Goldman Sachs suspends coverage of Nayuki Holdings, with final rating of Neutral

Overview

This report is Goldman Sachs' coverage suspension report on Nayuki Holdings (2150.HK). Goldman Sachs stated that it is suspending coverage effective immediately and summarized its final rating and views: the final rating is Neutral, with a 12-month target price of HK$0.78. The report believes that the company's 2H25 operating profit was slightly below Goldman Sachs' expectations, with weak sales momentum, franchise revenue, and RTD business; although the share price has fallen sharply and the market cap is below net cash, continued free cash flow burn could still erode the cash balance.

Core views

The core views include: first, 2H25 operating profit was under pressure, with a loss of Rmb151mn, below Goldman Sachs' expected loss of Rmb132mn; second, net profit posted a loss of Rmb122mn, slightly better than Goldman Sachs' expected loss of Rmb144mn, mainly driven by government subsidies and tax credits; third, for 2026 the company's management is cautiously optimistic on store expansion, but Goldman Sachs is more conservative on franchisee incentives to open stores and the pace of SSSG recovery; fourth, valuation has been changed to DCF and the target price cut to HK$0.78, while the rating was upgraded to Neutral because the share price has already fallen substantially.

Analysis framework

The report mainly arrives at its final target price through revisions to fundamental forecasts, store expansion assumptions, judgments on SSSG and store operating margin, RTD business adjustments, and a DCF valuation framework. Goldman Sachs also referenced the stock's historical performance relative to the HSCEI, cash balance, and the risk of free cash flow burn.

Methodology notes

• Valuation methodsDCF

  discounted cash flow

  Goldman Sachs changed the valuation method from EV/EBITDA to DCF because 2026E EBITDA is expected to be negative, and DCF is better suited to reflecting weak SSSG, operating deleverage, and the trend of continued cash flow burn.

• Factor frameworkGS Factor Profile

  growth, financial returns, valuation multiples, and composite percentile

  Goldman Sachs' factor framework compares stocks versus the market and industry peers using indicators such as forward sales, EBITDA, EPS, ROE, ROCE, CROCI, and valuation multiples.

• M&A frameworkM&A Rank

  M&A probability score

  Goldman Sachs classifies covered stocks into levels 1 to 3 by potential acquisition probability; this report shows Nayuki Holdings with an M&A Rank of 3, representing low probability and usually not included in the target price.

• Research databaseQuantum

  Goldman Sachs proprietary financial database

  Quantum is used to obtain corporate financial history, forecasts, and ratios, supporting both in-depth single-company analysis and cross-industry, cross-market comparisons.

Asset mapping & comparison

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

• 2150.HK

  Stock under coverage

  Strengths

  Market cap is below net cash, and 2H25 net profit was better than Goldman Sachs' expectations; major store optimization was completed in 2025, and more aggressive store expansion may resume in 2026; the RTD business plans to focus on profitable regions and co-develop customized products with major channels.

  Weaknesses

  Sales were weaker than expected, with weak sales per company-operated store, franchise revenue, and RTD sales; delivery-related cost ratios were higher than expected; Goldman Sachs expects 2026 company-operated store SSSG to still decline by about 10%, with operating deleverage pressure remaining.

  Comparison

  Since Goldman Sachs downgraded the stock to Sell on June 26, 2022, the share price has fallen 90%, while the HSCEI has risen 13%; the rating is relative to Goldman Sachs' Greater China retail coverage universe.

  Risks

  Key risks include SSS recovery being slower or faster than expected, efficiency improvements from cost savings and automation being weaker or stronger than expected, franchise store expansion being slower or faster than expected, and the impact of continued free cash flow burn on the cash balance.

Key data

• Final ratingNeutralGoldman Sachs' final rating at the time coverage was suspended.
• 12-month target priceHK$0.78Derived based on DCF valuation; the previous target price was HK$1.32.
• Current priceHK$0.71The price disclosed in the report.
• Implied upside9.9%Upside of the target price relative to the current price.
• 2H25 operating profitloss of Rmb151mnBelow Goldman Sachs' expected loss of Rmb132mn, mainly due to weak sales and higher-than-expected delivery-related cost ratios.
• 2H25 net profitloss of Rmb122mnBetter than Goldman Sachs' expected loss of Rmb144mn, supported by government subsidies and tax credits.
• 2026/2027E sales forecast revisioncut by 2%/8%Reflecting a slower SSSG recovery and a slowdown in other businesses.
• 2026/2027E net profit forecastloss of Rmb210mn/loss of Rmb223mnPrevious forecasts were a loss of Rmb20mn/profit of Rmb52mn.
• 2026 store expansionmanagement: about 300 additions; Goldman Sachs forecast: 155 additionsManagement expects to accelerate expansion after completing major store optimization, while Goldman Sachs is more conservative due to franchisee incentives and slow SSSG recovery.
• 2026 company-operated store SSSGabout -10%Goldman Sachs expects SSSG at company-operated stores to remain negative.
• 2026 store operating margin improvementmanagement: 3-5 percentage points; Goldman Sachs: 1 percentage pointGoldman Sachs assumes a slower recovery in per-store sales, so margin improvement is below management's expectation.
• Market capHK$1.2bn / $154.6mnKey Data disclosed in the report.
• Enterprise valueHK$(301.8)mn / $(38.5)mnKey Data disclosed in the report; parentheses indicate a negative value.
• 3-month average daily trading valueHK$1.5mn / $0.2mn3m ADTV disclosed in the report.
• M&A Rank3Represents low M&A probability and is usually not included in the target price.

Impact & implications

Coverage suspension means Goldman Sachs will no longer continue updating Nayuki Holdings' rating, target price, and earnings forecasts. From an investment perspective, the share price has fallen 90% since the downgrade to Sell on June 26, 2022, significantly underperforming the HSCEI, which rose 13%, leaving some room for valuation recovery; however, the fundamentals still need to show SSSG recovery, improved store efficiency, execution of franchise expansion, and better free cash flow in order to reduce the risk of cash burn.

Risks

• SSS recovery slower than expected may continue to pressure revenue and store operating margins.
• If cost savings and automation-driven efficiency gains are weaker than expected, operating deleverage pressure may continue.
• If franchise store expansion is slower than expected, it may weaken scale recovery and market share gains.
• Continued free cash flow burn may further reduce the cash balance, even though the current market cap is below net cash.
• If the RTD business contraction is poorly executed, it may continue to drag on sales and earnings quality.

What to watch

• Whether the actual number of new stores added in 2026 is closer to management's target of about 300 or Goldman Sachs' more conservative forecast of 155.
• Whether company-operated store SSSG still declines by about 10%, and when the recovery inflection point appears.
• Whether store operating margin improvement can reach management's target of 3-5 percentage points.
• Whether the RTD business, after contracting in profitable regions such as South China, can improve earnings quality.
• Sales performance of co-created products with major channels such as Sam's Club.
• Free cash flow burn and changes in cash balance.
• Progress in company-operated and franchise expansion in Southeast Asia and North America.