Jiumaojiu released 2024Q1 business data. The turnover rate of Taier/ Nan Hot Pot was 3.9/3.0 times, with changes of -0.4/-0.9 times compared to 23H1; the customer unit price was 73/116 yuan, respectively, a change of -2/-5 yuan compared to 23H1. The number of stores is growing steadily, and same-store sales performance is under pressure in the short term due to the high base. Overall, we believe that the business performance of the Q1 company basically continues the Q4 trend and is in line with market expectations. Recently, the company is expected to further enhance shareholder returns through dividends and repurchases. In the long run, major brands still have broad space in the country and maintain a “highly recommended” rating.
Due to the high base for the same period, the same store was under slight pressure in the short term, and the overall operating data was in line with expectations. In terms of turnover rate, 24Q1 Taier/ Hot Pot/ Jiumaojiu turnover rates were 3.9/3.0/3.0 times, respectively, compared with 23H1 changes of -0.4/-0.9/+0.2 times. In terms of customer unit prices, the customer unit prices for Taier/ Hot Pot/ Jiumaojiu were 73/116/57 yuan respectively, compared with 23H1 changes of -2/-5/-2 yuan. The reasons for the slight drop in customer unit prices include the continuation of competitive trends in the domestic hot pot industry since Q4, the company actively adjusted the structure and price of dishes, and the structural impact caused by the company's expansion in low-tier cities. In terms of same-store sales, the average daily sales of Taier/ Hot Pot/Jiumaojiu were -13.9%/-34.8%/-4.1% year-on-year. At the sales level, the main reason was that the same store had a high base last year, which was in line with market expectations as a whole.
The number of stores is growing steadily, and overseas markets continue to be expanded. As of March 31, 2024, Jiumaojiu Group had a total of 736 restaurants, including 584 from Taiji, with a net addition of 6; 66 households with a net addition; a net decrease of 2; other brands: Lai Mei/Mountain Outside/Xianyue Mu/Uncle Namu, the number of stores was 7/2/1/1, respectively. In 2024, Jiumaojiu Group aims to open 80-100 Taier restaurants and 35-40 hot pot restaurants in mainland China, and 15-20 Taier restaurants outside mainland China.
A 100 million share repurchase plan was added to boost market confidence. The company decided to exercise the board's repurchase authorization right passed by the shareholders' meeting on June 2, 23 to repurchase shares in the open market from time to time at a maximum total amount of HK$100 million. The board of directors believes that recent market stock prices do not reflect the company's long-term value. Recently, shareholder reporting has been enhanced through increased dividend rates and repurchases, which are expected to continue to boost market confidence.
Follow the opening progress of the Ge brand, the restoration and internationalization process of Tai'er's same store, and there is plenty of room for long-term growth. Overall, we believe that the business performance of the Q1 company basically continues the Q4 trend and is in line with expectations. Recently, the company is expected to further enhance shareholder returns through dividends and repurchases. In the long run, major brands still have plenty of room in the country. We expect the company to achieve net profit of 6.2/73/8.4 billion yuan in 24-26. The current stock price corresponds to a 24-year PE of 10x, maintaining a “highly recommended” rating.
Risk warning: Stores are opening faster than expected, competition in the catering industry is fierce, and residents' willingness to spend is declining.