The exhibition shop has advanced, and the annual exhibition goal has been completed. According to the company's official website, as of December 22, the number of stores opened by the company was 766. Compared with 415 new stores added at the end of 2020, the lower limit of the company's annual exhibition target (400-450 new stores opened throughout the year). Looking at the pace of opening stores, 2021H1 opened 135 new stores. The pace of opening stores was affected to a certain extent in the third quarter due to factors such as the disturbance of the epidemic, license processing, and capital. The number of new stores opened in the third quarter was 120+; in the fourth quarter, the company accelerated its exhibition stores. Up to now, 150+ new stores have been opened, and the same store is still relatively stable. Looking at the distribution of stores, as of December 22, the proportion of first-tier/second-tier/third-tier stores and below of the company's stores was 11%/57%/32% respectively; 179 stores were about to open, of which the first-tier/second-tier/third-tier stores and below accounted for 8%/47%/44%.

A social platform for young people, and the standardization system has broad scope for expansion. The pub industry's 100 billion race track is a sub-industry in the catering industry where it is extremely difficult to achieve large-scale profit due to various reasons such as crowd penetration rate, frequency of consumption, and part-time operation. The company pioneered the development of stores in the industry, targeting young people aged 18-28 to create a social platform for young consumers. Single stores are of high quality, and standardized replication capabilities are extremely strong. 1) Single store: Focus on affordability, but maintain a high gross profit margin through the high proportion of proprietary products and upstream bargaining power for third-party products under the advantage of scale. Focus on free social space & streamline products and services to achieve staff streamlining, control rent through selecting locations and forming a complete marketing drainage system, reduce cost rates, and achieve a profit margin of 20-30% from store operations. 2) Form a standardized store expansion system with a “big back office, small front end”: the back office completes site selection and marketing, and front-end stores have a high degree of standardization. In the process of expanding stores, the marketing, supply chain, product selection and pricing systems were continuously improved, and the first-mover advantage was highlighted. The current pattern of the superposition pub industry is fragmented (CR3 in 2020 was only 1.8%), and the company, as a leader, expects to continue integrating the industry.

Investment advice: We expect to open 430, 500 and 650 stores in 2021/2022/2023 respectively. We expect the company to achieve revenue of 16.7/37.8/633 billion yuan in 2021-2023, up 104.1%/126.4%/67.5%, respectively. The adjusted net profit returned to the mother was 1.2/51/1.05 billion yuan respectively, up 53.6%/335.0%/108.1%, respectively. The current stock price corresponds to PE 2022/2023 45X/22X According to estimates, a drop in passenger flow below 10% in 2023 still supports valuations, and there is a certain margin of safety. Although factors such as the epidemic and capital affected the pace of store opening in the third quarter, the company actively exhibited stores in the fourth quarter, and the company's annual exhibition goal was completed. At the same time, according to tracking, the repair performance of the same store was relatively good, and the operation was resilient under the turmoil of the epidemic. As a chain leader in the pub industry, we are optimistic that the company will raise the target price of Helens (9869.HK) to HK$30.9 to HK$30.9, corresponding to a market capitalization of HK$38.5 billion, corresponding to 30 times PE in 2023, using a high-quality single-store model. Maintain a “buy” rating.

Risk warning: 1) Store expansion falls short of expectations. 2) Fluctuations in raw material prices. 3) The epidemic is repeated. 4) Increased competition in the industry.