多重积极信号显示业务即将好转

Jiumaojiu (9922 HK) Multiple positive signs suggest a turnaround Target PriceHK$3.18(Previous TPHK$2.99)Up/Downside18.0%Current PriceHK$2.70 Tai Er’s SSS decline has already stabilizedand itsrestaurantOP margin hasstarted to improve HoH in 1H25.Backed by an array ofpositive signsin 2H25E,includingTai Er’s store revamp, improved breakeven point, less impairmentlosses, launch of Song hotpot’s new store format and a new brand, webelievethe turnaround is near. Hence,we raise our rating to BUY with TP of HK$ 3.18. The number of store closures in 2H25E may be a miss, in our view.Asthe management highlighted in theresultscall that they will close another40 to 50 Tai Er stores in 2H25E, the total store closures of the group inFY25Eshouldreach around 100 andaccountfor 13% of total sales, whichis worse than management’s previous guidance of 10%. This may lead to acut in sales estimates in the next few years. China Consumer DiscretionaryWalter WOO(852) 3761 8776walterwoo@cmbi.com.hk But we have turned more positive about the group in 2H25E andonwards.Apart from the miss in store count, there are quite a number ofpositive signs thatmake usturn more optimistic on the group as a whole,namely: 1) Tai Er’s SSS decline may have stabilized (where table turnover was at3.1x in 2Q25, same as that in 1Q25,while it should have dropped due tothe seasonality).Infact, the SSS recovery rate (vs 2019) in 2Q25 has alsostabilizedvs that in 1Q25), and noted that positive of the new store formathas not been kicked in yet, as there are only about 20 revamped stores (vs566in total).Noted that SSS decline had narrowed to SD in Jul 2025. Source: HKEx 2) Tar Er’s new store format has been a success (where SSS may increaseby at least 15% after revamp).Suchpositive may start to kick in and lead topositive SSSG in 4Q25E (as the number of new format stores will reachabout 150vs524 in total). 3) Tai Er’s restaurant level OP margin seems to have bottomed in 1H25 andmay further rebound in 2H25E, because it can stillmanageto stay ratherflattishat 13.4% in 1H25 (vs 13.8% in 1H24) even when the SSS was fallingby about 19% YoY.Thiswas mainly helped by closures of those non-performing stores andreduction in staffs per store. 4) Impairment losses associated with store closures should diminish in2H25E as the provision done in 1H25 are mostly for stores closures in2H25E and there might not be too many closures going forward in FY26E. Source: FactSet 5) Song hot pot will roll out a new store format in 2H25E, which has anemphasis of more fresh ingredients, healthier soup bases with zero-additiveand a happy dining atmosphere. Recent reports:Yum China (9987 HK)-Target kept butcash return may be limited(6Aug25) And 6) the groupwill launch a new brand (with a brand positioning ofdelicious, fun and good-looking) in 4Q25E, whichisbelieved to be scalable,have a good synergy with current supply chain and infrastructure and in alarge industry which is full of potential. Green Tea Group (6831 HK)-1H25Eprofit comes as surprise with positive2H25E outlook(4Aug25) Luckin Coffee (LKNCY US)-Sales arebooming but costs are also rising(31Jul25) Jiumaojiu (9922 HK)-SSS recovery andstore revamp on track(12 Jun25) Green Tea Group (6831 HK)-A casualChinese cuisine leader of great value(24 Jun25) Upgradeto BUY with TP of HK$ 3.18, based on 16x FY26E P/E (rolled overfrom 13x FY25E P/E).We have revised down our FY25E/ 26E/ 27E net profitforecasts by 4%/ 13%/ 16% in order to factorin: 1) worse-than-expected storecounts and expansion, but 2) better-than-expected opex control.Despite the smallmiss in 1H25, we have turned more bullish on the Company, supported by theinitial success of Tai Er’s store revamp, potential inflection ofstore closures andstronger-than-expected restaurant level OP margin.Therefore,weupgradeourrating to BUY with a new TPof HK$ 3.18, based on 16x FY26E P/E (rolled overfrom 13x FY26E P/E). The stock is now trading atjust14x FY26E P/E, still farbelow5-yearaverage of 20x. 1H25 results slightlybelow expectations.In 1H25, Jiumaojiu’s sales droppedby 10% YoY to RMB 2.75bn, 3% below BBGestimates.During the period,netprofit also fell by 16% YoY to RMB 61mn,missingBBGestimatesby 5%. Webelieve this small miss was due to the higher-than-expected staff costs and otheropex (despite the better-than-expected effective tax).But the operating numbersin 1H25havestarted to improve, vs 4Q24, in general. EventhoughJMJ’s samestore sales declineworsenedslightly to 20% in 1H25, vs 18% drop in 4Q24, TaiEr’s and Song’s same store sales drop were at 19%/ 20% in 1H25, bothimprovingfrom-25%/ 27% in 4Q24. JMJ/ Tai Er/ Song’s table turnover were at about 2.5x/3.1x/ 3.8x in 1H25, down by 11%/ 18%/ 16% YoY, but has started to stabilize vs2.4x/ 3.0x/ 4.2x in 4Q24. In terms of store network, JMJ/ Tai Er/ Song were at 68/566/ 76 in 1H25,downby 6%/ 17%/ 16% YoY. Most of these should be wellexpected as the Company has already reported its 2Q25operating numbers amonth ago. Earni