According to the company's mid-2021 report, as of June 30, 2021, the company's tavern network increased from 351 on December 31, 2020 to 471. As of September 24, 2021 (the last feasible date reported in 2021), the company's tavern network has further grown to 584, covering 24 provincial administrative regions and 104 cities. According to the company's website, as of November 29, 2021, the company has opened 703 stores and is about to open 221.
According to the Hang Seng Index company's website, on November 19, 2021, Hang Seng Index companies announced the results of the latest index review, including Tengsheng Bo Pharmaceuticals, Medical Maitong and Helen in the Hang Seng Composite Index, increasing the number of constituent shares from 500 to 503. All changes will take effect from December 6, 2021.
The average monthly opening speed of the company is increasing. From January 1 to June 30, 2021, the number of the company's stores increased from 351 to 471, with an average of 20 stores per month. From July 1 to September 24, 2021, the number of the company's stores increased from 471 to 584, with an average of nearly 38 stores per month. From September 24 to November 29, 2021, the number of the company's stores increased from 584 to 703, with an average of nearly 60 stores per month.
There is a lot of room for sinking the market and expanding stores. We expect that in the next three years, the company will enter a period of rapid expansion of new stores, which will focus on third-tier and below cities. The company's positioning to create a low-cost social space is in line with the sinking market demand, and the efficiency and profitability of mature third-tier stores are expected to exceed the first and second tier. The profitability of individual stores will continue to improve. On the revenue side, the company will continue to increase the proportion of high-margin own-brand drinks and snacks, expand store space and add tables and chairs. On the cost side, the company's operation model is based on large background and small front end, location, decoration, management and other processes are highly standardized, the cost is controllable in the process of store expansion, and is expected to achieve economies of scale.
According to the company's prospectus, HK $1.76 billion of the funds raised will be used to open new pubs in the next three years, with an average investment of about HK $90-1 million per pub, so we estimate that the company will open a total of about 1860 stores in the next three years. So far this year, 352 new stores have been opened, and it is expected that 2022 will be the peak of the company's opening, so we assume that the number of new stores will be 430,800,630 respectively from 2021 to 2023. In 2020, the proportion of stores in first-tier / second-tier / third-tier cities and below is 15%, 57%, 28%, respectively. In the future, the new stores will be mainly in third-tier and below cities, and the proportion of stores in third-tier and lower cities will continue to increase. We assume that from 2021 to 2023, the proportion of stores in third-tier cities and below will be 35%, 50%, 60%, respectively. In 2020, the average daily sales of stores in third-tier cities and below will be 10900 yuan, which is expected to accelerate with the recovery of the economy in the future. We assume that from 2021 to 2023, the average daily sales of stores in third-tier cities and below are 11000 yuan / 12000 yuan / 13000 yuan respectively, with a year-on-year growth rate of 3.7% 4.4% and 7.6% respectively.
Based on the above assumptions, we estimate that from 2021 to 2023, the operating income of the company will be 1.83 billion yuan / 4.46 billion yuan / 7.58 billion yuan respectively, and the year-on-year growth rate will be 123.5%, 144.0%, 70.0%, respectively, and the net profit (after adjustment) will be 290 million yuan / 660 million yuan / 1.17 billion yuan, respectively, and the year-on-year growth rate will be 278.6%, 131.4% and 76.8%, respectively. The corresponding PE is 103.8 times / 26.6 times / 15.0 times respectively. It is optimistic that the company will expand its store space in the sinking market, as well as the continued improvement of the profitability of individual stores, giving it an "overweight" rating.
[risk Tip]
The progress of opening the store is not as expected.
Risk of price fluctuation of raw materials
Food safety risks.