Tianfeng Securities: Maintains "Buy" rating on DPC DASH, optimistic about improvement in profitability

According to the Zhitong Finance APP, Tianfeng Securities released a research report stating that DPC DASH (01405) is a leader in the pizza sector, with strong growth potential and is expected to continue expanding in the Chinese market. The report is optimistic about the subsequent store expansion, cost reduction, efficiency improvement, and the enhancement of profitability through the dilution of headquarters expenses. Based on the performance in the first half of 2025, the profit forecast for 2025-2027 is maintained, with adjusted net profits expected to be CNY 170 million / 270 million / 380 million for 2025-2027, maintaining a "Buy" rating. The main points from Tianfeng Securities are as follows: The company released its performance announcement for the first half of 2025 In the first half of 2025, revenue was CNY 2.59 billion, a year-on-year increase of 27.0%. The operating profit at the store level was CNY 380 million, a year-on-year increase of 28.0%. The operating profit margin at the store level was 14.6%, an increase of 0.1 percentage points compared to the first half of 2024 and an increase of 0.2 percentage points compared to the second half of 2024. The adjusted net profit was CNY 90 million, a year-on-year increase of 79.6%, with an adjusted net profit margin of 3.5%, an increase of 1.0 percentage points compared to the first half of 2024, remaining flat compared to the second half of 2024. Store Opening and Operations: Annual Opening Target Locked at Approximately 98%, Same-Store Sales Maintain Positive Growth in Mature Markets Store Expansion: As of the end of the first half of 2025, the total number of stores was 1,198, a year-on-year increase of 31.1%. In the first half of 2025, there were 190 net new stores opened, and as of August 15, an additional 43 stores were opened. There are also 27 stores under construction and 35 stores signed, aiming to achieve the goal of 300 stores by 2025 (the annual opening target is locked at approximately 98%). By city, at the end of the first half of 2025, the number of stores in first-tier cities was 515, a year-on-year increase of 3.4%, accounting for 43% of the total number of stores, with 6 net new stores opened in the first half of 2025; the number of stores in non-first-tier cities was 683, a year-on-year increase of 64.2%, accounting for 57% of the total number of stores, with 184 net new stores opened in the first half of 2025. The number of cities entered by the end of the first half of 2025 reached 48, with 9 new cities entered in the first half of 2025. Same-Store Sales: Same-store sales in the first half of 2025 decreased by 1.0% year-on-year, mainly due to the strong sales momentum of newly entered market stores after December 2022, which created a high base effect. Specifically, same-store sales in first-tier cities maintained positive growth, and there was positive growth in same-store sales before December 2022. The average daily sales per store were CNY 13,000. Revenue by City: In the first half of 2025, revenue from first-tier markets was CNY 1.08 billion, a year-on-year increase of 7.2%, with same-store sales maintaining positive growth; revenue from non-first-tier markets was CNY 1.51 billion, a year-on-year increase of 46.6%, with the revenue share increasing to 58.2%, an increase of 8 percentage points year-on-year, benefiting from store expansion and strong performance of new stores in newly entered markets. Membership: By the end of the first half of 2025, the number of members reached 30.1 million, a year-on-year increase of 55%. In the first half of 2025, membership contributed 66.0% of revenue, an increase of 2.4 percentage points year-on-year. Cost and Expenses: Optimization of Compensation Expense Ratio In the first half of 2025, the raw material cost ratio was 27.3%, unchanged year-on-year, and the overall employee compensation expense ratio was 33.8%, a decrease of 1.1 percentage points year-on-year. Among them, the employee cash compensation expense ratio at the store level was 27.7%, an increase of 0.3 percentage points year-on-year, due to the increase in average staff numbers in stores to prepare for entering new markets; the employee cash compensation expense ratio at the headquarters was 5.1%, a decrease of 0.4 percentage points year-on-year, mainly due to economies of scale The share-based compensation expense ratio is 1.0%, a year-on-year decrease of 1.0 percentage points, mainly due to the reduction in the number of stock options granted. The rental expense ratio is 10.0%, the depreciation expense ratio is 4.8%, and the advertising and promotion expense ratio is 5.3%, all of which remain relatively stable year-on-year