Incident: In the second quarter, the company sorted out adjustments at the strategic level and clarified the long-term development direction. Recently, the company's strategic direction and positioning of the brewing and ready-to-drink sectors have been implemented. The subsequent tactical level will revolve around the established direction: 1. The milk tea sector: for the standardized milk tea industry, to meet the needs of consumers in different scenarios. It also reflects the company's product advantages: 1) Health: develop new low-sugar, light-weight milk tea products with few additives; 2) Good taste: the company must achieve a level comparable to or even better than existing tea stores; 3) Food safety: standardized manufacturing models have an advantage in terms of quality stability; 4) cost performance.

2. Meco fruit tea: The future style of play is mainly related to tea shops, highlight differentiated product forms in cups, and further expand scenarios, such as home consumption scenarios, leisure and entertainment scenes (such as high-end buffets, etc.), and gifts. Newly targeted advertising materials began to be launched in April of this year, advertisements were launched in late June, and more marketing campaign companies will gradually launch in the future. 3. Frozen lemon tea: Currently positioned as a healthy cold drink, targeting the carbonated drink market. Currently, frozen lemon tea is still mainly being developed as a model market, and resources are mainly invested in the two provinces and cities of Beijing and Guangdong. Freezing lemon tea requires a high degree of freezing. Currently, the company has more than 10,000 freezers and cooperates with the purchase of ice channel resources. The company is also experimenting with innovative frozen display formats for terminals, and subsequent marketing feedback needs to be further investigated.

The three core categories were strategically sorted out and repositioned to lay a solid foundation for the long term. In terms of tactics, the company is still in the exploration and accumulation stage. How to connect brand positioning with consumers in the most effective way will be the focus of the third quarter and the next work. These tasks will also be carried out one after another in terms of publicity and traffic exposure in Q3. In terms of channel construction, mass sales systems, Sam's Club stores, vending machines, etc. were enriched in 24Q2, and restaurants also set up separate teams to develop. Channel work is progressing in an orderly manner. After new brand demands gain momentum, the channel is expected to be better accepted.

Investment advice: The company's growth rate was under slight pressure in the second quarter, but once the direction is determined, the tactical level can also be targeted. The company maintains its own strategic strength and accumulates potential energy for subsequent expansion. The company is expected to achieve operating income of 4.139/4.76/5.481 billion yuan in 2024-2026, up 14.18%/15.00%/15.15% year on year; achieve net profit to mother of 0.332/0.42/0.529 billion yuan, up 18.59%/26.37%/25.95% year on year; achieve EPS of 0.81/1.02/1.29 yuan, corresponding PE of 15/12/9x, maintaining a “gain” rating.

Risk warning: food safety risks, fluctuating raw material prices, seasonal risk fluctuations.