Reversing losses in the main business, breaking new business formats, opening up the supply chain: Baiguoyuan (02411)'s “Three Growth Curves” have entered a new cycle

In 2026, community retail will enter a new round of transformation, moving towards “high quality and cost ratio community consumption”.

On the one hand, the rise of fresh snacks, short-term insurance and current production are hitting the demand for “healthy relief” among young consumers; on the other hand, mass-selling snack brands are evolving to hard discounts on all categories.

However, in the retail sector, freshness, good price, and profit are not easy to achieve. Fresh means loss. Good prices reduce gross profit. If you want to maintain profit levels, you have high requirements for operational efficiency.

As retail channel brands transitioned to healthy and fresh food, Baiguoyuan ushered in a period of strategic opportunity, relying on loss control, cold chain, and supply chain efficiency accumulated over 20 years.

On August 28, Baiguoyuan (02411) announced the interim results. In the first half of the year, revenue was about RMB 5.01 billion, up about 14.5% year on year; net profit to mother was about RMB 0.3 billion, with a loss of 342 million yuan in the same period in 2025, which changed from loss to profit; the number of full-caliber stores increased by 53% year on year to 6,709, returning to sustainable expansion. Revenue, profit, and store openings are rising at the same time, and an inflection point in performance has been established.

It is worth noting that this report card is a “low-key submission” to the capital market. The previous performance forecast gave guidelines for revenue growth of not less than 7% and net profit to mother of not less than 20 million yuan. In reality, the Group's overall revenue and profit for half a year significantly exceeded expectations. “Turning losses into profits” is Baiguoyuan's “chassis demonstration” after two years of active strategic adjustments.

But what is driving the reversal?

Previously, founder Yu Huiyong proposed three progressive strategic positions: the world's leading ecological technology company for the fruit industry, the world's leading brand incubation platform for fruit and vegetable processing categories, and a globally integrated fruit supply chain service platform.

In this financial report, Baiguoyuan is using business changes to answer what kind of company it will become in the future.

The inflection point has arrived, and “information+agriculture” technology empowers the basic market of fresh fruit

Fruit is fresh and competes with life every minute. Good fruit becomes a bad business if there is a problem with the timing of picking, storage temperature, transportation loss, and shelf life.

Over the past 20 years, Baiguoyuan has thoroughly carried out every node in this chain, from breeding varieties to preservation after harvesting, from intelligent ordering to store diagnosis.

Figure: Quality Control Grading

In the first half of 2026, the ability of the industrial chain to settle down will unlock more value. The three core indicators of revenue, profit, and store opening are rising at the same time, indicating that the main business reversal has been established.

What is rare is that Baiguoyuan's growth occurred after “refining” the quality of operations rather than pursuing scale expansion. In the past few years, Baiguoyuan experienced a round of active liquidation of inefficient stores, and now the consolidation has been completed.

Therefore, to understand this reversal, we must not only look at business restoration.

The deep industrial chain has formed a stronger competitive barrier than a simple network of stores. Based on this, Baiguoyuan has set the strategic goal of “the world's leading ecological technology company in the fruit industry”.

Facts have proved that the full-link technology system supports the main business to have a stable basic market in the new round of retail transformation.

The quality of store operations continues to improve. By the end of the second quarter, the number of members had exceeded 97.7 million, and online orders accounted for 27.8%. The single-store model and member repurchases continued to deepen.

Looking deeper, Baiguoyuan is evolving from a traditional fruit chain retailer to a platform-based enterprise with industrial infrastructure capabilities.

This evolution is based on the deep accumulation and visualization of the four core competencies:

The first is the deep application of digitalization and AI technology. Intelligent ordering and store diagnosis covered all department stores, but R&D expenses decreased by about 17% year on year;

The second is the hard power of the supply chain and cold chain to fulfill contracts. Over 20 years of global fruit supply chains, 29 national cold chain warehouses, and 56 signature fruit brands;

Third, franchise chain operation and management capabilities, and the standardized operation system of more than 4,000 fruit retail stores continues to iterate;

Fourth, fresh fruit has the ability to control losses. From picking timing and storage temperature to shelf life management, every node has been thoroughly implemented. It is the concentration of these “chassis capabilities” that has enabled Baiguoyuan to fully evolve into multi-format retail, B2B platform business, and big B while stabilizing the basic market of fresh fruit.

