Guoquan Food (Shanghai) Co., Ltd. Announces Robust 2025 Annual Results with Strong Growth Outlook

Key Financial Highlights for 2025

• Revenue: RMB 7,810.0 million, up 20.7% year-on-year.
• Gross Profit: RMB 1,686.6 million, up 19.0% year-on-year; gross profit margin at 21.6% (down slightly from 21.9%).
• Net Profit: RMB 453.9 million, up 88.2% year-on-year. Net profit margin increased from 3.7% to 5.8%.
• Core Operating Profit (Non-IFRS): RMB 460.7 million, up 48.2%.
• Basic and Diluted Earnings Per Share: RMB 0.1630, up 93.8%.
• Dividend: Proposed final dividend of RMB 0.0381 per share (tax inclusive), with interim dividend of RMB 0.0716 per share already paid. Total proposed dividend payout for 2025 is RMB 100.2 million.

Operational and Strategic Highlights

• Store Network Expansion: Total stores increased to 11,566 (from 10,150 a year earlier), covering all 31 provinces, with 1,004 net new township-level stores, demonstrating strong penetration into lower-tier markets.
• Omni-Channel Retail: More than 3,000 stores upgraded to 24-hour unmanned retail formats, supporting both online and offline sales. Douyin channel GMV soared 75.3% to RMB 1.49 billion, with over 9.41 billion impressions.
• Membership Growth: Registered members reached 64.9 million (up 57.1%). Value stored in prepaid cards grew 22.3% to RMB 1.2 billion, reflecting a strong loyalty program and recurring revenue base.
• Product Innovation: 282 new SKUs launched in hotpot and BBQ; multiple new meal sets and beverage options introduced, reinforcing the “tasty, convenient, value-for-money” brand positioning.
• Supply Chain & Production: Seven self-owned food ingredient plants and a new production base under construction in Danzhou, Hainan, fortifying supply chain control and supporting future expansion.
• Digitalization: 20 digitalized central warehouses established, next-day delivery to most stores, advanced inventory and supply chain management, and increased supply chain efficiency.

Business Outlook & Strategic Initiatives for 2026

• Expansion: Targeting >14,500 stores by end-2026 (net increase of nearly 3,000 stores), with <4% closure rate and high-single-digit growth in store efficiency. Membership base to exceed 95 million.
• Multi-Level Store Formats: Further penetration into county/rural markets, upgrade of community stores to large-format models, and exploration of new concepts like Guoquan stir-fry and camping stores.
• Product Matrix: Expansion into more meal scenarios (including Chinese/Western cuisine, ice cream, beverages), with differentiated strategies for township markets.
• Brand & Membership Ecosystem: Deeper integration of media, social platforms (Douyin, TV, offline ads) to drive community engagement and member loyalty.
• Technology & Smart Retail: Deployment of IoT, big data, and AI to empower stores, optimize service, enrich sales scenarios, and enhance operational efficiency. Smart cooking machines to standardize and accelerate stir-fry offerings.
• Industrial Integration: Continued investment in “one-product-one-factory” model, expansion of upstream partnerships, and overseas market entry (starting with Hong Kong SAR).

Additional Shareholder Updates and Price-Sensitive Information

• Significant Share Buybacks: In 2025, the company repurchased 78,027,200 H shares on the Stock Exchange for a total of HK\$200.6 million (all held as treasury shares, not yet cancelled or reissued). This is a major capital management action that may support share price stability.
• Use of IPO Proceeds: As of 31 December 2025, HK\$155.4 million of IPO funds have been used as planned, mainly for plant construction and working capital. Remaining HK\$293.3 million to be used by 2027, supporting further growth.
• Connected Transaction: In February 2026, Guoquan entered into a procurement framework agreement with Henan Songhe Liquor Co., Ltd. for alcoholic beverage supply, with a cap of RMB 200 million for 2026. This is a continuing connected transaction and is subject to HKEX reporting and review requirements.
• Board Renewal: Upcoming election of a new Board (second session) at the 2025 AGM, with a proposed term of three years, may result in leadership continuity or change.

Financial Position and Liquidity

• Net Asset Value: RMB 3,179.3 million as at 31 December 2025.
• Cash and Bank Deposits: RMB 1,349.1 million, plus RMB 618.1 million in financial assets at fair value through profit or loss (mainly wealth management products).
• Interest-Bearing Borrowings: RMB 139.0 million (up 105.9%, all in RMB at fixed rates).
• Inventory & Receivables: Inventory up 16.1% to RMB 803.2 million; turnover days improved to 44.6 days. Receivables increased to RMB 424.7 million, reflecting expanded sales to corporate clients.
• Gearing Ratio: Rose to 6.7% (from 3.2%), still low and manageable.
• No significant contingent liabilities, pledges, or major investments/disposals during the year.

Other Noteworthy Information

• Dividend Policy: All treasury shares are ineligible for dividends. Final dividend to be paid in RMB or HKD (as appropriate) by 18 June 2026, subject to AGM approval.
• Corporate Governance: The company notes a deviation from the HKEX Corporate Governance Code, where the Chairman and CEO roles are both held by Mr. Yang Mingchao, but justifies this on grounds of leadership continuity and strategic execution.
• Audit: Ernst & Young has agreed the figures in the results announcement with the audited financial statements.

Potential Price-Sensitive Factors

• Significant Profit Surge: The near-doubling of net profit and strong membership/store growth could positively re-rate the company’s valuation.
• Major Share Buybacks: The aggressive buyback program may support the share price and signal management’s confidence in the company’s intrinsic value.
• Ambitious Store and Membership Targets for 2026: If achieved, these targets could further boost market confidence and future earnings expectations.
• Strategic Partnership/Connected Transaction: The new procurement framework agreement with Songhe Liquor Group introduces a new business line and related-party risk, which investors should monitor.
• Overseas Expansion Plans: Entry into Hong Kong and other international markets represents a key growth catalyst, but also carries execution risks.

Disclaimer

The above article is provided for informational purposes only and does not constitute investment advice. Investors are advised to review the full financial statements and consult with their professional advisers before making any investment decisions. The company’s future performance may be affected by various risks, including market competition, regulatory changes, and execution of strategic initiatives.

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