Investment highlight
For the first time, Helens (09869) rated the outperforming industry with a target price of HK $24.00. The reasons are as follows:
The booming Chinese restaurant industry and the industry-leading single-store model: thanks to night economic development, per capita consumption lower than most other night places and the market potential of low-line cities, we expect China's restaurant industry to accelerate, with CAGR reaching 18.8% in 2020-2025, and there is plenty of room for the industry's leading market share to increase. According to our estimates, Helens leads most other restaurants with a 10-11-month payback period and about 30% of the operating profits at the mature store level.
A free and happy social space that is popular with young people: Helens is committed to allowing young customers to enjoy good value for money in a comfortable environment. Helens Tavern offers competitive quality products (all bottled beer costs less than 10 yuan per bottle) and excellent consumer experience. We believe that this rebuilds trust between consumers and taverns and significantly enhances the emotional connection and stickiness between consumers and brands.
Highly standardized business model and digital empowerment: Helen has established a standardized business model through SKU's limited optimization of product portfolio, modular operation, and systematic talent training.
In addition, the company actively embraces digitization and has successfully built a "big platform, small front-end" model.
Enterprising management team and people-oriented corporate culture: Helen is committed to establishing an equal, open and people-oriented corporate culture. to provide employees with a good living environment, rich collective activities, as well as competitive compensation, effective incentive mechanism and clear promotion path.
What is the biggest difference between us and the market? We believe that the company has a broad space for store expansion with its cost-effective product portfolio, excellent consumer experience, highly standardized business model, enterprising management team and people-oriented corporate culture.
Potential catalyst: the speed of opening stores and the better-than-expected sales of individual stores.
Profit forecast and valuation
We estimate that the EPS of the company in 2021 and 2022 will be 0.04 yuan and 0.55 yuan respectively, and the 2020-2022CAGR will be 216%. Taking into account the fact that Helens Bistro is a sizeable and fast-growing high-quality track, a leading brand in a period of rapid expansion and excellent single-store models, we give it 37 times the 2022 target price-to-earnings ratio. The target market value is HK $30.4 billion and the target price is HK $24.00 (45 per cent upside compared with the current share price). Give the "outperform industry" rating. The current share price corresponds to a price-to-earnings ratio of 26 times 2022.
Risk
The risk of repeated COVID-19 epidemic; the risk of declining business performance in the rapid expansion; the risk of food safety; the risk of failing to respond to changes in consumer preferences.