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谭仔国际(02217.HK):挑战重重下取得坚韧业绩 重申“买入”

Tam Tsai International (02217.HK): Achieving tenacious results despite many challenges and reaffirms “buying”

國泰君安國際 ·  May 19, 2022 00:00  · Researches

Despite the negative impact of the fifth wave of COVID-19 epidemic in Hong Kong, Tam Tsai International achieved resilient results in fiscal year 2022. The company's revenue for fiscal 2022 increased by 26.8% year-on-year to HK $2.275 billion. Net profit for shareholders fell 29.5 per cent year-on-year to HK $203 million. After deducting listing fees and government subsidies, adjusted net profit for fiscal 2022 rose 17.8 per cent year-on-year to HK $165 million.

As of March 31, 2022, Tam Tsai International operates 175 stores in Hong Kong, mainland China, Singapore and Japan.

Taking into account the impact of the fifth wave of COVID-19 epidemic in Hong Kong, the epidemic situation in other overseas markets, and the potential impact of epidemic prevention and control measures in the mainland on the catering business, we have lowered our revenue and profit forecasts for fiscal year 2023 and fiscal year 2024. We cut our revenue forecasts for fiscal year 2023-2024 by 6.1% and 5.3% respectively, and our adjusted net profit forecasts for fiscal year 2023-2024 by 25.9% and 14.3%, respectively. Our adjusted earnings per share forecasts for fiscal year 2023-2025 are HK $0.216, HK $0.345 and HK $0.445, respectively.

Reiterate "buy" and adjust the target price to HK $4.15. We believe that the company's resilient FY2022 performance despite many challenges once again proves Tam's excellent execution, and we still expect Tam to achieve higher growth than its peers in the next few years. However, it will take time for Hong Kong's catering market sentiment and consumer confidence to recover. In addition, the potential impact of epidemic prevention and control measures in mainland China on the catering business may affect Tam Tsai International's operations and expansion plans. Our target price is equivalent to 19.2x / 12.0x / 9.3x respectively for the 2023-2025 fiscal year.

Despite the negative impact of the fifth wave of COVID-19 epidemic in Hong Kong, Tam Tsai International (the "Company")'s revenue in fiscal year 2022 increased by 26.8% to HK $2.275 billion compared with the same period last year. The year-on-year increase in revenue was due to an increase in the number of operating restaurants and a significant increase in revenue from comparable restaurants. Despite the challenges posed by the fifth wave of the COVID-19 epidemic in Hong Kong in the last quarter of fiscal 2022, comparable restaurant revenue at Tam Tsai International Hong Kong restaurants increased by 9.6 per cent year-on-year. The overall daily sales of bowls per seat in fiscal year 2022 was 6.3 bowls, and the per capita consumption of overall customers reached HK $59.8, compared with 6.0bowls and HK $58.4in fiscal year 2021. As of March 31, 2022, Tam Tsai International operates 175 stores in Hong Kong, mainland China, Singapore and Japan, 28 more than on March 31, 2021.

Tam Tsai International maintained excellent operating cost control in fiscal year 2022. Due to investment in new markets, the company's employee costs increased by 29.2% year-on-year in fiscal 2022, and employee costs as a percentage of revenue increased by 0.6 percentage points to 31.8% year-on-year. In fiscal year 2022, the depreciation of the company's right-to-use assets, rent and related expenses increased by 16.2% to HK $418.4 million, mainly due to the increase in the number of restaurants. Depreciation of right-to-use assets, rent and related expenses as a proportion of income decreased by 1.7 percentage points. The year-on-year increase in advertising and publicity expenditure is mainly due to the company's brand activities and new market promotion in mainland China and Japan.

Both adjusted shareholders' net profit and adjusted net interest rate recorded resilient growth in fiscal year 2022. In fiscal year 2022, Tam Tsai International's net profit for shareholders was HK $203 million (fiscal year 2021:

HK $287.8 million), equivalent to basic earnings per share of HK $0.175 (fiscal year 2021: HK $0.288). Excluding one-time listing fees and government subsidies related to COVID-19 's epidemic, the company's adjusted shareholder net profit rose 17.8 per cent year-on-year to HK $164.5 million, equivalent to an adjusted net interest rate of 7.3 per cent.

As the peak of the fifth wave of COVID-19 epidemic in Hong Kong has passed, the Hong Kong SAR Government is gradually relaxing the social distance measures for catering premises as planned. The first phase of the social distance relaxation measure was implemented on April 21, which included the resumption of evening dining in the catering premises (extended to 09:59, the maximum number of deskmates raised from 2 to 4) and the phased resumption of face-to-face classes in schools. The Hong Kong SAR Government announced on May 3 the further relaxation of social distance measures with a view to the orderly resumption of social and economic activities, including the advance relaxation of the maximum number of persons per table in catering premises to eight persons with effect from May 5, and the extension of dining service to 11:59 as planned from May 19. In addition, the Hong Kong SAR government has also launched the fifth and sixth rounds of the "epidemic Prevention and Anti-epidemic Fund" and a new round of "employment preservation" programs. In April, the Hong Kong SAR Government issued a HK $5000 consumption voucher for the first phase to 6.3 million people.

Hypothesis and Adjustment of profit Forecast

We lowered our revenue and profit forecasts for fiscal 2023 and fiscal 2024. Taking into account the impact of the fifth wave of COVID-19 epidemic in Hong Kong, the epidemic situation in other overseas markets, and the potential impact of epidemic prevention and control measures in the mainland on the catering business, we have lowered our revenue and profit forecasts for fiscal year 2023 and fiscal year 2024. We have lowered our revenue forecasts for the 2023-2024 fiscal year by 6.1% and 5.3% respectively, and the company is expected to achieve revenue of HK $3 billion, HK $3.9 billion and HK $4.8 billion respectively in the fiscal year 2023-2025. We cut our adjusted net profit forecast for fiscal year 2023-2024 by 25.9% and 14.3%, respectively. Our adjusted earnings per share forecasts for fiscal year 2023-2025 are HK $0.216, HK $0.345 and HK $0.445, respectively.

Reiterate "buy" and adjust the target price to HK $4.15. We believe that the company's resilient fiscal year 2022 results despite many challenges once again demonstrate Tam's excellent execution and excellent cost control, and we still expect Tam Tsai to achieve higher growth than its peers in the next few years. At the same time, with the performance of successfully entering mainland China and Japan in fiscal year 2022 under the shadow of the COVID-19 epidemic, and maintaining the momentum of restaurant network expansion, the plan to expand at a reasonable rate of "caution and self-discipline" has been verified.

However, the catering industry in Hong Kong is still in the stage of recovery, and it will take time for Hong Kong's catering market sentiment and consumer confidence to recover. In addition, the potential impact of epidemic prevention and control measures in mainland China on the catering business may continue to affect Tam Tsai International's operations and expansion plans. As a result, we maintained our "buy" investment rating but lowered our target price to HK $4.15. Our target price is equivalent to 19.2x / 12.0x / 9.3x respectively for the 2023-2025 fiscal year.

The main risks include: I) expansion plans may lead to increased risks and uncertainties; ii) failure of new market operations due to regional differences; iii) difficulties in recruiting and retaining employees; iv) changes in consumer tastes and food and beverage preferences; v) fierce competition; and vi) recurrent COVID-19 epidemic has imposed stricter restrictions on the catering industry.

The translation is provided by third-party software.


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