Investment Rating - The report assigns a "Buy" rating with a target price of HKD 1.58 for the company [5][7]. Core Views - The company is currently facing operational challenges, with a focus on franchise expansion and overseas growth opportunities. The first half of 2024 saw a revenue decline of 1.9% year-on-year, with an adjusted net loss of RMB 438 million, primarily due to store closures and related impairments [2][4][5]. - The company maintains a high-end product positioning and aims for high-quality development, with expectations for potential profit recovery in the medium to long term if same-store sales stabilize [2][3]. Summary by Sections Financial Performance - In 1H24, the company's revenue was RMB 2.544 billion, with a year-on-year decrease of 1.9%. The adjusted net loss was RMB 438 million, compared to an adjusted net profit of RMB 70 million in 1H23. This loss includes RMB 150 million related to the anticipated closure of 200 stores [2][5]. - The company operated 1,597 directly managed stores and 297 franchise stores as of 1H24. Direct store revenue was RMB 2.105 billion, down 10.6% year-on-year, with an average transaction value of RMB 27.5, a decrease of 15.12% [3][4]. Store Expansion and Franchise Model - The company is actively expanding its franchise model, with 297 franchise stores as of 1H24, a net increase of approximately 216 stores, mainly in lower-tier cities. Franchise-related income grew by 222.8% year-on-year, accounting for 10.5% of total revenue [4][5]. - The company is also exploring overseas markets, with a flagship store opening in Thailand in August 2024, achieving record sales for overseas locations [4][5]. Earnings Forecast - The earnings per share (EPS) forecast for 2024-2026 is projected at RMB -0.4, RMB 0.05, and RMB 0.09, respectively. The target price of HKD 1.58 is based on a 16x PE ratio for 2026, compared to an average of 11x for comparable companies [5][11][12].
奈雪的茶：经营尚待调整，关注加盟和海外拓展