BRIEF: Guoquan profit jumps as revenue growth accelerates

Guoquan Food (Shanghai) Co. Ltd. (2517.HK), a supplier of ingredients for hotpots and other dining at home, last Thursday reported its revenue rose 20.7% last year, as its profit rose at more than double that rate amid a focus on expansion into China’s untapped smaller markets.

Guoquan reported revenue of 7.81 billion yuan ($1.13 billion) last year, up from 6.47 billion yuan a year earlier, accelerating from the slower 6.2% growth rate in 2024. Its net profit for the year rose 88% to 454 million yuan, while its core operating profit, which excludes certain non-cash items and a one-time donation, rose 48% to 461 million yuan.

Unlike many restaurant operators, which are suffering in China’s economic slowdown, Guoquan has been able to maintain strong growth by focusing on consumers looking for better value by dining at home. It has leveraged the franchising model to build up its network. The company ended last year with 11,566 stores throughout China, up 14% from the 10,150 it had a year earlier. Of the 1,416 net new locations, more than two-thirds were in smaller townships.

Looking ahead, the company said it will continue upgrading existing community stores into large-store models and expand its product categories and consumption scenarios. It will also explore new store formats such as Guoquan stir-fry and Guoquan camping and extend into different consumption scenarios. The company set a target of 2,934 net new openings for this year, bringing its total to more than 14,500, and said it aims to achieve high-single-digit growth in store efficiency, and to lift its core operating profit to significantly faster growth than its revenue growth.

The company said it will continue to emphasize its movement into smaller county and rural markets, expand its large-format township store upgrades, and continue to add to its more than 3,000 stores that have been upgraded to 24-hour intelligent unmanned formats.

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