According to the research report released by GTJA, the driving force of the domestic instant beverage industry mainly comes from the growth of per capita cup consumption, with the proportion of mid-range and low-end tea drinks expected to increase and the high-end segment to shrink. Considering the potential for market expansion, cultural and consumer habit compatibility, as well as the difficulty of supply chain development, Southeast Asia is the first choice for the international expansion of the domestic instant beverage industry, based on the calculation of store opening space.

GTJA's main opinions include:

Instant beverages are emotional value consumption with low individual spending and high frequency, providing growth momentum for expansion and international expansion, where the growth of coffee is superior to that of tea drinks.

The strategy of large signature products and breaking through marketing barriers, as well as the establishment of barriers in supply chain and management capability, are key to brand building in the rapidly evolving instant beverage market, especially in the mid-range segment. Long-term success depends on the ability to follow consumer demand changes through continuous product innovation and expanding marketing strategies, while the stability of product quality, cost, and the company's ability to manage the upper limit of stores are determined by the supply chain and operational management capabilities.

GTJA believes that Mxg ice city has a strong hold on the low stock price, with heavy asset investment in advance, and its scale effect is well established, firmly holding the leading position in the affordable market and continuously clearing the tail-end brands. In the mid-range beverage market, it is not ruled out that new brands may emerge through hit products, traffic marketing, or trading quantity for price advantage. However, the ultimate competition still boils down to the battle of supply chain and operational capabilities. Due to the constraints from tightened financing on the capabilities of latecomers, the front-runner brands that have accumulated capital and possess strategic flexibility, R&D innovation capabilities, and supply chain capabilities are more likely to succeed.

Investment opportunities in the instant beverage industry mainly occur in the expansion, recovery, and transformation phases. Companies with higher growth potential and stronger competitive barriers should enjoy valuation premiums. Expansion phase: matching growth ambitions with store expansion is expected to lead to valuation and performance enhancements. Generally, PEG and PS valuations are used, and the market will provide different valuation premiums based on growth prospects. Recovery phase: using PE valuations, after sudden crises or poor management, the valuation steadily improves with comprehensive optimization of operational strategies and gradual verification of performance. Transformation phase: when a new brand develops well and becomes the second growth curve, the valuation reflects future expectations in advance.

Investment recommendation: We recommend bullish on luckin coffee (LKNCY.US) and pay attention to the progress of IPOs such as Mixue Bingcheng, Guming, and Bawang Cha Ji. Mixue Bingcheng is a leading low-price on-demand beverage company with high barriers in terms of scale, supply chain, and brand power, and has an excellent first-mover advantage that makes it difficult for latecomers to catch up. In the mid-to-high-end on-demand beverage market, we are bullish on Guming, which has strong R&D and new product development capabilities and still has a wide range of domestic store openings, as well as Bawang Cha Ji, which has standardized tracks and strong marketing capabilities. In the coffee market, we are bullish on the leading brand luckin coffee which has a strong moat, and we are paying attention to improvements in the market structure.

Risk warning: There is a risk of deviation in market space estimation; weak consumer demand, store openings below expectations, and increased industry competition.