Guming's same-store sales and dine-in performance exceeded expectations; Goldman Sachs raises earnings forecasts and target price

Overview

This report reviews management discussions following Guming's 1H26 results, focusing on same-store sales, dine-in sales, store quality, regional expansion, and progress in new categories. Goldman Sachs views the return to positive same-store sales growth in July—August and the growth in dine-in sales as positive surprises. With store profitability also improving, it raised its earnings forecasts and target price and reiterated its Buy view.

Core views

Operating performance was first reflected in same-store sales and dine-in sales exceeding prior expectations. Guming's GMV per store grew 3% in 1H26; same-store sales achieved positive growth in July—August, outperforming management's previous target of no more than a 5% decline in 3Q26. Management believes May marked the operating low point for the brand due to a high comparison base and weather factors, followed by gradual improvement. The dine-in channel achieved double-digit growth in July and became the main driver of the improvement in same-store sales. Delivery's share declined by approximately 10 percentage points from its peak of 60%—70%. Goldman Sachs believes this performance is company-specific rather than merely reflecting an industry recovery, given that industry same-store sales were generally negative and Guming faced a relatively high comparison base. Management maintained its full-year 2026 same-store sales growth guidance of -5% to +5%. The improvement in dine-in sales resulted from several operating initiatives. First, the company maintained pricing discipline and did not adopt aggressive promotions when platform delivery subsidies were scaled back and industry price competition intensified, resulting in a higher actual transaction price year over year. Second, quality upgrades to core tea beverages and coffee drove new customer acquisition and repeat purchases, while the company also proactively directed new customers toward the dine-in channel. Third, the breakfast daypart expanded consumption occasions and was more oriented toward dine-in purchases. Fourth, dine-in sales and store economics at sixth-generation stores and renovated older stores outperformed those of non-renovated stores. The company plans to complete renovations at 2,000 stores during the year, and Goldman Sachs expects their contribution to the company's overall same-store sales to become more evident in the following year. As same-store sales improved and delivery's share declined, franchisee profitability has improved significantly since May. The pace of store expansion slowed, but the report interprets this as prioritizing quality rather than a loss of growth capacity. Net store openings approached 800 in 1H26. Reasons for the slower pace included franchisee cash flow pressure arising from installment payments for coffee machines purchased in the previous year and store renovation expenditures, as well as the company's stricter store-quality reviews since last November. Management does not regard store-count expansion as a mandatory KPI and places greater emphasis on sustainable long-term market share and profitability per store. Net store additions were limited in the three mature core provinces during 1H26, with efforts shifting toward store upgrades; more new stores entered emerging regions. Northern markets such as Shandong, Shaanxi, and Hebei demonstrated strong operating momentum, with lower-tier cities delivering solid profitability. The company also began testing first-tier and provincial-capital markets in Nanjing, receiving positive initial feedback, although whether the model can be replicated in other higher-tier cities remains under exploration. Category expansion is another major avenue for improving same-store sales and broadening consumption occasions. Coffee's share of sales has already exceeded management's original 2026 target of 20%, and management plans to increase it to 25%—30% from 2H26 to 1H27. Growth this year was primarily driven by innovations in fruit-flavored coffee, and coffee margins have improved significantly following the ramp-up in scale. Despite short-term promotional pricing during marketing campaigns, management plans to raise selling prices subsequently. New customers account for more than 50% of coffee customers, while coffee has also increased repeat purchases among existing customers. Breakfast and bakery products have entered more than 1,000 stores. Following preliminary equipment selection and product testing, they are entering a scaled expansion phase together with coffee. Ready-to-drink products such as HPP juices are positioned as a long-term 'second growth curve' requiring five years of exploration. They remain at an early stage and will be operated through a jointly managed entity without being consolidated into the company's income statement. Regarding margins, management noted that the product mix and expense allocation may cause half-year margin fluctuations but expects full-year margins to remain broadly stable. Although marketing activities are larger in scale this year, marketing expenses are not expected to increase significantly year over year because marketing resources are more concentrated. Goldman Sachs' model forecasts 2026 revenue of RMB156.364 hundred million, up 21.1% year over year; EBITDA of RMB42.455 hundred million, up 23.4% year over year, with an EBITDA margin of 27.2%; and a net profit margin of 20.5%. Revenue forecasts for 2027 and 2028 are RMB185.526 hundred million and RMB214.890 hundred million, respectively, while EBITDA forecasts are RMB50.044 hundred million and RMB57.103 hundred million, corresponding to revenue growth of 18.6% and 15.8% and EBITDA growth of 17.9% and 14.1%. Based on stronger same-store sales and earnings performance in 2H26, Goldman Sachs raised its 2026—2028 earnings forecasts by approximately 3%. The 2026 adjusted core net profit forecast was increased from RMB32.7 hundred million to RMB33.7 hundred million. In the forecast table, earnings per share for 2026—2028 were raised from RMB1.37, RMB1.58, and RMB1.81 to RMB1.43, RMB1.66, and RMB1.90, respectively. Revenue forecasts for 2026—2028 were raised from RMB152.520 hundred million, RMB180.509 hundred million, and RMB210.068 hundred million to RMB156.364 hundred million, RMB185.526 hundred million, and RMB214.890 hundred million, respectively. Based on the report price, the forecast P/E ratios for 2026—2028 are 15.1x, 13.0x, and 11.4x, respectively. Regarding valuation and the investment view, Goldman Sachs reiterated Buy (on CL) and raised its 12-month target price from HK$31 to HK$33, based on 20x forecast 2026 P/E. Relative to the report price of HK$25.20, this implies 31.0% upside. Goldman Sachs expects that, following prior downward revisions to market expectations, improvements in same-store sales and store-network quality may strengthen market confidence and drive a positive share-price reaction the following day. The longer-term Buy thesis also includes Good me being the second-largest freshly made tea beverage store brand in 2023 and ranking first in the mid-priced market, with overall and mid-priced market shares of approximately 9% and 18%, respectively. Goldman Sachs believes its supply chain, differentiated products, IT systems, alignment of interests with franchisees, and regional densification strategy can support market-share gains. Although the company trades at a forecast 2025 P/E close to those of freshly made beverage and Chinese restaurant peers, Goldman Sachs believes it offers a stronger earnings outlook and shareholder returns. Management also reiterated that it would repurchase shares when it believes the stock price is undervalued.

