Goldman Sachs maintains Buy on Guming and keeps it on the Conviction List, target price HK$31

Overview

This is a Goldman Sachs 1H26 earnings preview on Guming Holdings (1364.HK). The report expects the company to release 1H26 results in late August and forecasts 1H26 sales of RMB7.372 billion and adjusted core net profit of RMB1.63 billion, representing YoY growth of about 30% and 43%, respectively. Goldman Sachs also cuts its 2026-28E adjusted core net profit forecasts by 6%-13%, mainly due to slower new store additions, faster-than-expected normalization of delivery subsidies, higher convertible bond financing costs, and a slightly higher effective tax rate.

Core views

The core view is that short-term growth expectations have been revised down, but the 19% pullback in the share price has already largely reflected concerns over slower store expansion and negative same-store sales growth. Goldman Sachs believes Guming still has room for store expansion, while category expansion, differentiated new products, and improved store quality should help support same-store sales. Earnings growth in 2026E should also benefit from the base of stores added during the previous rapid expansion and from operating leverage. The report maintains a Buy rating and sets the target price at HK$31.

Analysis framework

The report combines an earnings preview with earnings forecast revisions, breaking down factors such as sales growth, store count, per-store GMV, equipment sales, gross margin, SG&A expense ratio, FX gains/losses, withholding tax, and valuation multiples, and uses 2026E P/E to estimate the target price.

Methodology notes

• Valuation methodsTarget P/E method

  20x 2026E P/E

  The HK$31 target price is based on 20x 2026E P/E; the valuation multiple is lowered from the previous 23x due to weak sentiment in the consumer sector, weaker same-store sales under a high base, and downward earnings revisions.

• Earnings forecastSales and profit breakdown

  Revenue, stores, margin, and expense decomposition

  The report separately forecasts per-store GMV, average store count, equipment sales, gross margin, SG&A expense ratio, FX gains/losses, and taxes to derive its 1H26 revenue and net profit forecasts.

• Factor frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs' factor framework uses metrics such as forward sales, EBITDA, EPS, ROE, ROCE, CROCI, and P/E, P/B, EV/EBITDA to compare stocks on a relative basis.

• M&A assessmentM&A Rank

  Acquisition probability tiering

  The report discloses Guming's M&A Rank as 3, indicating a relatively low probability of being acquired, and therefore typically excluding any M&A premium assumption from the target price.

Asset mapping & comparison

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

• Guming Holdings Ltd. (1364.HK)

  Covered company and core recommended name

  Strengths

  The store network still has room for expansion, category expansion and differentiated new products can support same-store sales, margins are supported by operating leverage and efficiency improvements, and after the valuation pullback the target price still implies 40.0% upside.

  Weaknesses

  The 2026E new store forecast has been lowered, same-store sales face short-term pressure, delivery subsidy normalization is faster than expected, and higher financing costs and tax rates weigh on earnings forecasts.

  Comparison

  The report notes that Guming's store network remains significantly smaller than Mixue and Luckin, so expansion room still exists.

  Risks

  Poor management of the store network, store openings below expectations, weaker-than-expected per-store output, intensified competition, price wars, rising store costs, higher-than-expected subsidies to franchisees, lower-than-expected economies of scale from regional expansion, and food safety issues.

• China Greater China Retail coverage universe

  Relative rating reference universe

  Strengths

  Guming is compared for relative return potential within Goldman Sachs' covered universe of China and Greater China retail/consumer stocks.

  Weaknesses

  Overall weak sentiment in the consumer sector has led to a lower target valuation multiple.

  Comparison

  The coverage universe includes companies such as Anta Sports, Chagee, Luckin Coffee, Mixue Group, Pop Mart, and Yum China.

  Risks

  Sector sentiment, competitive dynamics, promotional intensity, and fluctuations in consumer demand can affect valuation and earnings expectations.

Key data

• 12-month target priceHK$31.00Based on 20x 2026E P/E, reduced from the previous 23x valuation multiple.
• Current priceHK$22.14Price disclosed in the report, implying 40.0% upside to the target price.
• 1H26 sales forecastRMB7.372 billionExpected to grow about 30% YoY; another sales breakdown section mentions about 31% revenue growth in 1H26.
• 1H26 adjusted core net profit forecastRMB1.63 billionExpected to grow 43% YoY, excluding the impact of withholding tax and FX losses.
• 1H26 reported net profit forecastRMB1.47 billionIncluding RMB80 million in withholding tax and RMB80 million in FX losses.
• 2026E new store forecast2,000 storesCut from the previous 3,600 stores.
• 1H26 net new store forecast780 storesAverage store count is expected to grow 32% YoY.
• 1H26 gross margin forecast33%Close to the full-year 2025 level, expanding 1.6 percentage points YoY.
• 1H26 operating margin change+1.9 percentage pointsCalculated as gross margin minus SG&A expense ratio, it would expand about 3 percentage points YoY.
• 2026E P/E13.9xThe report states the share price is at about 13x 2026E P/E, while the table shows 13.9x.
• 2026E revenue forecastRMB15.252 billionPrevious forecast was RMB16.609 billion.
• 2026E EPS forecastRMB1.37Previous forecast was RMB1.45.
• Market capitalizationHK$52.7 billion / US$6.7 billionDisclosed in the report's Key Data.
• Enterprise valueHK$43.8 billion / US$5.6 billionDisclosed in the report's Key Data.
• 3-month average daily trading valueHK$113.6 million / US$14.5 millionDisclosed in the report's Key Data.

Impact & implications

The report's investment implication is broadly positive: downward earnings revisions confirm short-term pressure on store expansion and same-store sales, but valuation has already pulled back and margins remain solid, while operating leverage and past store expansion should continue to support earnings growth in 2026E. If management can demonstrate good progress in same-store sales, category expansion, and store quality improvement during the earnings call, market concerns about Guming's slowing growth may ease.

Risks

• Inability to effectively manage a large-scale store network.
• Store expansion coming in below expectations.
• Per-store productivity or per-store GMV underperforming expectations.
• Intensified competition, trend risk, and price wars.
• Rising store-level costs.
• Higher-than-expected subsidies to franchisees.
• Lower-than-expected economies of scale from regional expansion.
• Food safety issues.
• Normalization of delivery subsidies and FX losses putting pressure on profits.
• Higher convertible bond financing costs and a rising effective tax rate may depress earnings.

What to watch

• The 1H26 earnings release and management's outlook for same-store sales growth in 2H26.
• Recent SSSG performance, and the recovery path after the high base and subsidy normalization.
• The share of coffee sales, and progress in breakfast and other new category expansion.
• The pace of store network expansion, the strategy of prioritizing store quality, and franchisee willingness to open stores.
• Changes in the competitive landscape, pricing strategy, and promotional intensity.
• Shareholder returns and further buyback plans.
• Changes in gross margin, SG&A expense ratio, FX gains/losses, withholding tax, and financing costs.