Huaxi Securities maintains a 'Buy' rating for Guozhiquan (02517) citing impressive profit growth

According to Zhitong Finance APP, Huaxi Securities issued a research report stating that, referring to the latest earnings forecast, adjustments have been made to Guozhi (02517) $GUOQUAN (02517.HK)$ The revenue forecast for 2025-2027 has been revised from 7.646/9.083/10.82 billion yuan to 7.803/9.183/10.82 billion yuan. The EPS forecast for 2025-2027 has been raised from 0.16/0.19/0.24 yuan to 0.16/0.20/0.25 yuan. Based on the valuation of 4.26 Hong Kong dollars on January 30, 2026, the respective valuations are 24/19/15 times, maintaining a 'Buy' rating.

The main viewpoints of West China Securities are as follows:

The company released a positive profit report

In 2025, it is expected to achieve revenue of 7.75 to 7.85 billion yuan, an increase of 19.8% to 21.3% year-on-year; net profit of 443 to 463 million yuan, an increase of 83.7% to 92% year-on-year; core operating profit of 450 to 470 million yuan, an increase of 44.8% to 51.2% year-on-year.

Aggressively expand into rural markets to drive rapid revenue growth

In 2025, the company will continue to aggressively expand into rural markets, where low rents and high potential align well with Guoquan's 'community central kitchen' positioning, becoming a major source of revenue expansion. For the fiscal year 2025, the company's total revenue is projected to increase by 19.8% to 21.3% year-over-year, reaching a scale of 7.75 to 7.85 billion yuan. From the store perspective, by the end of 2025, the number of Guoquan stores will reach 11,566, with 1,416 new stores added year-over-year, including 805 new stores in Q4 alone. The pace of expansion aligns with the company’s strategy for penetrating lower-tier markets, providing a solid channel foundation for revenue growth. In terms of store operations, the company has implemented multi-dimensional measures to enhance operational efficiency. On one hand, it optimizes store performance by expanding product categories, increasing SKUs, and introducing seasonal scenario-based meal packages to boost average transaction value and repeat purchases. On the other hand, it deepens membership operations, with the latest membership count surpassing 60 million. Through a series of membership engagement and prepaid card initiatives, customer loyalty has been further strengthened. As a result, per-store revenue has steadily increased.

Scale effects combined with operational efficiency improvements lead to impressive profit growth

The company’s full-year profit performance for 2025 was outstanding, with net profit expected to grow by 83.7% to 92% year-over-year, reaching 443 to 463 million yuan. Thanks to the scale effects from store network expansion and increased per-store revenue, unit costs in supply chain production, procurement, and logistics delivery have continued to decline, serving as the core driver of profit growth. Additionally, the company’s ongoing efforts to optimize operational efficiency have jointly driven significant increases in profit margins and core operating profit margins.

Firmly advancing the community central kitchen strategy, heralding the start of a new decade

The year 2026 marks the tenth year for Guoquan and the beginning of a new decade. The firm expects the company to accelerate its store openings, with adjustments to larger stores and rural market expansion driving sustained earnings certainty. In the medium to long term, based on the chairman's New Year speech, the firm is optimistic about the company’s commitment to its community central kitchen strategy. It aims to excel in community dining, firmly focus on large offline stores, embrace retail manufacturing, adopt AI and cutting-edge technologies, innovate across scenarios and emotional value, and concentrate on home dining scenarios. By tapping into the trillion-yuan home dining market, the company seeks to achieve multi-scenario, high-frequency coverage and unlock its growth potential.

Risk Warning:Potential risks include slower-than-expected store expansion, underperformance of new store formats, and weaker-than-expected consumer recovery.

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