Analysis framework

Goldman Sachs first compared same-store sales, dine-in sales, and the delivery mix in 1H26 and July—August against management targets, the company's historical low point, and peer performance. It then analyzed drivers including pricing, product quality, breakfast consumption occasions, and store renovations. Next, it assessed store-expansion quality, regional replicability, and the growth path of new categories such as coffee. It incorporated stronger 2H26 operating assumptions into its 2026—2028 earnings model and ultimately derived the target price using 20x forecast 2026 P/E.

Methodology notes

• Valuation MethodologyPE/PEG valuation

  Target price based on forecast P/E

  The report values Guming at 20x forecast 2026 P/E, deriving a 12-month target price of HK$33; the report price of HK$25.20 implies 31.0% upside.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposition of store count, GMV per store, same-store sales, transaction price, and channel mix

  The report decomposes growth into net store openings, GMV per store, and same-store sales, and further examines actual transaction prices and the shares of dine-in and delivery sales to determine whether revenue improvement comes from store expansion or higher productivity at existing stores.

• Company Fundamentals and Financial FrameworkDuPont analysis

  DuPont ROE and financial return metrics

  The financial forecast table presents DuPont ROE, asset turnover, leverage, and other metrics to assess how shareholder returns evolve with changes in capital structure and operating efficiency.

• Quantitative/Factor/Portfolio TheoryMulti-factor model

  GS Factor Profile

  Goldman Sachs uses forecast sales, EBITDA, and earnings-per-share growth; return metrics including ROE, ROCE, and CROCI; and valuation metrics including P/E, P/B, and EV/EBITDA to calculate standardized rankings and percentiles for comparing the stock with the market and industry peers.

• Event Strategies and Behavioral FinanceEvent-driven analysis

  M&A Rank

  Goldman Sachs evaluates the probability of the company becoming an acquisition target using qualitative and quantitative factors. Guming has an M&A rank of 3, corresponding to a low probability of 0%—15%; therefore, no acquisition premium is incorporated into the target price.

Asset mapping & comparison

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

• Guming Holdings (1364.HK)

  The return to positive same-store sales growth, dine-in growth, improved franchisee profitability, and coffee category expansion constitute positive operating drivers, and Goldman Sachs reiterated Buy (on CL).

  Strengths

  Supply chain, differentiated products, IT systems, alignment of interests with franchisees, regional densification strategy, operating track record in lower-tier markets, and strong execution capabilities.

  Weaknesses

  The pace of store openings was slower in 1H26, franchisees face cash flow pressure from coffee-machine installment payments and store renovation expenditures, and the higher-tier city model remains in the pilot stage.

  Comparison

  Against a backdrop of generally negative peer same-store sales, Guming achieved positive growth in July—August. Its forecast 2025 P/E is close to the average for freshly made beverage and Chinese restaurant peers, but Goldman Sachs believes its earnings outlook and shareholder returns are stronger.

