Deutsche Bank released a report that gave Cuihua (01314-HK) a “buy” rating for the first time, with a target price of 2.97 yuan, which is equivalent to 21.7 times the predicted price-earnings ratio for calendar year 2013. It is the largest tea restaurant in Hong Kong, with a market share of 3.2%. Due to the effective and standard business model, new stores generally have a balance of payments of 1-2 months and a return on investment period of less than 1 year, giving management confidence to explore the mainland market.

The bank expects that in 2012-15, it will add 10-15 new stores each year, with a compound annual sales growth rate of 38.9%, driving a compound annual growth rate of 38.7% in net profit. By 2015, Tsui Wah's stores in Hong Kong and the Mainland will increase to 31 and 26 respectively.

The report predicts that by 2015, Tsui Wah's sales in Hong Kong and the Mainland will account for 61% and 39% respectively, compared to 89% and 11% in 2012. The increase in same-store sales in Hong Kong is mainly driven by higher average prices and delivery services. Delivery services are expected to account for 20% of sales in 2015.