in new markets and upgrading existing markets with new store iterations to achieve store environment upgrades, improved customer experience, while reducing rental and labor costs to enhance operational performance. As of the reporting date, 10 stores have opened or are scheduled to open soon.

**Direct-Operated Daily Sales Recovery, Partner Stores Under Pressure, Cost Optimization Supports Profitability**

1) Daily sales: In H1 2025, overall daily sales per direct-operated and franchise cooperative tavern recovered to 8,300 yuan (up 10.7% year-on-year), with first-tier, second-tier, and third-tier and below cities achieving 9,000 yuan, 8,800 yuan, and 7,700 yuan respectively, representing year-on-year growth of 3.4%, 18.9%, and 6.9%. Hi-Beer partner taverns' overall daily sales were 4,200 yuan (down 22.2% year-on-year), facing pressure.

2) Same-store performance: Same-store daily average revenue declined 17.6% year-on-year to 9,000 yuan.

3) Profitability: Despite revenue and same-store pressure, the company demonstrated resilient profitability. Direct-operated taverns' gross margin contribution improved from 70% in the same period last year to 74%. Self-owned alcoholic beverages and third-party alcoholic beverages achieved gross margins of 80.2% and 57.8% respectively, reflecting improved supply chain management capabilities. Meanwhile, due to the company's proactive efforts to reduce rental costs and improve labor efficiency, employee benefits and human services expenses, along with right-of-use asset depreciation costs, declined significantly by 36.2% and 47.2% year-on-year respectively, leading to improved store-level operating profit margins for same stores in Q2 2025.

**Multiple Initiatives to Enhance Same-Store Performance, Strengthen Core Competitiveness and Explore New Models**

1) Same-store performance improvement: The company plans to restore same-store performance through multiple initiatives including deepening performance incentives, optimizing store operations, continuously optimizing product matrix, and strengthening marketing system development.

2) The company will continue to focus on its platform-based development strategy, expanding stores through the Hi-Beer partner program while restarting direct-operated store expansion. Simultaneously, the company will continue to strengthen its two core competitive advantages: supply chain integration management and space environment creation, leveraging these to explore new third-space models.

**Risk Warnings:** 1) Platform transformation progress below expectations; 2) Raw material price volatility; 3) Intensified industry competition.