Jinwu Financial News | HTSC's research report indicates that XIABUXIABU (00520) recorded revenue of 2.403 billion in 1H24, down 15.92% year-on-year; net income attributable to the parent was -0.273 billion, a year-on-year loss, including store closure-related impairment losses of 0.203 billion. The consumer environment is subdued, and industry competition has intensified, putting pressure on the company's operations. In 1H24, XIABUXIABU/CouCou's same-store revenue fell by 19%/-43% year-on-year.
The institution continued to point out that in the face of challenges, the company actively deepens operational and organizational management reforms, reducing the scale of old stores while responding to demand changes through measures such as optimizing operating models, lowering dish prices, strengthening brand visual image, and expanding delivery services. As of 1H24, the company has 1,072 restaurants, of which 21 are overseas. After experiencing fluctuations in the external environment and internal adjustments, if the operational environment stabilizes in 2025, the company is expected to return to a stable development track. Based on the long term, the company is leveraging its membership assets to provide strong support for subsequent repurchases, while the long-term foundation in supply chain construction has been solidified, looking forward to re-growth after multi-brand collaborative adjustments.
The institution stated that considering the intense competition and subdued brand demand in 1H24, it expects the company's adjustments will take time, projecting that the net income attributable to the parent for 2024-2026 will be -0.451 billion yuan, -0.229 billion yuan, and 2.49 million yuan respectively. The company has gone through external environmental fluctuations and internal adjustments, with continuous pressure on profits, and the actual results of reforms remain to be validated, carrying high uncertainty, hence a discount is given. Referencing the comparable peers’ Bloomberg consensus estimate of a 10 times EV/EBITDA average for 2025, a 5X EV/EBITDA is assigned to the company, adjusting the Target Price to 1.32 Hong Kong dollars (previous value 4.52 Hong Kong dollars, corresponding to the comparable company's 2023 Wind and Bloomberg consensus expected PE average of 28 times).