Judging from financial reports, the reversal of the main business is the first step. Opening up room for imagination is the second and third step.

Growth engine, from quality growth to ecological expansion

In the past, there were many business theories that imagined enterprise development.

For example, a senior consultant at McKinsey proposed in “The Alchemy of Growth — The Secret to Continuous Growth”: All large companies that continue to grow maintain a balanced development of three levels of business. The first level is to protect and expand core businesses, the second level is to establish emerging businesses, and the third level is to create viable candidate businesses.

The three-tier business is like a pipeline. The old business contributes cash flow, and the new business continues to grow.

This coincides with Baiguoyuan founder Yu Huiyong's judgment: fruit stores are only a starting point and front-end testing ground.

With the steady growth of the main fruit business, Baiguoyuan expanded outward with fresh fruit capacity. The second step is to open up a second growth curve for community fresh retail/community hard discount supermarkets in addition to fruit stores.

In the past two years, mass sales of snacks have quickly gained ground at low prices and on a large scale, but after the hard-discount snack circuit stabilized, the demand of consumers, especially young people, shifted from “relieving cravings at low prices” to “being healthy, fresh, and experienced.”

As a result, a fresh snack track exploded.

According to Zheshang Securities Research Report, from 2020 to 2025, the size of China's fresh snack market grew from less than 5 billion yuan to 18 billion yuan, with a compound annual growth rate of more than 40%. It is expected to grow sharply to 40 billion to 50 billion yuan in 2026.

However, behind fresh snacks is high loss, high operational difficulty, and high turnover requirements, which is exactly the field that traditional snack players are least good at.

Baiguoyuan did this, but it reduced the dimensions.

Fresh fruit is one of the most difficult categories to manage in fresh food, and Baiguoyuan has been deeply cultivated for more than 20 years, forming four core advantages: over 20 years of global fruit supply chain, 1,000 fresh food loss control experience, 29 national cold chain warehouses, and 7 major regional local brands.

Today, Baiguoyuan has rules and regulations to explore new business formats.

On the one hand, category expansion, from fruit category brands, to fruit and vegetable category brands, to fruit and vegetable and derivative processing brands, has systematically exported cultivation, quality control, preservation, channel and capital capabilities accumulated over many years to every single brand.

On the other hand, with channel expansion, the new business format does not change the old store, but the two business formats share a set of capabilities. Use standards and agility to achieve a balance between standardization and localization.

As a result, Baiguoyuan evolved towards the second strategic goal, “the world's leading incubation platform for fruit and vegetable processing brands”.

According to the company's announcement, in the first half of 2026, seven local brands have joined hands to explore new business formats and new store types, including “fruit+snacks” and community fresh retail stores.

In July, the first innovative integrated store opened in Shenzhen. The business positioning was extended from “buying fruit” to “one-stop healthy living solutions”, with the goal of increasing the share of non-fresh fruit sales to around 40%.

Ready-to-eat fruit cuts, short-shelf food, dried fruit, juice, and even baking ingredients, these derivative products will open up a longer life cycle for category brands.

While the retail side of multiple business formats is speeding up its layout, Baiguoyuan's B2B platform business and supply chain empowerment are also being scaled up simultaneously.

B2B platform Banguo's GMV reached 1,401 billion yuan in the first half of the year, an increase of about 22% over the previous year; in terms of fully opening the supply chain 2B business, the company provides a three-tier enabling system from differentiated product development, low-cost implementation to full-process operation and education for businesses such as snack stores, convenience stores, restaurants, tea, and welfare collection.

Whether it's Big B or Little B, any business format that requires fruit supply chain capabilities has become Baiguoyuan's “external customer”.

This means that Baiguoyuan's supply chain capacity is no longer only serving its own stores, but is beginning to open up to the entire industry, moving from a “closed loop of self-operation” to “platform-based export.”

With fresh fruit ability as the center, so that good categories can grow from the entire industry chain, Baiguoyuan's imagination is opening up in retail innovation.

