Introduction to this report:

The overall operating data was restored under the recovery in passenger flow after the epidemic, the expansion of stores was more focused on the frontline, the turnover rate picked up under the impetus of subsidies, and profitability gradually improved.

Summary:

Investment suggestions: Considering the gradual restoration of the catering industry and the pressure to expand stores in the short term, net profit for 2023-2025 was lowered to 1.42 billion (-63%) /3.11 (-55%) /3.97 (-66%), and the target price was lowered to 4.71 million Hong Kong dollars (-53%) to maintain the rating increase.

Performance summary: The company's 23H1 achieved revenue of 2,932 million yuan/ +33%, of which Xiabu achieved 1,376 million yuan/ +31%, rounding up 1,402 million yuan/ +37%, other revenue of 93 million yuan/ +15%, operating profit of 168 million yuan, margin 5.9%, net profit of 0.02 billion yuan, margin of 0.1%, -13% for the same period last year, and -1.6% for the same period in '21;

Operating data was repaired at an accelerated pace as passenger flow picked up after the epidemic. ① Looking at store expansion performance, in response to the acceleration of exhibition stores in Tier 1 and 2 regions, 23H1 first-tier/second-line/third-tier Xiabujing opened 17/24/-10 stores. The corresponding growth rate was 5.6%/8.2%/-4.6%, and the net revenue growth rate was 26.5%/24.6%/47.1%; rounding up the first-line/second-line/third-tier/overseas net opening stores 15/32/2/2. The corresponding growth rate was 20%/29.6%/40%/20%, net revenue growth rate of 20%/29.6%/20%, Compared to the speed of opening stores in Xiabu Faster, the low-tier style of play is also more obvious; ② Judging from the customer unit price, Xiabu has a significant downward trend. At the same time, the turnover rate has increased dramatically. The subsidy activity behind it has played an obvious role. First-tier, second-tier, and third-tier passenger unit prices are -12.5%/-3%/5%, and the turnover rate is +32%/22.2%/40%; round up, the subsidy for first-tier and second-tier cities is also obvious. First-tier and second-tier passenger orders are also -4.3%/-0.7%, but as a result, third-tier and overseas turnover rates are +2.1%/9.8%, but as a result, third-tier and overseas turnover rates are also +2.1%/9.8%, but as a result, third-tier and overseas turnover rates are also +2.1%/9.8%, but as a result, third-tier and overseas turnover rates are also +2.1%/9.8%, but as a result, third-tier and overseas turnover rates are also +2.1%/9.8%, but as a result, third-tier and overseas turnover rates are also +2.1%/9.8%, but as a result, third-tier and overseas Impact, corresponding to a turnover rate of -9.5% compared to the same period, line 1 and 2 Both overseas and overseas have achieved high growth.

The overall profit in the first half of the year was marginal, and behind this, impairment measures mentioned the impact of supply chain construction. Looking at expenses, raw material expenses and employee remuneration expenses both increased after the epidemic, with a year-on-year ratio of +31%/23%, and single-store rent +4.4%; profit side gradually recovered, strategic asset impairment calculation was hampered; restaurant-level operating margin was 11.5%, flat month-on-month, +1pct year on year; Guimu's net profit was 0.02 billion yuan, 0.1%, reversing losses year on year.

Risk warning: The epidemic has been repeated, store openings have fallen short of expectations, a marked decline in the same store, etc.