Date of Report
October 22, 2024
Broker
UOB Kay Hian
Company Overview
Jiumaojiu International Holdings is a leader in China’s north-western cuisine and specializes in Chinese sauerkraut fish. The company operates several catering brands, including Jiu Mao Jiu, Tai Er, Song Hotpot, Lai Mei Li, and Uncle Chef.
Stock Data
- GICS Sector: Consumer Discretionary
- Bloomberg Ticker: 9922 HK
- Shares Issued: 1,410.6 million
- Market Capitalization: HK$4,542.0 million (US$584.4 million)
- 3-Month Average Daily Turnover: US$18.6 million
- 52-Week High/Low: HK$9.16 / HK$2.14
Recent Performance
- Share Price: HK$3.22
- Target Price: HK$5.20 (Previous Target Price: HK$3.80)
- Upside Potential: 61.5%
Operational Updates for 3Q24
- Sequential Improvement: The company reported improvements in table turnover rates and same-store sales (SSS) during 3Q24, particularly during the Golden Week.
- Average Spending Per Customer (ASP):
- Tai Er: Rmb69
- Song Hot Pot: Rmb97
- Jiu Mao Jiu: Rmb54
- Table Turnover Rates:
- Tai Er: 3.6x
- Song Hot Pot: 3.0x
- Jiu Mao Jiu: 2.8x
Revenue Insights
- Business Operations: Improvement was observed in 3Q24 compared to 2Q24, with management expecting operating margins to enhance in the second half of the year, driven by lower labor costs and amortization expenses.
- Same-Store Sales Growth (YoY %):
- Tai Er: -18%
- Song Hot Pot: -33%
- Jiu Mao Jiu: -10%
Store Expansion Plans
- Cautious Store Opening Target:
- Management has reduced Tai Er’s 2024 store opening target to 70 new stores from the previous 80.
- For Song Hot Pot, the target remains at 25 new stores.
- Store Openings in 9M24:
- 62 Tai Er stores and 17 Song Hot Pot stores have been opened, achieving approximately 89% and 68% of their respective annual targets.
Financial Projections
- Net Turnover (Rmbm):
- 2023: 5,986
- 2024F: 6,380
- 2025F: 7,861
- 2026F: 9,215
Analyst Recommendations
- Recommendation: Maintain a BUY rating on Jiumaojiu International Holdings.
- Valuation: The target price implies a price-to-earnings (PE) ratio of 21.4x for 2024F and 14.7x for 2025F, compared to the current trading PE of 13.6x for 2024F and 9.4x for 2025F.
