Mixue Bingcheng (Minutes): Food delivery subsidies are unsustainable, adhere to 'high quality and affordable price'
$MIXUE GROUP(02097.HK) The following are the minutes of Mi Xue Bing Cheng's 2025 first half financial report conference call organized by Dolphin Research. For financial report interpretation, please refer to "Mi Xue Group: Surging in Lower-Tier Markets, Lucky Coffee's Comeback, Can High Valuation Hold?"
I. Review of Core Financial Information:
(1) Comprehensive Performance
Total Revenue: RMB 14.875 billion, a 39.3% increase from RMB 10.677 billion in the same period of 2024.
Gross Profit: RMB 4.706 billion, a year-on-year increase of 38.3%.
Profit for the Period/Net Profit: RMB 2.718 billion, a year-on-year increase of 44.1%.
Earnings Per Share: RMB 7.23 (not explicitly disclosed for the same period in 2024, estimated to be approximately RMB 5.23).
Cash Flow: Net cash inflow from operating activities was RMB 3.28 billion. As of June 30, 2025, cash and cash equivalents, term deposits, and other liquid funds totaled RMB 17.612 billion, a 58.5% increase from the end of 2024, mainly from operating cash flow and fundraising from the Hong Kong stock listing. The company has no interest-bearing debt.
(2) Revenue Composition and Profitability
Revenue from Goods and Equipment Sales: RMB 14.495 billion, a year-on-year increase of 39.6%, accounting for 97.4% of total revenue. Its gross margin is 30.3% (same period in 2024: 30.5%), a slight decrease mainly due to the rise in some raw material costs and changes in revenue structure.
Franchise and Related Services Revenue: RMB 380 million, a year-on-year increase of 29.8%, accounting for 2.6% of total revenue. Its gross margin is 82.7% (same period in 2024: 81.7%), an increase mainly due to the scale effect brought by the expansion of the franchise network.
Overall Gross Margin: 31.6% (same period in 2024: 31.9%), remaining stable.
Expense Situation:
1. Selling and Distribution Expenses: RMB 914 million, a year-on-year increase of 40.2%, with an expense ratio of 6.1%, unchanged from the same period last year.
2. Administrative Expenses: RMB 438 million, a year-on-year increase of 56.6%, with an expense ratio of 2.9% (same period in 2024: 2.6%), mainly supporting business expansion.
3. R&D Expenses: RMB 41 million, a year-on-year increase of 1.7%, with an expense ratio of 0.3%, unchanged from the same period last year.
(3) Store Network Expansion
Total Number of Stores Worldwide: Over 53,000 (as of June 30, 2025), a net increase of approximately 9,800 from 43,218 in the same period of 2024.
Stores in Mainland China: 48,281, covering 31 provincial-level administrative regions and over 300 prefecture-level cities. First-tier cities: 4.9% (2,356 stores) New first-tier cities: 18.4% (8,878 stores) Second-tier cities: 19.1% (9,243 stores) Third-tier and below cities: 57.6% (27,804 stores), continuing to penetrate deeper.
Overseas Stores: Approximately 4,700, covering 12 countries worldwide. In the first half of the year, focused on optimizing existing stores in Indonesia and Vietnam (with a reduction in number) and successfully expanded into Kazakhstan and other new markets with 28 stores.
Franchise System: Number of franchise stores: 52,996 (same period in 2024: 43,197), a year-on-year increase of 22.7%. Number of franchisees: 23,404 (same period in 2024: 19,310). Directly operated stores: 18, mainly for operational insights and brand reinforcement.
(4) Brand and Product Innovation
Mi Xue Bing Cheng Brand: Classic products (such as iced lemon water and fresh ice cream) performed steadily. Launched new products such as hawthorn series, taro series ice cream, and Longjing series tea drinks.
Lucky Coffee Brand: Launched 32 new products in the first half of the year, focusing on the fruit coffee series (e.g., 14 new products launched in May), with some new products like green grape, apple, and passion fruit coffee receiving positive market feedback, using raw materials from its own supply chain. Classic products like Night Flame Latte have achieved sales of over RMB 200 million within the year, with several products like Signature Iced Latte and Grape Ice Ball Lucky Ice achieving sales of over RMB 100 million within the year.
"Snow King" IP Development: Released multi-language versions (English, French, Portuguese) of the "Snow King Arrives" animation; opened a flagship store at Zhengzhou East Station, integrating IP cultural creation and consumption scenarios, with over 240,000 visitors during the May Day period.
