Tam Tsai International Limited (Tam Tsai International, or the “Company”) is a leading chain of fast casual restaurant operators in Hong Kong, which also operates in mainland China and Singapore. In the first half of fiscal year 2022, Tan Tsai International's revenue increased 43.0% year over year to HK$1,182 million. After deducting listing fees, government subsidies and COVID-19 rent relief, Tam Tsai International's adjusted net profit for the first half of fiscal year 2022 increased 130.7% year-on-year to HK$147 million.

We expect Tam Tsai International's revenue to increase by 36.4%, 30.3%, and 30.0%, respectively, from fiscal year 2022 to fiscal year 2024, mainly due to the expansion of the restaurant network, the recovery of the Hong Kong restaurant market brought about by effective control of COVID-19 infections in the region, and the expectations of quarantine-free customs clearance between the mainland and Hong Kong. After deducting listing expenses, government grants and COVID-19 rent relief, we forecast the Company's adjusted shareholders' net profit for FY2022 to FY2024 was HK$258 million, HK$399 million and HK$539 million respectively, up 100.2%, 51.4% and 38.1%, respectively. We forecast adjusted earnings per share of HK$0.220, HK$0.291 and HK$0.402 respectively from fiscal year 2022 to fiscal year 2024, up 71.1%, 32.2% and 38.1%, respectively.

We covered Tam Tsai International for the first time and gave it a target price of HK$5.11 with an investment rating of “buy”. We anticipate that Tam Tsai International will benefit from: i) its leading position in the Hong Kong market and its high brand awareness; ii) the expansion of its restaurant network into existing and new markets; and iii) a highly standardized and scalable business model that will contribute to future growth and expansion. Our target price is equivalent to 24.8 times, 17.6 times, and 12.7 times price-earnings ratios from FY2022 to FY2024.