On December 15, 2024, Guming Holdings Co., Ltd. (hereinafter referred to as “Guming”) updated its prospectus, further demonstrating its steady upward trend in the current beverage industry.
As an industry-leading and rapidly growing enterprise, Guming focuses on providing consumers with fresh, delicious, stable quality, and affordable products. In the first three quarters of 2024, GMV reached 16.6 billion yuan, a year-on-year increase of 20.4%; in the same period, the number of stores was 9778.
If you use GMV in 2023 and the number of stores as of December 31, 2023 as a measure, Gu Ming dominates the field of popular ready-made tea stores with a price range of 10 yuan to 20 yuan, and is firmly in the first place in the industry; even in the full-price range of ready-made tea shops, Gu Ming ranks second with outstanding market performance, and its advantages as an industry leader are prominent.
Looking at financial data, revenue for the first three quarters of 2024 was 6.441 billion yuan, adjusted profit (non-IFRS measurement) was 1.149 billion yuan. Looking back at 2023, annual revenue was 7.676 billion yuan, and adjusted profit was 1.459 billion yuan. Revenue mainly stemmed from sales of goods, equipment and services to franchisees, showing stable, good and diverse profit model characteristics.
The ready-to-drink industry is booming, and the advantages of accurate positioning of Gu Ming are evident
Over the past five years, China's ready-to-drink industry has experienced explosive growth, and the market size has continued to expand. Gu Ming accurately focuses on the Chinese mass ready-to-drink tea shop market.
According to Insight Consulting's report, measured by GMV in 2023 and expected GMV growth data from 2023 to 2028, the market is not only huge, but also growing rapidly, and at the same time extremely competitive. In 2023, the GMV of the popular tea shop market reached 108.6 billion yuan. It is expected to continue to rise at a compound annual growth rate of 20.8% from 2024 to 2028, and is expected to exceed 280.9 billion yuan by 2028.
In the fierce market competition, Gu Ming successfully built a solid competitive barrier with its strong product development capabilities, an efficient and stable supply chain system, advanced technology-driven platform capabilities, and a high-quality expansion model of the store network based on geographical encryption strategies.
These core advantages ensure that Guming franchisees can achieve a healthy and sustainable level of profit, maintain a leading position in market competition, and lay a solid foundation for the long-term steady development of the Guming brand.
In the field of product development and innovation, Gu Ming has always maintained a high level of focus and continuous investment, continuously optimizing and enriching the product matrix to meet the increasingly diverse taste needs and consumer experiences of consumers. In the first three quarters of 2023 and 2024, Gu Ming successfully launched 130 and 85 new products respectively. The speed and quality of new product launches were at the leading level in the industry.
At the same time, Gu Ming relies on its perfect operation management system and supply chain support capabilities to ensure that nearly 10,000 stores can simultaneously provide consumers with high-quality products of consistent quality and pure taste, which greatly enhances the brand's market competitiveness and consumer satisfaction.
With excellent product quality and brand reputation, Gu Ming has won the love and trust of consumers, and has accumulated a large and loyal member base. According to the prospectus data, as of September 30, 2024, the number of registered members of the Guming Mini Program has exceeded 0.135 billion, the number of quarterly active members has exceeded 43 million, and member activity is high. Throughout 2023, the average quarterly repurchase rate of Guming reached 53%, far exceeding the average repurchase rate of popular tea shop brands of less than 30%, fully demonstrating the strong appeal and consumer stickiness of Guming products and providing strong support for the brand's continued development.
Gu Ming also knows that winning together with franchisees is the core principle of enterprise development. It has created rich profit margins for franchisees and built close and long-lasting cooperative relationships. According to prospectus data, in 2023, Gu Ming franchisee's single-store operating profit reached 0.376 million yuan, and the single-store operating profit margin reached 20.2%, greatly surpassing the general profit margin level of less than 15% in the current Chinese tea shop market during the same period, and its profitability was excellent.
Looking at it the other way around, the store's outstanding performance has greatly stimulated the enthusiasm and confidence of franchisees to open stores. As of September 30, 2024, in the group of franchisees that have been operating Guming stores for more than two years, each franchisee has operated an average of 2.9 stores. Of these, 71% of franchisees have two or more franchisees, and the store network continues to expand in encryption, forming strong market penetration.
A strong supply chain system supports the high quality of products, and is deeply involved in the sinking market to seize growth opportunities
According to prospectus data, as of the end of 2023, Guming had the largest cold chain storage and logistics infrastructure among existing tea shop brands in China, which enabled its franchisees to make full use of high-quality raw materials such as fresh fruit, tea, and fresh milk with a short shelf life to produce high-quality drinks to meet consumers' demand for healthy and fresh drinks. Throughout 2023, Gu Ming completed cold chain distribution of raw materials with a total value of more than 4 billion yuan. The distribution scale ranked first in the industry, further highlighting its supply chain advantages and market competitiveness.
