Price Adjustments by Brands: Several Chinese tea and dining brands, including Luckin Coffee, NAYUKI, KFC, and McDonald's, have been increasing their takeaway prices since the second half of 2025, with KFC raising prices by an average of RMB0.8.

Discount Reductions: Cotti Coffee has begun to reduce its RMB9.9 discount across all products, while Luckin Coffee has shifted most of its beverages to a higher price range of RMB10.9-13.9, cutting back on the RMB9.9 offerings.

Hong Kong Stock Market Performance: The Hong Kong bourse experienced a rally on the 28th, with the HSI reaching a 4.5-year high of 27,757, up 630 points or 2.3%, and a turnover of HK$176.495 million.

MIXUE GROUP Stock Decline: MIXUE GROUP's stock opened 2.5% lower and fell to HK$396, down 10.6%, following a downgrade by UBS, which cited potential short-term pressures and reduced profit forecasts.

Pressure on Tea Beverage Stocks: Several tea beverage stocks, including CHABAIDAO and GUMING, faced declines of 2-3%, diverging from the overall market trend.

Short Selling Activity: The short selling ratios for various stocks, including MIXUE GROUP and others in the tea beverage sector, indicate increased market skepticism, with significant short selling reported.

Stock Performance Overview: Various Hong Kong stocks showed mixed performance, with ZIJIN GOLD INTL and MINIMAX-WP experiencing significant gains, while others like GUMING and CHERY AUTO faced declines.

Short Selling Data: Short selling activity varied across stocks, with FWD showing a high short selling ratio of 16.999%, while NANSHAN AL INTL had a notably low ratio of 0.135%.

Market Capitalization Insights: The market capitalization at the end of the lock-up periods for these stocks ranges from 21.4 billion to 406.6 billion, indicating varying levels of investor interest and company valuations.

Future Lock-up Dates: Key lock-up expiration dates for these stocks are set between early 2026 and late 2026, which may impact trading strategies and stock performance as these dates approach.

Market Performance: The HSI closed down 11 points at 26,552, with the HSCEI and HSTECH also experiencing slight declines. Total market turnover for the half-day was HKD129.845 billion.

Tech Stock Movements: Major tech stocks like TENCENT and BIDU-SW fell by approximately 1.5%, while JD-SW and BILIBILI-W saw gains of around 1.1% and 1.2%, respectively.

Sector Highlights: Consumer stocks performed well, with POP MART surging 8.5% after announcing a share buyback, while pharmaceutical stocks like HENGRUI PHARMA and WUXI APPTEC faced significant declines.

Economic Indicators: China's Fixed Asset Investment for December showed a year-on-year decrease of -3.8%, and the GDP growth rate for Q4 was reported at 4.5%, slightly below expectations.

Downgrade and Valuation Changes: Daiwa downgraded MIXUE GROUP from Outperform to Hold, reducing its target price from $535 to $427 and lowering the projected 2026 PE ratio from 28x to 22x due to concerns over future earnings growth and the validation of its overseas market expansion.

Sales Growth and Market Expectations: Despite a resilient same-store sales growth post-subsidy wave, Daiwa believes the market may have overly high expectations for MIXUE GROUP's second growth engine, which is yet to be proven.

Market Positioning and Innovation Limitations: Daiwa noted that MIXUE GROUP's mass market positioning restricts its product innovation and pricing flexibility compared to mid-tier competitors like GUMING and Luckin Coffee.

Business Model Comparison: The report likened MIXUE GROUP's business model and long-term advantages to TINGYI, highlighting its strong franchisee network and supply chain benefits, particularly in lower-tier cities.