(5) Supply Chain and Operational Efficiency
Supply Chain: Owns five production bases in Henan, Hainan, Guangxi, Chongqing, and Anhui, achieving 100% self-production of core beverage ingredients. The new base in Hainan was put into operation in the first half of the year, becoming the second-largest production base in China.
Intelligentization: Intelligent Liquid Dispensing Machines have been deployed in over 5,600 Mi Xue Bing Cheng stores, enhancing efficiency, standardization, and food safety levels.
Logistics: 29 warehouses set up domestically, with a distribution network covering 33 provincial-level administrative regions (including Hong Kong and Macau) and over 300 prefecture-level cities.
II. Detailed Content of the Financial Report Conference Call
2.1, Key Information from Executive Statements
Business Development and Group Strategy:
1. The group adheres to the principle of "high quality and affordable price", owning two major brands: Mi Xue Bing Cheng (freshly made tea drinks) and Lucky Coffee (freshly ground coffee).
2. The core competitiveness lies in the "three-in-one" total cost leadership advantage of supply chain, brand IP, and store operations.
3. Growth is driven by the expansion of the store network and the increase in average store sales.
4. Future focus on three directions: Consolidate domestic leadership and expand overseas markets (deepening in Southeast Asia, exploring potential markets). Enhance brand infrastructure and operational systems (strengthen the supply chain, build a flexible overseas supply chain platform, empower with digitalization and intelligence). Deepen "Snow King" IP development (enrich content through animation, movies, collaborations, etc., to create a global cultural symbol), and actively fulfill social responsibilities.
Financial Performance:
1. Double growth in revenue and profit, with solid profitability quality.
2. Gross margin remains stable, reflecting the cost control capability brought by scale procurement, vertically integrated supply chain (direct sourcing from the origin, production based on sales and sales based on production coordination), and continuous efficiency improvement.
3. Overall expense ratio is controllable, and future investments will continue to support business development (such as credit card expansion, overseas business, brand IP, digitalization, global talent).
4. Ample cash flow, zero-debt operation, providing financial support for long-term strategy.
2.2, Q&A Analyst Questions and Answers
Q: How do you view the impact of the current high industry prosperity on the domestic store opening plan and pace? What are the key areas and scenarios for future domestic incremental store layout?
A: The enhanced industry prosperity boosts confidence but will not change the company's established pace and strict franchisee selection standards. There is vast domestic space (low per capita consumption), with many blank spots (such as tourist attractions, highway service areas, industrial parks) and 30,000 township markets to penetrate. With high quality and affordable prices and strong operational capabilities, we will continue to sink and penetrate.
Q: What is Lucky Coffee's development strategy in the context of intensified competition in the coffee industry?
A: The domestic freshly ground coffee market has a large space, and the pattern is not yet solidified. Lucky Coffee's strategy: 1. Product strength: Classic products are popular, with 32 new products launched in the first half of the year (including the fruit coffee series), with some new products ranking among the top five in sales. 2. Store expansion: Accelerate layout after refining the single-store model, "go where consumers are," but adhere to high standards of franchise review. 3. Franchise support: Provide comprehensive support in site selection, training, and operations; trial measures such as fee reduction and strategic price increase of 1 yuan in first-tier cities to enhance franchisee profitability; build agile teams to respond quickly to the market. 4. Supply chain reliance: Backed by the group's global coffee bean direct sourcing, scale procurement, and self-roasting (Henan with an annual capacity of 8,000 tons, Hainan over 20,000 tons) and other strong supply chain advantages.
Q: What is the impact of the "takeaway battle" on store-level revenue and profit? How does the company view it?
A: Short-term: Subsidies lower the threshold for trying, stimulating industry demand. The company seizes the opportunity with its extensive store network and online operation capabilities, promoting the increase in average store sales and profitability. However, it also brings store operation pressure (staff workload, consumer waiting time). Long-term: Believes subsidies are unsustainable (regulators have required standardization), with growth slowing in July. But it helps cultivate consumption habits. Long-term brand development still needs to return to the product and service itself, and the company will adhere to "high quality and affordable price," enhancing product strength, brand strength, and operational quality.
Q: What are the company's capacity plans in the domestic and overseas markets for the next 1-2 years?
