China Merchants Securities: Very busy maintaining momentum (01768) “Highly recommended” rating, target price of HK$578

The Zhitong Finance App learned that China Merchants Securities released a research report saying that Ming Ming was very busy (01768) releasing the 2026 interim report. The bank maintained a “highly recommended” rating, considering that the company's adjusted net profit compound growth rate of more than 40% over the next 3 years was given 20 times PE in 2026, corresponding to a target price of HK$578. The adjusted net profit of the company is expected to be 54.1/71.2/8.35 billion yuan, respectively.

The main views of China Merchants Securities are as follows:

H1's performance exceeded expectations, and both revenue and profit grew rapidly

2026H1's revenue was 45.0 billion yuan, up 60.0% year on year; net profit was 2.24 billion yuan, up 155.4% year on year, corresponding net interest rate 5.0%, up 1.7 percentage points year on year; adjusted net profit was 2.45 billion yuan, up 136.6% year on year, and adjusted net profit margin was 5.4%, up 1.8 percentage points year on year. Revenue and profit performance were better than market expectations, and net interest rates increased dramatically while the scale grew rapidly.

The number of stores exceeded 26,000, and the closing rate declined further

By the end of 2026H1, the number of company stores reached 26,405, a net increase of 4,457, of which 26H1 had a net increase of 4,468 stores and 121 closed stores, corresponding to a closure rate of 0.5%, a year-on-year decrease of 0.3 percentage points, which is significantly better than the industry. By city level, the number of stores in first-tier and new-first-tier, second-tier, third-tier and third-tier cities was 5287/3949/17,169 respectively, accounting for 20%/15%/65% respectively. At the end of 26H1, the number of franchisees in the company was 10,327, up 42.6% year on year, with a net increase of 655 allies. The average number of franchisees opened was 2.4, an increase of 20% year on year.

Fast opening and ordering stores are still showing steady performance

The company achieved GMV of 63.89 billion yuan in 2026H1, up 55.6% year on year, and the revenue/GMV ratio was 70%, up 1.9 percentage points year on year; the bank calculated that the average daily GMV for a single 26H1 store was 14,500 yuan, a slight increase of 0.3% year on year, and the monthly revenue of a single store was 310,000 yuan, up 3.2% year on year. It maintained steady single-store performance during the high-speed opening period, leading in operating efficiency.

The gross margin has increased steadily, and the cost ratio has been optimized with the release of operating leverage

The company's 2026H1 gross margin was 11.5%, up 2.2 percentage points year on year, 1.3 percentage points higher than 25H2, and sales rate 3.5%. The large-scale effect of the mass-selling snack business is obvious. It is expected that as the company expands, gross margin will continue to increase in the future, and there is still room for optimization of the cost ratio, which will drive an increase in net interest rates.

Risk Alerts

Competition in the industry intensified, opening stores fell short of expectations, same stores fell short of expectations, errors in calculating store efficiency, and the risk of lifting the ban.