Gu Ming: Left hand takeaway, right hand coffee, is the 'Costco of the tea beverage industry' smiling again?

$GUMING(01364.HK) On the evening of August 26, Beijing time, GuMing (1364.HK) released its 2025 H1 results. As this is the first semi-annual report disclosed since GuMing's listing, there are not many sell-side analysts covering it, resulting in a lack of market consensus expectations. Dolphin Research believes the overall performance is quite good.

Key points are as follows:

1. High growth on a low base. From the perspective of overall performance, in the first half of the year, the company benefited from accelerated store openings, delivery subsidies, and the newly launched coffee business, which improved same-store sales. GuMing achieved total revenue of 5.66 billion yuan, a year-on-year increase of 41.2%. However, due to the impact of the 3.15 incident in the same period last year, overall same-store sales in the second quarter were in a double-digit decline, and the base was already relatively low. Therefore, excluding this impact, GuMing's own growth should be viewed with some discount.

2. Accelerated store openings. From the perspective of store openings, there was a net addition of 1,265 stores in 25H1, reaching a total of 11,179 stores, making it the second tea beverage brand to surpass 10,000 stores after Mixue Bingcheng. From the pace of store openings, benefiting from a series of preferential policies for new and existing franchisees (such as waiving franchise fees, training fees, and installment payments for equipment), store openings have accelerated significantly compared to the first half of last year. Based on the current progress, the goal of adding more than 2,000 stores for the year is likely to be exceeded. Additionally, in terms of structure, more new stores are focused on lower-tier markets, with the announcement showing that the proportion of stores in township areas increased by 4 percentage points from 39% last year to 43%.

3. Decline in the proportion of "selling shovels" business. From the perspective of revenue structure, in the first half of the year, the company's revenue from sales of goods and equipment was 3.6 billion yuan, a year-on-year increase of 20%, accounting for 25.6% of the total GMV of stores (14.1 billion yuan), down 3 percentage points. Dolphin Research speculates that the core reason is GuMing's scale advantage in the supply chain and bulk procurement upstream, which lowered the raw material prices sold to franchisees.

4. Record high single-store cup volume. From the perspective of franchise store operations, in the first half of the year, GuMing's average GMV per store reached 1.37 million yuan, a year-on-year increase of 20.6%. Breaking it down, the average daily cup volume per store reached 439 cups, an increase of 17.4% year-on-year, as the core driver. In addition to the incremental increase brought by delivery subsidies, the large-scale integration of the coffee business into GuMing stores in the first half of the year also boosted cup volume. In terms of pricing, although the company did not disclose specific data, based on research information, Dolphin Research estimates that with the increase in the proportion of high-priced fruit tea (fruit and vegetable juice), the price per cup increased slightly by about 1%-2%.

5. Gross margin remains stable. Although the company lowered raw material procurement prices and unit processing costs through supply chain advantages, to attract more franchisees, GuMing passed on this profit to franchisees through lower raw material prices, thus keeping the overall gross margin stable.

6. Operating leverage drives profitability release. In terms of selling expenses, GuMing significantly increased advertising and IP co-branding expenses in the first half of the year after listing, resulting in the selling expense ratio remaining unchanged. Meanwhile, the management expense ratio decreased by 0.4 percentage points to 3.3% with improved operational efficiency, ultimately achieving an operating profit margin of 23.7%, a record high.

7. Overview of financial information:

Dolphin Research's overall view:

In terms of the first half's performance alone, GuMing's performance is quite good, with both store expansion progress and single-store revenue exceeding the overall industry level.

However, Dolphin Research believes the market's main concern is that GuMing's strong growth in the first half is largely dependent on delivery subsidies, and in 2026, with the subsidies fading, facing this year's high base, the pressure will be significant.

Based on research information, GuMing's same-store growth has been strong since April, exceeding 20%, coinciding with the start of delivery subsidies. As a leading tea beverage brand, GuMing receives higher subsidies and exposure from platforms compared to the industry average. Additionally, as a player in the mid-price range of 10-20 yuan, the consumer experience of GuMing after delivery coupon subsidies is higher compared to brands in the sub-10 yuan mass price range. In this context, GuMing's delivery proportion directly increased from 40% to over 55% in May. Therefore, from this perspective, the market's concerns are not unfounded, as delivery has indeed significantly boosted GuMing's performance.

