CITIC Securities: Multiple factors resonate, turning point for the catering industry is expected.

CITIC Securities research report stated that we believe the current catering industry is in a resonant stage of "improvement in fundamentalscontinuing policy supportprice mechanism repairexpectation of valuation enhancement" due to multiple factors. From an operational perspective, since the second half of 2025, the revenue of social catering and the performance of major catering sub-sectors in the same store have continued to improve, combined with a slowdown in supply expansion and a marginal decrease in industry competition intensity, providing a more friendly external environment for business operation repair and profit improvement. From a policy perspective, the orientation towards service consumption continues to strengthen, and with the characteristics of high frequency, strong scenarios, and short decision-making chains, catering has become one of the clearest beneficiaries in the consumption stimulus policy. In terms of price, against the backdrop of the country's clear promotion of reasonable price increases, catering companies have gradually started to raise prices. Historical experience shows that cost disruptions are more likely to have a temporary impact, and in the medium to long term, gross profit margins are expected to recover and rise. In terms of valuation, benchmarking overseas experiences, improvements in inflation expectations often drive the centralization of valuations in the catering sector. Under the combined effects of fundamentals, policies, prices, and valuations, the catering industry is moving towards a more positive direction of recovery.