Create the future and rewrite value with three levels of progressive growth

Baiguoyuan's strategic vision extends to a longer-term dimension.

Every round of retail sales explosions occurs at the corner of the economic cycle. For example, the reconstruction of the German economy after World War II gave birth to Aletsch, the originator of hard discounts. Low gross profit, streamlined SKUs, and extreme supply chain efficiency have conquered the European market.

Today, in the midst of structural changes in the global economy, consumption is becoming the core engine of China's domestic demand, enabling the beginning of the “15th Five-Year Plan”. A new round of retail innovation is poised to begin. The iconic hard discount logic is about to rewrite retail in China.

According to the Cathay Pacific Haitong Securities Research Report, the penetration rate of China's pan-hard discount model in grocery retail is only 8%, far lower than Germany's 42% and Japan's 31%, with a compound growth rate of 23% over the next three years.

The combination of low penetration rate and high growth rate means that this is a highly deterministic racetrack. Allezi China accelerated its expansion, Walmart laid out its own brand, and Hema launched Ultra Box NB.

But there's always a gap. How can the “last mile” closest to the community achieve economies of scale for fresh food in small and medium-sized stores that are highly dependent on the flow of people in the community?

The traditional hard discount model excels at categories such as snacks, beverages, and daily necessities, and there are currently no widely verified solutions for fresh and short-preserved foods.

Baiguoyuan can fill the gap of large-scale fresh food in the community scene, expanding from fruit monopoly to hard discounts on all types of fruit. This indicates that the second growth curve will usher in the dividends of an explosion in community consumption.

On this basis, Baiguoyuan did not use its own abilities in a circle.

Founder Yu Huiyong set the third major strategic goal, “a globally integrated fruit supply chain service platform for all business formats”. Baiguoyuan promotes supply chain platformization, fully opening standards, products, compliance, training and operation capabilities to all business formats that require fruit supply chain capabilities.

Specifically, this enablement system is divided into three layers:

At the level of product empowerment, we rely on differentiated product development capabilities to provide high-margin products, and 56 signature fruit brands continue to deepen their voice.

At the level of supply chain compliance, we rely on the national fresh distribution and preservation system to provide low-cost fulfillment.

Furthermore, at the enabling level of training and operation, we provide guidance on the whole process from product selection to promotion.

It can be seen from this that the three growth curves of “current profit, medium term growth, and long-term space” have formed, and Baiguoyuan has become the “ideal type” of McKinsey's three-level theory.

The first curve is the fruit business, which leverages brand density, service standards, and ability to fulfill contracts to turn losses into profits.

The second curve is the incubation of ecological technology and category brands in the fruit industry, incorporating agricultural technology, information technology, and industrial incubation into the longer-term value map.

The third curve is to export supply chain capacity to the entire industry. Snack stores, convenience stores, restaurants, tea, welfare gathering, and any business that requires fruit are potential customers.

Currently, Baiguoyuan is still in the valuation perception of “traditional retailers” in the market, and there is a clear divergence between the broken state and the fundamental reversal of performance. However, this performance exceeded expectations and was a key step for the company to gradually establish trust in the capital market: don't tell stories, hand in the questionnaire first; don't pursue the hustle and bustle; use verifiable data to prove the effectiveness of the strategy. As AI efficiency increases continue to contribute incremental revenue to net interest rate improvements, new business formats, and B2B businesses, the market is expected to switch from pure retail valuation to a diversified valuation perspective of “retail+technology+supply chain services”.

Bank securities have raised the company's rating to “recommended” based on improvements in the main business and exploration of new business formats.

Looking forward to the future, Baiguoyuan has seized the opportunity of a new round of retail innovation and is entering a new growth cycle. Supported by a three-tier growth logic, Baiguoyuan evolved into an industrial platform of “fruit industry ecological technology+fruit and vegetable brand incubation+supply chain service”.

With the consumption of 1.4 billion people becoming the main engine of domestic demand in China, the dividends of the times have just arrived.

This article is reprinted from the “Hong Kong Stock Research Association” official account, Zhitong Finance Editor: Jiang Yuanhua.