However, from another perspective, delivery subsidies have also helped GuMing convert potential consumers, especially after integrating the coffee business into most stores in the first half of the year, the new coffee category has also gained good exposure. The key is how many of these consumers who "fell into the pit" due to subsidies can become regular customers of GuMing after the subsidies decline next year. On this point, Dolphin Research is quite confident in GuMing's product strength.

Finally, from a valuation perspective, assuming the subsidies continue in the second half of the year (with merchants bearing more of the cost), GuMing's 2025 valuation corresponds to 22x, which is not high compared to Dolphin Research's estimated profit growth rate of over 25% for the next three years. Additionally, GuMing's long-term growth logic has not changed, so at the current point, Dolphin Research believes the downside risk is not significant. However, from a safety margin perspective, one could also wait for the valuation to adjust to 20x, corresponding to 48 billion HKD, before considering entry.

Below is a detailed interpretation of the financial report:

I. Overall performance: High growth on a low base

From the perspective of overall performance, in the first half of the year, the company benefited from accelerated store openings, delivery subsidies, and the newly launched coffee business, which improved same-store sales. GuMing achieved total revenue of 5.66 billion yuan, a year-on-year increase of 41.2%. However, due to the impact of the 3.15 incident in the same period last year, overall same-store sales in the second quarter were in a double-digit decline, and the base was already relatively low. Therefore, excluding this impact, GuMing's own growth should be viewed with some discount.

II. Accelerated store openings

From the perspective of store openings, there was a net addition of 1,265 stores in 25H1, reaching a total of 11,179 stores, making it the second tea beverage brand to surpass 10,000 stores after Mixue Bingcheng.

From the pace of store openings, benefiting from a series of preferential policies for new and existing franchisees (such as waiving franchise fees, training fees, and installment payments for equipment), store openings have accelerated significantly compared to the first half of last year. Based on the current progress, the goal of adding more than 2,000 stores for the year is likely to be exceeded.

In terms of the distribution of new store levels, 80% of the stores are located in lower-tier markets (with Hubei, Hunan, Anhui, and Guangxi as key regions), and most areas are provinces where GuMing has already reached a critical scale.

The core reason is that in provinces where GuMing has reached a critical scale, the supply chain construction is more complete, and brand recognition is stronger, making franchisees generally more willing to join.

From the overall pace of store openings in the industry, according to data from Tea & Coffee Observation, the overall pace of store openings in the new tea beverage industry has significantly slowed in the first half of the year, with the total number of stores remaining basically unchanged.

From the chart below, apart from Mixue Bingcheng and GuMing, which continue to open stores steadily through continuous penetration and densification, the differentiation among other brands has intensified, resulting in a "polarized" state.

Overall, it can be observed that the phenomenon of store closures is mainly concentrated in two types of brands:

1) Internet-famous brands focusing on single categories and relying on product cycles for rapid expansion in the early stages (represented by Shuyi Grass Jelly and Hand-beaten Lemon Tea): These tea beverage brands have a single category, and consumers generally do not have high loyalty to a single category of tea beverages. Once the category's popularity declines, consumers experience aesthetic fatigue, leading to a significant drop in store traffic, deteriorating franchisee profitability, and ultimately resulting in store closures. This is also why Dolphin Research is not optimistic about Chagee in the long term (single category, mainly fresh milk tea).

2) Tea beverage brands in the mid-price range (10-20 yuan) with relatively weak supply chain capabilities: These tea beverage brands are the most common type we encounter. On the one hand, there are many players in the mid-price range, making it the most competitive battlefield. On the other hand, the products of these tea beverage brands are relatively homogeneous. Dolphin Research mentioned in "GuMing: Slow is Fast! Is there a "Costco" in the Tea Beverage Industry?" that these brands ultimately compete on their supply chain capabilities.

