Huachuang Securities: Maintains "Recommended" Rating on JIUMAOJIU (09922), Target Price HK$1.25

Huachuang Securities released a research report maintaining its "Recommended" rating on JIUMAOJIU (09922), forecasting net profit attributable to shareholders of RMB144 million/205 million/248 million for 2026/27/28, with the current market cap corresponding to P/E ratios of 7/5/4x respectively. Considering the company's improving same-store recovery and referencing comparable companies and liquidity discounts, it assigns 7x PE for 2027, with a target price of HK$1.25. Tai Er's continued same-store growth in mainland China and the accelerated rollout of the "Fresh" model are the main highlights of the company's current operational recovery; during the National Day holiday, Tai Er further improved and the new JIUMAOJIU model performed favorably, providing positive signals for subsequent recovery. Huachuang Securities' key views are as follows: Event JIUMAOJIU released its Q3 2026 latest operating performance announcement, with divergent operating performance across major brands. Tai Er self-operated stores achieved positive same-store sales; Song Hotpot and JIUMAOJIU brand self-operated stores remained under same-store pressure. In terms of store structure, while optimizing brand layout, the company continues to advance the Tai Er "Fresh" model upgrade and the new JIUMAOJIU model. Tai Er mainland same-store performance continues to recover, with divergence across brands and regions In Q3 2026, Tai Er mainland self-operated stores' same-store average daily sales increased 10.4% year-on-year, but dragged by a 17.4% year-on-year decline in other regions, Tai Er's overall same-store growth was 5.1%, lower than 7.4% in the first half. Song Hotpot same-store sales declined 26.8% year-on-year, widening from the 22.9% decline in the first half, with the effectiveness of operational adjustments still pending observation; JIUMAOJIU brand same-store sales declined 11.4% year-on-year, broadly flat versus the first half. Tai Er traffic improvement drives same-store growth, per-capita spending remains relatively stable In Q3 2026, Tai Er self-operated stores' table turnover rate was 3.8 times/day, of which mainland China was 3.8 times/day and other regions 3.7 times/day; Song Hotpot and JIUMAOJIU self-operated stores were 2.0 times/day and 2.3 times/day respectively. In terms of per-capita spending, Tai Er self-operated stores were RMB73, of which mainland China was RMB66 and other regions RMB151; Song Hotpot and JIUMAOJIU self-operated stores were RMB104 and RMB58 respectively. Tai Er mainland per-capita spending remained relatively stable, with mainland same-store growth mainly driven by traffic improvement, reflecting the positive effect of product and store model adjustments on consumer appeal. In terms of store structure, the group continues to optimize brand layout As of end-September 2026, the group had 584 stores in total (including franchise stores), a net decrease of 60 from 644 at the beginning of the year. Among them, Tai Er had 462 stores, a net decrease of 37 from 499 at the beginning of the year, including 439 self-operated and 23 franchise stores; Song Hotpot had 48 stores, a net decrease of 14 from 62 at the beginning of the year; JIUMAOJIU had 59 stores, a net decrease of 4 from 63 at the beginning of the year, including 57 self-operated and 2 franchise stores. Other brands totaled 15 stores, a net decrease of 5 from the beginning of the year. While optimizing its restaurant network, the company continues to advance the Tai Er "Fresh" model upgrade. "Fresh" model continues to iterate, National Day performance further improves As of end-September, Tai Er mainland "Fresh" model stores totaled 358, covering 90 core cities, of which the "6.0 Fresh Model" has been implemented in 5 stores. During the National Day holiday, Tai Er mainland same-store average daily sales increased 17.8% year-on-year, with overall table turnover rate exceeding 5 times/day, and "Fresh" model stores performed even better, demonstrating the positive role of store upgrades in operational recovery. New JIUMAOJIU model shows initial results, promotion effectiveness still needs verification During the National Day holiday, "JIUMAOJIUShanxi Cuisine Restaurant" comparable stores' same-store average daily sales achieved double-digit year-on-year growth, outperforming the JIUMAOJIU brand overall, initially demonstrating the new model's potential to improve operations. Risk warnings: Intensified competition in the catering industry; new store model promotion falling short of expectations; food safety issues.