Goldman Sachs Reiterates Buy Rating on Guming Holdings with HKD 36 Target Price

Overview

Based on the content of Guming Holdings' 2026 Partner Conference, Goldman Sachs reiterates its Buy rating. The core investment thesis lies in the company driving growth through optimizing the dine-in experience, upgrading store quality, and expanding product categories (coffee/breakfast), with the current stock pullback offering an entry opportunity. The target price of HKD 36 corresponds to a 23x PE for 2026, implying 54.9% upside potential.

Core views

The profitability of the dine-in channel is significantly superior to delivery; the company's strategy focuses on increasing the dine-in proportion. Key drivers include breakfast category trials (1400+ stores), a student membership system, and deepening engagement with community customers. Coffee performance is outstanding, with daily sales reaching 90 cups/store, and the target sales mix is set to increase from the current 20% to a long-term 25%. Menu optimization continues, with SKUs reduced from 43 in 2025 to 36, while star products (such as Orange Cocoa Latte) are launched monthly. Store quality has become the core driver of growth. New stores opened after Q3 2025 are performing significantly better than existing stores, with the Guangdong/Guangxi regions leading sales due to a higher proportion of large-format stores. The company plans to establish a Franchisee Development Center to strengthen operational support and intends to enter higher-tier cities such as Nanjing, while overseas expansion is in the preparation stage. A 2026 marketing budget of RMB 400 million will be used for celebrity endorsements and IP collaborations to unify brand image and the 'freshness' positioning. Short-term performance is under pressure mainly due to high base effects and weather impacts, but same-store sales have rebounded in April-May. Goldman Sachs expects full-year same-store sales to be flat, implying a high single-digit decline in Q2 and Q3, but incremental contributions from coffee and breakfast will offset the high base pressure. The new product pipeline is rich, with upgraded yogurt, ice cream, and coffee products scheduled to launch over the next three months.

Analysis framework

The institution adopts a dual-dimension analysis framework of 'Channel Quality + Category Expansion': first, comparing profitability differences between dine-in and delivery channels to validate the rationale of the dine-in strategy; second, quantifying category expansion progress through coffee sales volume and breakfast trial data; finally, evaluating execution effectiveness by combining store quality metrics (new store performance, regional sales comparisons). On the valuation front, the PE method is employed, applying a 23x multiple based on expected 2026 earnings, with implied growth rates matching the company's industry standing.

Methodology notes

• Valuation MethodPE/PEG valuation

  Applying a 23x PE valuation based on expected 2026 earnings per share

  The PE valuation method measures valuation levels through the ratio of stock price to earnings per share; a 23x PE reflects the institution's recognition of the company's growth potential and should be assessed for reasonableness against industry average PE

• Competition & Strategy FrameworkMoat / competitive advantage

  Store quality and supply chain advantages constitute competitive barriers

  A high-quality store network and fresh food supply chain capabilities form differentiated advantages, supporting the dine-in experience and product innovation, falling within the scope of sustainable competitive advantage analysis

• Industry/Sector Analysis FrameworkSupply-demand framework

  Coffee category expansion addresses intensifying market competition

  Amid an increasing number of players in the fast-food coffee segment, the company is seizing market share by preemptively布局 the coffee category, reflecting the impact of supply-demand dynamics on strategic formulation

Asset mapping & comparison

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

• Guming Holdings (1364.HK)

  Direct beneficiary; core vehicle for dine-in upgrades and category expansion

  Strengths

  Scale advantage of store network, supply chain 'freshness' positioning, first-mover advantage in coffee category

  Weaknesses

  High proportion of lower-tier cities constrains brand upgrading; reliance on delivery persists

  Comparison

  Compared to Nayuki/Heytea, has a higher dine-in proportion and broader coverage in lower-tier markets

  Risks

  Increased complexity in store management; intensifying coffee price wars

Key data

• 12-Month Target PriceHKD 36.00Corresponds to 23x PE for 2026
• Coffee Daily Sales Volume90 cups/storeUp from 80 cups at end-2025; target sales mix 20%-25%
• Breakfast Trial Stores>1400 storesMainly located in Guangdong/Guangxi, contributing over RMB 200 in daily GMV
• 2026 Marketing BudgetRMB 400 millionUsed for celebrity endorsements and IP collaborations
• Same-Store Sales Growth ExpectationFlat for the full yearImplies high single-digit decline in Q2 and Q3

Impact & implications

The report suggests that upgrading the dine-in experience will enhance overall profitability, while coffee and breakfast category expansion opens up growth space. Optimizing store quality can alleviate pressure from normalized delivery subsidies, while penetration in higher-tier cities and overseas preparations provide long-term upside. The recent short-term stock pullback has already reflected concerns over high base effects, with new product launches and warming weather serving as catalysts.

Risks

• Insufficient management capability for large-scale store network
• Store expansion speed lower than expected
• Single-store output below expectations
• Intensified industry competition triggering price wars
• Rising store operating costs
• Franchisee subsidies exceeding expectations
• Diminishing economies of scale in cross-regional expansion
• Food safety issues

What to watch

• Progress in achieving coffee sales mix targets
• Effectiveness of breakfast category rollout
• Quality metrics of newly opened stores
• Progress in penetration of higher-tier cities
• Market feedback on new product launches