Store space: evolution and prospect of the third space for night entertainment Helens is a "third space for night entertainment" company with a tavern as its format; as a new type of consumer service, "demand" is the core issue when studying its prospects. Reviewing the history of the rise and fall of the old King KTV, we believe that its replacement needs to meet the precise social needs of contemporary youth to "connect with identity" and improve the extensive model of "heavy asset and high investment". The bistro represented by Helens is in line with today's young people's consumption trend of "slightly tipsy and light drinking", and the market size is expected to reach 180 billion within five years. Helens disclosed in the prospectus that it is expected to open 400,630,900 new stores respectively from 2021 to 2023; we extrapolate the penetration rate of the brand in Wuhan university market to the whole country, and judge that the company's medium-term store opening guidelines can be supported in terms of demand space. in addition, the market potential of low-line cities can not be ignored.

Competitive advantage: overseas mature Market and domestic Competition pattern

After the demand space, we will discuss the long-term steady state of the industry and the current competition pattern. The Anglo-American pub market has entered a mature stage, with a moderate increase in the scale of the industry and a clear pattern of competition. However, due to the different social and historical background, we think that the leading development path of Britain and the United States has limited reference significance for Helen: wine is not a traditional consumer product overseas, and the heavy taxes in Britain and the license plate in the United States are barriers to the chain. On the other hand, in China, the tavern industry is still in the early stage of development, and there is much room for improvement in per capita alcohol consumption and pub ownership; the competition pattern of chain brands is highly dispersed, and Helens, as a dragon, has a market share of only 1.1% in terms of income. By comparing with potential competitors, Helens locates the broadest group of young people, removes dinner and live music supplies, and takes the lead in starting standardized expansion in the lightest mode.

Business model: the low-price strategy around the core values of young users is different from the traditional catering model of selling products and services. Helens sells "in-store scenarios", so the repurchase rate replaces the turnaround rate and becomes the focus of measuring the quality of income. Helen has initially formed a set of unique business logic, with a "low-price strategy" to meet the core needs of young people's offline social interaction, so as to promote the acquisition of repurchase customers and drive the expansion of "second stores". The Helens model can be summarized as "own products, low input, standardization": 1) in terms of product mix and pricing, the price and rebate customers are depressed by the economies of scale obtained by high gross margin own goods; 2) in terms of cost control and profit release, light service and light location, with lower labor costs and rental water and electricity costs, the operating profit margin of the store is obviously higher than that of the traditional catering model. 3) in the background construction of the direct operation mode, the atmosphere is copied in the direct operation stores through real-time digital supervision.

Investment suggestion: be optimistic about the efficient expansion of new consumption in Generation Z

Helens' store network has expanded rapidly in recent years, from 162in 2018 to 748in mid-December 2021; correspondingly, the company's revenue has increased from 110 million yuan in 2018 to 820 million yuan in 2020, and its revenue in the first half of 2021 has exceeded 870 million yuan. The operating profit margin at the store level is significantly better than that of traditional catering enterprises due to the low cost of manpower, rent, water and electricity, which helps the company to grow tenaciously in the context of the epidemic. We are optimistic about the demand prospect of Helens Bistro "the third Space for Young people's Night Entertainment". The brand has a significant market share advantage and has the potential to further expand. According to the store opening plan disclosed in the prospectus, the company is expected to achieve an operating income of 18.6,45.3 and 8.61 billion yuan from 2021 to 2023, and a net profit (loss) of-0.10,4.11 and 1.104 billion yuan. It will be covered for the first time and given a "buy" rating.

Risk Tips:

1. The progress of opening the store is not as expected.

two。 The epidemic situation repeatedly affects the operation.

3. Competition in tavern industry intensifies

4. Operating costs are under pressure.