Introduction to this report:

2024H1 revenue has increased, and we are optimistic about the company's future growth potential.

Key points of investment:

Maintain an increase in holdings rating. 2024H1 profit was optimized at an accelerated pace. The adjusted net profit for 2024-2026 was 0.11, 0.156, and 0.259 billion yuan respectively, and net profit was 0.26 (+0.57), 1.13 (+0.71), and 2.32 (+1.33) billion yuan, respectively. According to the adjusted net profit, the PE corresponding to the adjusted net profit was 69x, 49x, and 29x, respectively.

Performance summary: 2024H1 revenue 2.041 billion yuan/year over year +48.3%, store level operating profit 0.296 billion yuan/year on year +59.0%, store level operating profit margin 14.5% /year on year +1.0pct; adjusted net profit of 50.89 million yuan, which turned a loss year on year into profit, adjusted net interest rate of 11.4% /year on year +2.2pct; net profit to mother 10.91 million yuan/year on year +24.6% (2023H1 has 0.119 (Profit from changes in fair value of billion yuan convertible preferred shares).

Same-store sales maintained positive growth, and stores in new growth markets expanded rapidly. ① Number of stores: As of 2024H1, the total number of stores was 914, +36% year-on-year, with a net increase of 146 2024H1. Among them, the number of 2024H1 stores in the north was 363, +9.7% year over year, 2024H1 was a net increase of 12; the number of new growth market stores was 551 house/ +61.6% year over year, and 2024H1 increased 134. As of August 20, 31 additional stores have been opened, the number of stores is 945, 29 more are under construction, and 21 have already signed contracts. It is expected that the target of opening 240 stores by 2024 will be achieved. ② Same-store sales: 2024H1 same-store sales increased 3.6%. The average daily sales volume of a single 2024H1 store was 13515 yuan/YoY +10.1%. Among them, the average daily order volume of a single store was 162 orders/YoY +15.7%, and the average unit price was 83.6 yuan/-4.6% YoY. The decline in the average unit price was affected by the decline in the share of takeout, and the share of delivery services fell from 63.6% in 2023H1 to 46.4% in 2024H1.

New growth markets provide growth drivers and continuous optimization of profitability. Cost and expense ratio: ① 2024H1 raw material cost 27.3% /y-0.3 pct; ② Employee compensation: 2024H1 store-level employee cash salary 27.4% /year over year +0.5pct, mainly due to demand for offsite training and new store personnel reserves; corporate level employee cash remuneration 5.5% /year over year -1.9 pct year on year, improving human efficiency; share compensation 2.0% /year over year -3.4 pct; ③ Rental expenses: 2024H1 rent 9.9% /year over year -0.2 pct; ④ 2024H1 plant equipment depreciation 4.8 %/year over year - 0.4 pct, intangible asset amortization 1.3%/year on year - 0.6 pct, water and electricity 3.5%/year on year - 0.1 pct, advertising 5.4%/year on year - 0.5 pct year on year. The proportion of store operation and maintenance expenses is stable, and other expenses are 3.3% /1.6 pct year over year.

Risk warning: Opening stores fell short of expectations, the same store declined significantly, and consumer demand was weak.