As we all know, the reason Gu Ming can provide consumers with fresh, tasty, high-quality and affordable products is inseparable from the strong support of its strong warehousing and logistics supply chain system. As of September 30, 2024, Guming has successfully operated 22 modern warehouses, with a total construction area of about 0.22 million square meters, including more than 0.06 million cubic meters of cold storage space, which can meet the storage needs of various raw materials under different temperature conditions and ensure the freshness and quality stability of raw materials.
In addition, about 76% of Guming's stores are located within 150 kilometers of the warehouse. Relying on an efficient logistics distribution network, fresh raw materials can be delivered to major stores in a timely and accurate manner, which can ensure the freshness and consistent quality of the store's products.
Meanwhile, Gu Ming's store layout strategy based on geographical encryption has achieved remarkable results in the national market expansion process. As of September 30, 2024, Gu Ming has successfully established a network of stores in 17 provinces across the country, and has continued to steadily increase store density to further consolidate its market position. At the same time, there are still many provinces that have yet to be laid out, which may have reserved broad development space and potential for Gu Ming's future business growth.
According to market data, since there is still a large market demand for ready-made tea in second-tier cities and below, it is expected that in the next few years, second-tier cities will continue to be the fastest growing GMV in the Chinese ready-to-drink tea store market, and the market growth momentum is strong.
Gu Ming, on the other hand, has already established a strong brand influence and market share in second-tier cities and below. As of September 30, 2024, about 80% of Gumin stores were located in second-tier cities and below.
At the end of 2023, Guming's market share in second-tier cities and below was about 22% in the popular ready-to-drink tea shop market, occupying an important position. Furthermore, by the end of 2023, the proportion of Guming stores located in townships reached 38.3%, while the proportion of the other top five popular tea shop brands in townships was generally less than 25%. By September 30, 2024, Guming's share of township stores had further increased to 40%, reflecting that the company had already sunk deep into the market, exploiting potential consumer demand, and had obvious market layout advantages.
It is worth mentioning that among the top ten tea shop brands in China ranked by GMV at the end of 2023, Guming is the only company that can frequently deliver fresh fruit and fresh milk with a short shelf life to stores in low-tier cities. This enables its franchisees to obtain industry-leading products and service efficiency in store operations, effectively improving store performance and profit levels, and further enhancing Minggu's competitive advantage and brand appeal in the sinking market.
Technology empowers store operations and builds a positive feedback development ecosystem
Gu Ming attaches great importance to technological application and innovation, and has built technology-driven, rapidly iterative platform capabilities to provide comprehensive and intelligent operation support and management services for tens of thousands of its stores. Through advanced technical methods such as big data analysis, intelligent marketing, and supply chain optimization, Gu Ming can accurately grasp market dynamics and changes in consumer demand, adjust product strategies in a timely manner, optimize store operation processes, improve supply chain efficiency, and achieve efficient store operation and performance growth.
Strong platform capabilities, stable and long-lasting franchisee relationships, and excellent consumer satisfaction have formed a positive feedback cycle development ecosystem that is closely linked and mutually reinforcing.
Gu Ming empowers franchisees with advanced platform technology, enhances their operational efficiency and profitability, thereby enhancing franchisee loyalty and willingness to cooperate; high-quality franchisee services and store products and service quality further enhance consumer satisfaction and brand reputation, attract more consumers to choose Gu Ming, and promote the expansion of the brand's market share and continuous business growth; and the growing market share and business scale also provides more resources and impetus for Gu Gu's technology R&D and platform upgrades, so that it can continuously optimize platform capabilities to create greater value for franchisees and consumers, and ultimately, It can promote the healthy development and continuous evolution of the entire brand ecosystem.
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In summary, with its strong financial performance, leading market competitiveness, excellent product quality, strong supply chain system and stable franchisee cooperation network, as well as its precise market positioning and sinking strategic layout, Gu Ming stood out in the rapidly developing Chinese ready-to-drink industry, and gradually showed good development potential and investment value. Furthermore, Guming Technology's empowerment has seen initial results. Its ability to build a technology-driven and rapidly iterative platform is also expected to continue to lead the development trend of the industry in the future.
Gu Ming did show many highlights and potential after updating the prospectus, making it one of the high-profile and most anticipated IPO candidates in the Hong Kong capital market.
