Huachuang Securities issued a research report maintaining a "Recommend" rating for JIUMAOJIU (09922), projecting the company's net profit attributable to shareholders for 2025/2026/2027 at RMB147/165/168 million, with a target price of HK$2.65. The company has a solid supply chain foundation and outstanding core brands, with the capability to continuously incubate new brands, making future growth promising. Focusing on the future development of each brand: 1) Tai Er: Store renovations are advancing the "Fresh Mode," achieving comprehensive upgrades in products, services, and dining environment, helping to reshape brand perception; 2) JIUMAOJIU: Long-term product strength remains stable with resilient operations, expected to continue providing performance support; 3) Song Hotpot: Brand momentum has been initially established and is expected to continue contributing to performance.

Event: JIUMAOJIU released its 2025 interim report. In H1 2025, the company achieved revenue of RMB2.753 billion, down 10.1% year-on-year; net profit attributable to shareholders was RMB61 million, down 16.05% year-on-year; net profit margin was 2.13%, down 0.09 percentage points year-on-year, and net profit margin attributable to shareholders was 2.2%, down 0.16 percentage points year-on-year.

Huachuang Securities' main viewpoints are as follows:

By brand, Tai Er's H1 2025 operating profit margin was 13.4%, down 0.4 percentage points year-on-year; Song Hotpot's operating profit margin was 3.6%, down 5.0 percentage points year-on-year; JIUMAOJIU's operating profit margin was 12.7%, down 4.2 percentage points year-on-year; other brands' operating profit margin was 15.9%, up 25.7 percentage points year-on-year. The company closed some non-core brands, reducing related expenses.

In the first half of the year, offline dining consumption faced pressure, with table turnover rates declining across all brands, with Tai Er showing a more significant decrease. Table turnover rates: In H1 2025, Tai Er's table turnover rate was 2.2 compared to 2.7 in the same period of 2024; Song Hotpot's was 1.7 compared to 2.0 in the same period of 2024; JIUMAOJIU's was 1.5 compared to 1.8 in the same period of 2024. Daily turnover rates: In H1 2025, Tai Er's daily turnover rate was 3.1 compared to 3.8 in the same period of 2024; Song Hotpot's was 2.5 compared to 2.9 in the same period of 2024; JIUMAOJIU's was 2.5 compared to 2.8 in the same period of 2024.

Average spending per customer increased slightly for Tai Er and JIUMAOJIU, with Tai Er benefiting from some stores upgrading to "Fresh Mode," while Song Hotpot's average spending per customer declined. Average spending per customer: In H1 2025, Tai Er's was RMB73 compared to RMB71 in the same period of 2024; Song Hotpot's was RMB99 compared to RMB110 in the same period of 2024; JIUMAOJIU's was RMB57 compared to RMB56 in the same period of 2024.

Same-store sales declined overall. In H1 2025, Tai Er's same-store sales were RMB1.536 billion, down 18.9% year-on-year; Song Hotpot's same-store sales were RMB288 million, down 20.07% year-on-year; JIUMAOJIU's same-store sales were RMB193 million, down 19.85% year-on-year.

The company actively optimized its store structure and decisively closed underperforming stores. As of the end of H1 2025, the company had a total of 729 stores including a small number of franchised restaurants, a net decrease of 42 stores compared to the end of H1 2024, including: Tai Er had 566 stores, a decrease of 48 compared to the end of H1 2024, with some directly-operated Tai Er stores converted to franchised stores, increasing the number of franchised restaurants to 19; Song Hotpot had 31 stores, an increase of 9 compared to the end of H1 2024; JIUMAOJIU had 68 stores, a decrease of 4 compared to the end of H1 2024, with 1 franchised restaurant; Nawei Uncle is Da Chef stores were closed; Lai Meili Grilled Fish had 1 store, a decrease of 3 compared to the end of H1 2024; Shang Xian Yue Mu had 1 store, unchanged; Shan Wai Mian had 17 stores, an increase of 10 compared to the end of H1 2024.

The company continues to advance supply chain construction and international expansion. The Nansha supply chain center has begun trial operations, with continuously improving digitalization levels. The Tai Er brand has expanded operations in Singapore, Malaysia, Canada, the United States, Thailand, and Indonesia, while Lai Meili has also opened 1 store in Singapore.

Risk warnings: Product innovation falling short of expectations, food safety risks, intensified industry competition risks.