JPMorgan Cuts MIXUE Target Price 48% to HKD270
JPMorgan has downgraded MIXUE GROUP (02097.HK) from "Overweight" to "Underweight," signaling a significant loss of confidence in the beverage chain's near-term prospects. The bank slashed its target price by 48% from HKD521 to HKD270, asserting that the company's multi-year phase of rapid growth is concluding. Following the report, MIXUE's shares fell 6.9%, reflecting immediate investor concern. JPMorgan's analysis points to a strategic shift within MIXUE, moving from a growth-focused model to a value-oriented one as it confronts both external policy changes and internal structural hurdles over the next year.
Gross Margins to Narrow to 30% on Competition
Mounting competitive pressure and a slowdown in expansion are set to erode MIXUE's profitability. JPMorgan projects the company's gross margin will contract by 1.1 percentage points to 30% this year. The bank highlighted intensifying internal competition between MIXUE and "Lucky Coffee" as a key factor. This challenging environment, combined with decelerating store expansion and the risk of rising costs, prompted JPMorgan to revise its earnings forecasts for 2026 and 2027 downward by 9% to 14%. The analysis suggests that the company's previous expansion-at-all-costs strategy is no longer viable.
Weak Guidance Undermines 33% Profit Growth
The bleak forecast from JPMorgan overshadows MIXUE's recent strong financial performance. The company recently reported a 32.7% year-over-year increase in net profit to RMB5.887 billion for 2025, on revenue that grew 35.2% to RMB33.56 billion. Those results initially sent the stock rallying as much as 8.1% to a high of HKD348.8. However, the subsequent downgrade and management's own guidance for a "strategic adjustment" have shifted market focus from past successes to future challenges, indicating that investors now place greater weight on the weaker outlook than on the strong historical earnings.
