J.P. Morgan maintains Overweight on Guming-H, target price unchanged at HK$38

Overview

This is a model update report by J.P. Morgan on Guming-H(1364.HK). The report mainly incorporates the full-year 2025 balance sheet and cash flow into the model, but explicitly states that earnings forecasts and target price remain unchanged. The overall investment view is positive, continuing to favor the company's management execution, regional densification strategy, affordable fresh tea positioning, and supply chain capabilities.

Core views

The core view is that Guming-H has replicable regional density expansion capabilities and strong supply chain support, enabling it to expand brand penetration in lower-tier cities at attractive prices. The company had reached 13,554 stores by the end of 2025, and management's five-year target is 30,000 stores; J.P. Morgan expects the rapid store opening pace to continue in 2026 and drive 19% CAGR in both revenue and EPS for 2025-2028E. The report believes the market is overly conservative on 2026 same-store sales growth due to the high base in 2025, and future earnings upgrades could trigger further valuation re-rating.

Analysis framework

The report adopts a company research framework combining earnings forecasts, store operating metrics, valuation multiples, and risk scenarios. On the operating side, it focuses on GMV, average daily GMV per store, cup volume, average ticket size, number of stores, net store openings, and margins; on the financial side, it forecasts revenue, adjusted EBITDA, adjusted net profit, EPS, cash flow, and valuation multiples; on the valuation side, it derives the Dec-26 target price of HK$38 using 20x 2027E P/E.

Methodology notes

• Valuation methodsP/E multiple valuation

  20x 2027E P/E

  The HK$38 target price is based on 20x 2027E P/E. The report believes that, considering the company's solid market share gains in a fast-growing industry, a valuation premium to Chinese peers is justified.

• operating_modelstore expansion model

  Store expansion and per-store operating metric forecasts

  The model is built around total GMV, average daily GMV per store, cup volume, average ticket size, total store count, and net store openings, assuming net additions of 3,500 in 2026E and 3,400 in 2027E.

• earnings_modelfinancial forecast model

  Revenue, margin, EPS, and cash flow forecasts

  The report updates the full-year 2025 balance sheet and cash flow while retaining the original earnings forecasts; it projects 19% CAGR for both revenue and EPS in 2025-2028E.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 1364.HK

  Covered stock

  Strengths

  Low-profile management, focused strategy, and strong execution; efficient and replicable regional densification strategy; 97% of stores receive cold-chain deliveries every two days; strong expectations for store expansion and revenue growth.

  Weaknesses

  Rapid expansion depends on franchise store management capability; the high base in 2025 may affect expectations for same-store growth in 2026; free float ratio is only 19.8%.

  Comparison

  The report believes its valuation can be higher than Chinese peers because the company continues to gain market share in a fast-growing segment.

  Risks

  Rapid changes in consumer tastes, franchise store management challenges, rising prices of key raw materials such as coffee, milk, and tea, and reputational risks such as food safety or social media controversies.

Key data

• RatingOverweightThe report maintains a positive rating.
• Current priceHK$25.84As of April 24, 2026.
• Target priceHK$38.00Dec-26 target price, based on 20x 2027E P/E.
• Implied upside47.1%Calculated based on the HK$38.00 target price and the HK$25.84 current price.
• Store count at end-202513,554家Net addition of 3,640 in FY25.
• 2027E store target约20,454家The report model forecasts total store count to exceed 20k in 2027E.
• 2025-2028E revenue CAGR19%Disclosed in the main body of the report.
• 2025-2028E EPS CAGR19%Disclosed in the main body of the report.
• 2026E revenueRmb16,312mnYear-on-year growth of 26.3%.
• 2027E adjusted P/E13.3xBased on forecasts in the table.

Impact & implications

If the company maintains its rapid store opening pace, supply chain delivery efficiency, and regional densification advantages, the market may raise its expectations for 2026 same-store sales and earnings growth, thereby driving a valuation re-rating. Conversely, if consumer preferences change, franchise management becomes more difficult, or raw material prices rise, earnings delivery and support for the target price will face pressure.

Risks

• Rapid changes in consumer tastes may weaken product appeal.
• Management challenges arising from the expansion of franchise stores may affect service quality and earnings quality.
• Rising prices of key raw materials such as coffee, milk, and tea may compress margins.
• Reputational risks such as food safety incidents, labor disputes, or social media controversies may erode consumer trust.

What to watch

• Whether 2026 same-store sales growth exceeds the market's conservative expectations.
• Whether net store openings in 2026E and 2027E are close to the model assumptions of 3.5k and 3.4k.
• The replication efficiency of the regional densification strategy across more provinces.
• Whether cold-chain and supply chain service capabilities can support rapid expansion.
• Whether earnings upgrades will bring further valuation re-rating.