Daiwa issued a report stating that Mixue Group (02097.HK) is facing a potential downward revaluation of its valuation due to a slowdown in future earnings growth, and that its second growth engine has yet to be validated. The firm downgraded its investment rating from “Outperform” to “Hold” and lowered its valuation multiple from a projected 28x P/E for this year to 22x, with the target price reduced from HK$535 to HK$427. The firm believes that Meixue’s current valuation, equivalent to a forward P/E ratio of 21 times, is high compared to mainland food and beverage peers, which range from 15 to 19 times, and to the firm’s forecast of a 15% compound annual growth rate (CAGR) in earnings per share (EPS) for Meixue from 2025 to 2027. The firm noted that while Mixue’s same-store sales growth has remained resilient following the end of the subsidy boom, and its store network expansion may provide some support, it believes the market may have set expectations for its second growth engine too high.