A leading Hong Kong-style restaurant chain, operating a number of restaurant brands under its umbrella:

Hong Kong Dale Group is a leading Hong Kong-style restaurant chain. It operates many well-known brands such as Dale, One Porridge and Noodle, Shanghai Grandma, Rice Noodles, Spaghetti House, Lihua Super Sandwich, Pan-Asian Food, and Energizing Lunch. As of March 31, 2023, the company operated 376/153 restaurants in the Hong Kong and mainland markets respectively, making it one of the largest listed catering groups in Asia.

Diversified brands and supply chains build the core competitiveness of enterprises:

In order to continue to increase its scale and market share in the mature Hong Kong restaurant market, the Group implemented a multi-brand strategy in 1991. Over the years, it has achieved multi-brand operations in different catering business formats through self-creation, acquisitions, and joint ventures. While providing consumers with a rich choice of catering brands, it has also accumulated rich experience in multi-brand operation, and has also become a very competitive bargaining chip for negotiations with property parties. At the same time, as a diversified food kingdom, the supply chain is more complicated than other catering companies. The Group's perfect product supply chain and excellent supply chain management capabilities ensure stable food quality and price stability, and are also the key to achieving daily meal menu changes and multi-brand operations.

The Hong Kong market aims to increase profit margins in the short term, and the mainland China market continues to expand its network:

In the short term, benefiting from the recovery of offline consumption scenarios and consumer confidence after the epidemic, the Group's business performance in Hong Kong and mainland stores is expected to continue to improve; among them, the Hong Kong market will aim to increase profit margins on the basis of revenue scale, and the Group plans to return to pre-pandemic levels (i.e. 7%) within 2 years; in addition to increasing profit margins, the mainland market will continue to expand the Greater Bay Area store network. It is expected that within 4 years, the number of stores will rise from 153 at the end of FY23 to 280.

For the first time, coverage gave a “buy” rating, with a target price of HK$11.1:

It has been more than 50 years since Dajiale Group was founded. Over the years, it has focused on the restaurant business. It has a steady business style, maintains a high dividend rate to give back to shareholders, and is expected to maintain a dividend of over 70% in the future. We are optimistic about the recovery of profitability in the Chinese and Hong Kong markets under post-epidemic recovery, cost optimization, and improved operational efficiency; as well as the Group's development potential in the mainland China market. The company's EPS for the 2024-2026 fiscal year is expected to be HK$0.50/0.74/0.94, respectively, with a target price of HK$11.1, corresponding to 22/15 times PE for the 2024/2025 fiscal year. There is room for an increase of 31.8% compared to the current price, covering the “buy” rating for the first time.