UBS downgraded MIXUE GROUP to "Sell," stating that its valuation is higher than that of its peers in the mainland new consumption sector

UBS published a report stating that MIXUE GROUP (02097.HK) is overvalued, with the current price corresponding to a forecasted price-to-earnings ratio of 43 times for this year and 36 times for next year, equivalent to a dynamic price-to-earnings ratio of 2.2 times (compared to the dynamic price-to-earnings ratio of 1.9 times for peers in China's new consumption sector). Additionally, due to the slower-than-expected pace of overseas recovery, UBS downgraded MIXUE GROUP's rating from "Neutral" to "Sell," raising the target price from HKD 435.59 to HKD 477.13, which corresponds to a forecasted price-to-earnings ratio of 33 times for this year and 28 times for next year, and a dynamic price-to-earnings ratio of 1.7 times.

The bank pointed out that the group benefits from strong supply chain capabilities, value propositions, and a robust franchise model, with its domestic business maintaining strong growth momentum. However, due to increasing competition, its overseas business has encountered setbacks.

The bank believes that MIXUE GROUP will maintain an annual store growth rate of 15% over the next 3 to 4 years, reaching 70,000 stores by 2028. Furthermore, the bank expects the group to have long-term growth potential in the Southeast Asian market, predicting that the proportion of overseas revenue to total revenue will slow to 4.5% next year and return to 5.3% by 2028.

UBS forecasts that MIXUE GROUP's diluted earnings per share for 2025 and 2026 will be RMB 13.29 and RMB 15.93, respectively, representing year-on-year increases of 7.8% and 19.9%