Goldman Sachs reiterates Buy on Fujian Wanchen Group: robust store openings, improving per-store GMV, and a still-rational competitive environment

Overview

This is Goldman Sachs’ company research update on Fujian Wanchen Food. After meeting with the company retail business CFO and capital markets head at APAC Consumer & Leisure Corporate Day, Goldman believes visibility for 2026 growth has strengthened, and the medium-to-long-term path is supported by a healthy franchising ecosystem, high-quality store expansion, and continuous model and product innovation. The report reiterates a Buy rating and sets a 12-month target price of Rmb319.

Core views

Key views include: first, store opening pace in the first half of 2026 was strong, but the company still prioritizes store health and payback period, avoiding indiscriminate expansion; second, per-store GMV and same-store sales are resilient, benefiting from disciplined site selection, category expansion, and refined operations; third, gross margin expansion and operating leverage are expected to lift retail net margin to improve moderately versus FY25 by around 5%; fourth, industry subsidies and store-opening competition remain relatively rational, and no obvious vicious price war is seen among peers; fifth, long-term penetration still comes from share migration from traditional channels, further densification in strong regions, and improving franchisee confidence.

Analysis framework

The report bases its fundamental judgment on management communication, store expansion data, per-store GMV trends, same-store sales, category structure, own-brand progress, member operations, logistics efficiency, and competitive dynamics, and forms the target price through a 2027E target P/E discount model. The report also compares Fujian Wanchen with peers such as Busy Ming, and attributes valuation discount reasons to relatively slower network expansion momentum, lower per-store GMV, and differences in profit mix.

Methodology notes

• Valuation methodsTarget P/E discounted model

  Uses a 2027E target P/E of 21.5x and discounts it at an 8.2% cost of equity to year-end 2026.

  Goldman gives a 12-month target price of Rmb319. The target P/E shows a high single-digit percentage discount versus Busy Ming, and references the past two-year NTM P/E gap between DLTR and DG, while considering differences in Fujian Wanchen’s network expansion pace and per-store economics.

• Fundamental trackingPer-store GMV and payback period

  Uses average monthly GMV per store, daily sales, and payback period to measure store quality.

  Management emphasizes that store-opening pace should be balanced with a healthy per-store economics model; it is still maintaining a two-year payback period and strictly controlling rent-to-sales ratio.

• Factor frameworkGS Factor Profile

  Goldman compares stocks and sector peers across four attributes: Growth, Financial Returns, Multiple, and Integrated.

  The report discloses this framework to provide investment context, but the core investment conclusion in this note mainly comes from company fundamentals, competitive landscape, and valuation judgment.

Asset mapping & comparison

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

• 300972.SZ

  Research target

  Strengths

  Fast store rollout, improved per-store GMV, resilient same-store sales, strong franchisee confidence, and remaining penetration room in strong regions.

  Weaknesses

  Network expansion pace is relatively slower than some peers, and per-store GMV and per-store economic model still require ongoing validation; new formats are still in a testing stage.

  Comparison

  The target P/E is at a high single-digit discount to Busy Ming, and the report references the past two-year NTM P/E valuation gap between DLTR and DG.

  Risks

  Intensifying competition, price sustainability, franchise model complexity, M&A, supply chain, food safety, and logistics risks.

• Busy Ming Group

  Comparable company

  Strengths

  As a valuation reference, it is used to compare expansion quality across value retail and snack discount formats.

  Weaknesses

  This report does not expand on Busy Ming’s own fundamentals and uses it only for relative valuation and peer competitive context.

  Comparison

  Fujian Wanchen’s target P/E is at a high single-digit discount to Busy Ming.

  Risks

  Changes in industry competition, store-opening subsidy practices, and peer expansion pace can affect relative valuation.

Key data

• 2026 first-half store openingsNet approximately 4.1k stores, total openings about 4.7kThis exceeded the total number of stores opened in 2025.
• Average per-store GMV guidanceabout Rmb390k/monthManagement said average per-store GMV in the first half showed positive growth, and the full-year guidance is about the same level as 2H25.
• New category shareabout 5% of GMVCold-chain products are about 3%, while other categories such as IP and daily essentials are about 2%.
• Own-brand SKUsmore than doubled versus over 30 in FY25Management aims for full-category coverage by year-end, with current focus on improving consumer value and product differentiation rather than short-term gross margin uplift.
• Member basemore than 200mn registered membersActive members buy about 3 times per month, contributing about Rmb90 per person each month.
• Target retail net marginabout 5% improvement versus FY25Drivers include gross margin expansion, operating leverage, and logistics efficiency optimization.
• Valuation14x/12x 2026/27E P/ECorresponding to Goldman’s forecast of 2026E revenue and net profit growth of 36% and 84%.
• Target priceRmb319Based on a 2027E target P/E of 21.5x discounted at an 8.2% cost of equity.

Impact & implications

The investment implication of the report is constructive on Fujian Wanchen Food: if the company can continue rapid expansion while maintaining two-year payback, positive per-store GMV growth, and disciplined subsidies, market concerns about the quality and margin sustainability of expansion may ease. New categories, own brands, member operations, and logistics efficiency offer medium- to long-term growth levers, but in the short term store ramp, subsidy discipline, and replicability of new formats still need to be validated.

Risks

• Intensifying market competition and declining sustainability of pricing.
• Franchise-model governance risks and operational complexity from rapid expansion.
• M&A-related risks.
• Supply chain, food safety, and logistics fulfillment risks.
• Testing outcomes for new formats such as convenience stores, hard discount, and cold-chain products may fall short of expectations.

What to watch

• Whether second-half 2026 new-store ramp and per-store GMV are delivered.
• Whether the full-year average monthly GMV guidance of about Rmb390k is achieved.
• Whether same-store sales growth continues to outperform average per-store GMV trends.
• Whether industry leader subsidy discipline and store-opening regions remain rational.
• Whether the rising shares of new categories, own brands, and cold-chain products deliver traffic and margin improvement.
• Whether the logistics expense ratio declines year-on-year as the warehouse network expands.
• Whether tests for hard discount, convenience stores, and FreshSnacks have scalable potential.