Pagoda Group (02411.HK) Capital Gearing Ratio and Franchise Model Risk Analysis

Based on the limited information I found, the analysis of Pagoda Group (stock code: 02411.HK) is as follows:

Pagoda Group is one of China’s largest fruit retail chain enterprises, adopting a “corporate + franchisee” operation model. As of 2024, the company has over 6,000 stores nationwide [1].

According to the financial data from search results:

Financial Indicators	2024	2023
Bank Borrowings	Approximately RMB 1.45 billion	Approximately RMB 1.08 billion
Lease Liabilities	Approximately RMB 2.23 billion	Approximately RMB 1.86 billion
Total Liability Scale	Significantly increased	-

1. The debt ratio is indeed at a relatively high level
   , mainly due to the rapid increase in lease liabilities (store rents) and bank borrowings
2. In 2024, the stock price experienced a sharp fluctuation of 20.69% in a single day [2], indicating the market’s sensitive reaction to the company’s fundamentals

1. Debt Burden Transmission Risk
   • High debt ratio may affect the company’s ability to support franchisees
   • If the headquarters faces liquidity pressure, it may impact franchisee operations

2. Sustainability of Expansion Model
   • Rapid expansion relies on continuous capital investment
   • Franchisee profitability directly affects network stability

3. Intensified Industry Competition
   • Impact from new formats like fresh e-commerce and community group buying
   • Profit margins in fruit retail are squeezed

• Short-term risk
  : If the debt ratio continues to rise and revenue growth is weak, it may face debt repayment pressure
• Model rationality
  : Retail chain industry generally has high debt ratio (mainly lease liabilities), the key is cash flow coverage capacity
• Industry characteristics
  : Fruit retail has high requirements for capital turnover, and the franchise model itself has a risk-sharing mechanism

1. Operating cash flow coverage rate
2. Same-store sales growth
3. Franchisee churn rate
4. Inventory turnover efficiency

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Due to limited public information, it is recommended that investors gain in-depth understanding through the following ways:

• Review company annual and interim reports
• Follow management performance meetings
• Track industry research reports

[1] Sina Finance - Pagoda Store Data (https://finance.sina.com.cn)
[2] East Money - Pagoda Group 02411.HK Stock Price Data (https://quote.eastmoney.com)

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Disclaimer: This analysis is for reference only and does not constitute investment advice. The stock market has risks, investment needs to be cautious.