A: Domestic: The existing five production bases have sufficient and flexible capacity to meet the demand for the next 3-5 years. The next step is to extend upstream to agriculture, enhancing the standardization of raw materials (such as building a frozen passion fruit project in Yuxi, Yunnan, with an annual capacity of 15,000 tons). Overseas: Southeast Asia: Currently, raw materials are mainly supplied domestically (Hainan base can export), and in the future, local specialty fruits may be directly sourced and processed.
Americas and other distant markets: Once the store network reaches a certain scale, the feasibility of local factory construction will be comprehensively evaluated (such as in South America).
Q: What are Lucky Coffee's core competitive advantages? How is it distinguished from the coffee products in Mi Xue Bing Cheng stores?
A: Core Advantages: 1. Supply Chain: Shares the group's global coffee bean direct sourcing, scale procurement, and self-roasting advantages; other raw materials (fruit, tea, milk, small ingredients) can also leverage the group's mature supply chain.
2. Franchisee Win-Win Philosophy and Comprehensive Support: Including site selection, training (over 60 full-time trainers, 12,000 square meters training campus), operations (digital tools such as Card Manager, Store Manager, Intelligent Middle Platform), innovative store design (such as bar relocation to shorten distance), etc.
Distinction from Mi Xue Bing Cheng Coffee: Lucky Coffee: Focuses on professional freshly ground coffee, using factory-roasted beans + semi-automatic machines in stores for grinding and making, providing a more advanced coffee experience. Mi Xue Bing Cheng Coffee: Serves as a supplement to the tea drink menu, using factory-ground powder + fresh extraction in stores, simplifying operations and reducing pressure. The two are in a complementary relationship, jointly exploring the market and achieving synergistic growth.
Q: What was the operating situation in Southeast Asia (especially Indonesia and Vietnam) in the first half of the year? What optimization measures were taken? What were the effects?
A: Overall in line with expectations, with a year-on-year increase in average store sales, validating the "quality improvement and efficiency enhancement" strategy. Indonesia, Vietnam: The earliest markets entered, with some missteps. In the first half of the year, focused on optimizing existing stores (reduced in number): improved product quality, service quality, and cleanliness standards; optimized store locations (average store sales increased by over 50% after relocation); introduced mature domestic systems (Mi Xue Tong) to enhance store inspection efficiency; organized franchisees for practical training in China. Malaysia, Thailand: Performed well, with a steady increase in the number of stores and continuous improvement in operational quality, leveraging successful domestic experiences. Challenges and Plans: Supply chain efficiency is lower than domestic (formulas need local adaptation, inventory allocation is difficult). Efforts are being made to improve through domestic R&D to optimize taste adaptation, empower overseas warehousing and digital construction. In the second half of the year, focus on store operation optimization, supply chain efficiency improvement, professional team cultivation, and brand IP development.
Q: What are the long-term goals and strategies for the company's overseas market expansion? What is the development situation in markets other than Southeast Asia?
A: Long-term Goal: To build a global brand with world influence, believing that overseas markets will contribute increasingly significantly in the future. Strategy: Step by step, adhere to high-quality development (solid supply chain, strong brand power, attractive store model, international team). New Markets: Central Asia: Stores have been opened in Kazakhstan, with a dozen signed, and plans to expand to more Central Asian countries. Americas: Preparing for the first stores in the East and West coasts of the U.S., Mexico, and Brazil. Initially adopting a direct operation model to refine the model and establish the brand, transitioning to a franchise model in the mid-term to support franchisees and ensure their interests.
Q: What was the specific impact of the price increase of raw materials such as lemons and coffee beans on the gross margin in the first half of the year? What is the gross margin outlook for the second half of the year? What are the expectations for the main expense ratios in the second half of the year?
A: Gross Margin: The price increase of specific raw materials (lemons, coffee beans) was offset by the price decline of other categories (sugar, milk). The vertically integrated supply chain (direct sourcing from the origin, locking in high-quality raw materials in advance, flexible adjustment of product plans) and continuous efficiency improvement (cost reduction through scale procurement, increasing self-production ratio, process innovation) effectively mitigated the impact. Gross margin remained stable (31.6%), and it is expected that around 30% is a sustainable healthy level in the long term. Expense Ratios: Business development requires continuous investment (credit card expansion, overseas quality improvement, brand IP, digitalization, global talent), but business scale growth will also dilute expenses. It is expected that all expense ratios will remain stable at a healthy level in the second half of the year.
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