  Risks

  Risks include large-scale store-network management, store expansion and per-store productivity falling short of expectations, competition, price wars, costs, franchisee subsidies, weaker regional expansion economies of scale, and food safety.

Key data

• 1H26 GMV growth per store3%Operating performance at existing stores remained resilient
• July—August same-store salesPositive growthBetter than management's previous target of no more than a 5% decline in 3Q26
• 2026 same-store sales guidance-5% to +5%Management maintained its full-year guidance
• July dine-in growthDouble-digit growthDine-in sales were the main recent driver of improved same-store sales
• Change in delivery shareDown approximately 10 percentage points from the peakDelivery's share previously peaked at 60%—70%
• 1H26 net store openingsApproaching 800 storesExpansion was slower, primarily due to franchisee cash flow pressure and stricter store-quality reviews
• Annual store renovation target2,000 storesSixth-generation stores and renovated older stores are expected to make a more evident contribution to overall same-store sales in the following year
• Coffee sales-share target25%—30%The current share has exceeded the original 20% target, with the new target planned for achievement from 2H26 to 1H27
• Share of new coffee customers>50%Coffee also drove repeat purchases among existing customers
• Stores offering bakery productsMore than 1,000 storesPreliminary testing has been completed, and the business is entering a scaled expansion phase
• 2026 adjusted core net profit forecastRMB33.7 hundred millionThe previous forecast was RMB32.7 hundred million
• 2026—2028 earnings forecast revisionRaised by approximately 3%Reflects stronger 2H26 earnings and same-store sales performance
• 2026—2028 earnings-per-share forecastsRMB1.43, RMB1.66, RMB1.90Previously RMB1.37, RMB1.58, and RMB1.81, respectively
• 2026—2028 revenue forecastsRMB156.364 hundred million, RMB185.526 hundred million, RMB214.890 hundred millionPreviously RMB152.520 hundred million, RMB180.509 hundred million, and RMB210.068 hundred million, respectively
• 2026 EBITDA forecastRMB42.455 hundred millionUp 23.4% year over year, with the EBITDA margin forecast at 27.2%
• Valuation benchmark20x forecast 2026 P/EUsed to derive the 12-month target price of HK$33
• Report price and target priceHK$25.20 / HK$33.00Implies 31.0% upside; the previous target price was HK$31.00
• Market capitalization and enterprise valueHK$599 hundred million / HK$509 hundred millionMarket data presented on the report's front page
• 2023 market shareApproximately 9% overall / approximately 18% in the mid-priced marketGood me was the second-largest freshly made tea beverage store brand and the largest brand in the mid-priced market

Impact & implications

The report believes that positive same-store sales growth, a higher dine-in share, and improved franchisee profitability should help alleviate market concerns about store quality and the sustainability of growth. In the short term, Goldman Sachs expects recovering market confidence to potentially drive a positive share-price reaction. Over the medium term, performance will depend on whether store renovations, replication in northern and higher-tier cities, and the expansion of coffee and breakfast can continue supporting same-store sales and profits. Based on these improvements, Goldman Sachs raised its earnings forecasts and target price but continued to emphasize expansion quality over simply pursuing store-count growth.

Risks

• The company may be unable to manage its extensive store network effectively.
• The pace of store expansion may fall below expectations.
• Per-store productivity may underperform expectations.
• Industry competition, risks from changing trends, and price wars may intensify.
• Store-level operating costs may increase.
• Subsidies provided by the company to franchisees may exceed expectations.
• Geographic expansion may weaken economies of scale.
• The company may experience food safety issues.

What to watch

• Monitor whether full-year 2026 same-store sales remain within management's guidance range of -5% to +5% and whether the positive growth trend in 2H26 continues.
• Monitor the completion of renovations at 2,000 stores during the year and their contribution to dine-in sales, per-store economics, and overall same-store sales in the following year.
• Monitor whether coffee's share of sales reaches 25%—30% from 2H26 to 1H27, as well as margin performance following subsequent price increases and the ramp-up in scale.
• Monitor the impact of franchisee cash flow and store-quality reviews on the pace of store openings, as well as sustained profitability in northern markets such as Shandong, Shaanxi, and Hebei.
• Monitor whether the Nanjing pilot can be replicated in other first-tier and provincial-capital cities.
• Monitor the progress of the bakery business as it expands at scale from more than 1,000 stores, as well as early validation of the five-year HPP juice 'second growth curve.'
• Monitor whether the declining delivery share continues to improve franchisee profitability and whether full-year margins remain broadly stable.