Under the dual pressure of price wars and the penetration of leading brands, the result of insufficient supply chain capabilities is sacrificing franchisee profitability, and franchisees with weaker risk resistance naturally withdraw, leading to a contraction of the brand's territory.

As a brand with fast product iteration and supply chain capabilities second only to Mixue Bingcheng, it is not difficult to understand why GuMing maintained a store opening speed far exceeding the industry average in the first half of the year.

III. Decline in the proportion of "selling shovels" business

From the perspective of revenue structure, in the first half of the year, the company's revenue from sales of goods and equipment was 3.6 billion yuan, a year-on-year increase of 20%, accounting for 25.6% of the total GMV of stores (14.1 billion yuan), down 3 percentage points. Dolphin Research speculates that the core reason is GuMing's scale advantage in the supply chain and bulk procurement upstream, which lowered the raw material prices sold to franchisees.

IV. Record high single-store cup volume

Although GuMing did not disclose same-store revenue in the financial report, based on research information, GuMing's same-store growth in H1 is estimated to be around 15-20%, which is very impressive among leading tea beverage brands.

Breaking it down, the average daily cup volume per store reached 439 cups, an increase of 17.4% year-on-year, as the core driver. In addition to the incremental increase brought by delivery subsidies, the large-scale integration of the coffee business into GuMing stores in the first half of the year also boosted cup volume. In terms of pricing, although the company did not disclose specific data, based on research information, Dolphin Research estimates that with the increase in the proportion of high-priced fruit tea (fruit and vegetable juice), the price per cup increased slightly by about 1%-2%.

Since Dolphin Research has not analyzed GuMing's coffee business much before, here are some additional views on the coffee business:

Based on research information, by mid-2025, GuMing's coffee business has covered over 8,000 stores (accounting for over 80% of total stores), with a GMV proportion of 15%-20% in the overall store.

Dolphin Research is quite optimistic about GuMing's coffee business. Firstly, the most important aspect of the coffee business for GuMing is expanding the store's consumption scenarios and improving store efficiency. Previously, GuMing had almost no sales before 10 a.m. in the breakfast period, but after introducing the coffee business, the coffee + baked breakfast combination brought real incremental sales to GuMing, and it does not conflict with the milk tea business.

Additionally, from a competitive landscape perspective, Dolphin Research mentioned in Luckin: The "Blue Cup" is Soaring, Is the "Coffee King" on a Smooth Path? that GuMing's coffee and professional coffee brands like Luckin have low audience overlap (Luckin's main consumer group is office white-collar workers, while GuMing's coffee consumers are more of an extension of tea beverage consumers' curiosity).

Moreover, from a product perspective, whether it's the Apple Lava Americano or the Good Light Coconut Latte, GuMing focuses on fresh fruit coffee, which not only amplifies its advantage in the cold chain supply but also creates a good competitive differentiation with Luckin's milk coffee product matrix.

Although the profit margin is not as high as milk tea, due to the overall improvement in store efficiency, the actual feedback from franchisees shows that the overall operating profit margin of the stores is actually increasing.

V. Overall gross margin remains stable

Although the company lowered raw material procurement prices and unit processing costs through supply chain advantages, to attract more franchisees, GuMing passed on this profit to franchisees through lower raw material prices, thus keeping the overall gross margin stable.

V. Operating leverage drives the release of company profitability

In terms of selling expenses, GuMing significantly increased advertising and IP co-branding expenses in the first half of the year after listing, resulting in the selling expense ratio remaining unchanged. Meanwhile, the management expense ratio decreased by 0.4 percentage points to 3.3% with improved operational efficiency, ultimately achieving an operating profit margin of 23.7%, a record high.

Dolphin Research "GuMing" historical articles:

In-depth

July 4, 2025: "GuMing: Slow is Fast! Is there a "Costco" in the Tea Beverage Industry?"

July 8, 2025: "GuMing: Attack or Defend, Can the "Costco of the Tea Beverage Industry" Laugh Last?"

The risk disclosure and statement of this article: Dolphin Research Disclaimer and General Disclosure