CICC: China's leading 10,000 store valuations have room to clearly balance growth and value

The Zhitong Finance App learned that CICC released a research report saying that Wandian has already become a milestone in China's major consumer chain business. Why tens of thousands of stores? Refine sharp store models to break through the deepest hierarchical consumer market. After 10,000 stores, there are often 10,000 stores. Scarce scenario bases and scale advantages are expected to drive profits to the next level. From a global perspective, China's 10,000 store leaders have clear room to increase their valuation, and both growth and value are there.

CICC's main views are as follows:

Why ten thousand stores: Using the sharpest store model to condense the greatest common denominator of Chinese consumption. 1) Wandian Gene comes from standardized expansion, friendly pricing, and expansion models adapted to local conditions: based on easy product standards and mild service, the chain rate of mass-selling snacks and ready-to-drink beverages reached 92%/49%. Affordability, affordability, and affordability push 10,000 stores to break through the sinking market. The more the layout sinks, the less complex the management, and the greater the need for open franchise. 2) “Three pillars and one foundation” to build 10,000 store capabilities: On the basis of supply chain, store and franchisee management and brand value construction, digital capabilities are integrated throughout. The Wandian business format generally has low product complexity, and strong supply chain capabilities take precedence over the ability to innovate large single products; the recycling period for small franchised health stores is less than 2 years, stemming from a strong management and control system, which brings about 10,000 stores; scale is medium, density is volume, and Wandian itself is the best product promotion. 3) Xinwan stores: Ready-made drinks, mass-selling snacks, hotel chains, etc. are on a flywheel of growth, and the momentum of some Laowan stores is weakening.

After 10,000 stores: Store replication to ability reuse, and increase in breadth, depth, and efficiency. 1) Excessive growth in leading domestic brands: Michel/Lucky has verified a high-density nationalization path, and the first-class commercial site occupancy rate is 75%/72%. There is plenty of room to expand the store for mass-selling snacks and mid-priced teas. Regional barriers to mass selling snacks are stronger, and cities with dominant snacks/tea/drink/coffee brands have the highest market share of 97%/70%/67%. 2) Big fish out of the sea: McDonald's, Starbucks, Snow, and Lucky's overseas stores accounted for 70%/55%/7%/1% in 25 years. The local supply chain and operation system to replicate efficiency is the key. 3) Category expansion, quality improvement, and brand upgrading: points, time periods, and demand complement each other to achieve capacity reuse and category expansion, such as tea and coffee; release of supply chain efficiency to drive quality improvement, driving repurchase and same-store growth, such as pure tea; brand upgrading comes from back-end platform reuse and front-end brand advancement, such as Huazhu's high-end brand. 4) Link compression, scale effects and value chain reshaping drive profits: mass-selling snacks from reducing distribution costs to reshaping the value chain to create incremental growth.

Wandian Investment: Combining growth and value, it is time for China's Wandian leader to increase its valuation. 1) Dual investment framework for growth and value: Overseas 10,000 store chains have both high cash flow and long-term operating resilience, leading global restaurant chains have started steady returns; some domestic 10,000 store chain brands have both growth and value, and some are in the process of expansion and reinvestment. 2) China's top ten thousand stores have obvious discounts: the average PE of leading hotels and restaurants in overseas/China is 33x/15x and 29x/15x under consistent expectations.

risk

Consumer demand is under pressure, industry competition is intensifying, and the improvement in enterprise management capabilities falls short of expectations.