Investment Bank Research Brief
Citigroup predicts that Bawang Cha Ji (CHA.US) 2Q26E Group's same-store GMV will decline by approximately 15% year-on-year, while non-GAAP net profit will be flat month-on-month and decline by approximately 20% year-on-year.
Citigroup predicts that Bawang Cha Ji (CHA.US) 2Q26E Group's same-store GMV will decline by approximately 15% year-on-year, while non-GAAP net profit will be flat month-on-month and decline by approximately 20% year-on-year. It is predicted that the year-on-year decline in same-store GMV in 2H26E will narrow due to the low base effect, and the net store opening plan in 2026 will be reset to about 300 stores in China. The report maintains a Buy/High Risk rating. The market may not be prepared for the risk of same-store decline after Bawangchaji's rapid expansion, and its profitability and store expansion pace are facing challenges. One sentence conclusion: Bawangchaji is in the "digestion period" after rapid expansion. The decline in same-store sales will significantly drag down short-term performance. It needs to wait for the low base effect to appear and the store optimization effect. Short-term investment risks are high. Positive/negative: negative for Cha Ji (CHA.US). Catalysts: 1) 2Q26 official financial report to verify the extent of performance decline; 2) 3Q26/4Q26 same-store GMV data to verify whether the low base effect can bring improvements; 3) new store expansion and operating efficiency in lower-tier markets.