Group 1 - Three chain restaurants have gone public in Hong Kong in 2023, with notable stock performance: Dashi Holdings (01405.HK) up 116.74%, Xiaocaiyuan (00999.HK) up 25.65%, and Green Tea Group (06831.HK) up 31.57% since their IPOs [2][3] - Dashi Holdings, the operator of Domino's Pizza in Greater China, has seen its stock price rise from an IPO price of 46.00 HKD to 99.70 HKD [2][3] - Xiaocaiyuan and Green Tea Group also reported positive stock performance since their IPOs, with current prices of 10.68 HKD and 9.46 HKD respectively [2][3] Group 2 - Laoxiangji, a chain restaurant based in Anhui, has submitted an application for an IPO in Hong Kong, aiming to replicate the success of other listed chain restaurants [2][3] - Established in 2003, Laoxiangji has expanded its network to 1,564 stores across 58 cities by April 2025, with a focus on a "direct + franchise" expansion model [4][5] - The number of franchise stores has outpaced self-operated stores, with a significant increase in franchise locations from 118 to 653 between the end of 2022 and April 2025 [5] Group 3 - Laoxiangji's supply chain is a key advantage, having established an integrated supply chain covering breeding, procurement, processing, storage, and logistics [7] - In 2024, Laoxiangji reported total revenue of 6.288 billion RMB and an adjusted net profit of 439 million RMB, resulting in a net profit margin of 6.99% [7][8] - Compared to other newly listed chain restaurants, Laoxiangji's same-store sales growth rate of 2.6% is slightly higher than Dashi Holdings' 2.5%, while Green Tea and Xiaocaiyuan reported negative growth [7][8] Group 4 - Laoxiangji faces challenges, including intense competition from food delivery platforms affecting both delivery and dine-in services [9] - The company has a high dependency on the East China market, with 86% of its stores located in this region, particularly in Anhui [9] - Financially, Laoxiangji has a current ratio of 0.74, indicating potential liquidity issues, with cash reserves of approximately 572 million RMB against significant payables [9] Group 5 - The company plans to use the funds raised from the IPO to enhance its supply chain, expand its store network, improve IT capabilities, and strengthen brand marketing [9][10] - However, the recent surge in IPO activities in Hong Kong raises questions about investor interest in Laoxiangji's prospects [10]

Core Viewpoint - The recognition of Domino's China as an "ESG Innovative Practice Excellence Enterprise" highlights the increasing importance of ESG principles in driving business value and innovation in the industry [1]. Group 1: ESG Practices and Innovations - Domino's China integrates technology and model innovation to create a unique business model that generates both social and economic value, deeply embedding ESG into its operations [1]. - The company emphasizes food safety and quality from farm to table, with a 100% internal quality assurance audit coverage across all stores, and plans to launch several new products in 2024 [2]. - The implementation of a Transportation Management System (TMS) optimizes logistics routes between central kitchens and stores, ensuring product quality while reducing energy consumption and costs [2]. Group 2: Sustainable Delivery and Safety Measures - Domino's China has established a comprehensive safety and efficiency system for delivery riders, balancing both aspects to ensure sustainable development [2]. - The company employs technology to prevent unnecessary deliveries and speeding, optimizing task distribution through an intelligent delivery system [2]. - Safety measures include providing certified electric bicycles for delivery riders and implementing emergency protocols during extreme weather conditions [2]. Group 3: Value Chain Empowerment and ESG Efficiency - The company extends its ESG capabilities across the entire value chain, including procurement, transportation, processing, and store operations, maximizing ESG effectiveness [4]. - In procurement, Domino's China has reduced the proportion of non-biodegradable plastic packaging from 16% in 2020 to 4% in 2024, promoting sustainable sourcing practices [4]. - The introduction of TMS in transportation aims to optimize costs and minimize environmental impact by prioritizing nearby suppliers [4]. Group 4: Waste Reduction and Circular Economy - Domino's China employs a dual strategy of "smart loss control + recycling" to minimize material waste, targeting a waste loss rate of no more than 0.1% in central kitchens [5]. - The company uses reusable containers for packaging key food ingredients and replaces cardboard boxes with recyclable turnover boxes [5]. - The ongoing introduction of low-carbon equipment and technologies in central kitchens and stores signifies a commitment to sustainable practices [5]. Group 5: Industry Benchmark and Future Potential - The innovative ESG practices of Domino's China set a benchmark in the industry, showcasing a sustainable development model with significant effectiveness [5]. - The company is positioned to find optimal value coordinates within the ESG development wave, continuously unlocking its value potential [5].

Core Viewpoint - The company, Dashijia, is the exclusive franchisee of Domino's Pizza in mainland China, Hong Kong, and Macau, and has undergone significant internal reforms since 2017, leading to rapid expansion and revenue growth. Group 1: Company Overview - Dashijia has expanded its store presence to 1,008 locations across 39 cities by the end of 2024, demonstrating a strong growth trajectory [1] - The company has achieved a compound annual growth rate (CAGR) of 41% in revenue from 2020 to 2024, with same-store sales maintaining positive growth for 30 consecutive quarters [1] Group 2: Market Position and Competitive Advantage - The global pizza market was valued at $53.886 billion in 2022, with the Chinese market at ¥37.5 billion, showing a CAGR of 6% and 9% respectively from 2016 to 2022, indicating a higher growth rate in China [2] - Domino's Pizza holds the largest market share globally at 33% in 2024, and has surpassed its competitor, Pizza Hut, in the Chinese market [2] - The company's competitive advantages include a unique pre-mixed flour recipe, a diverse product range, and a robust delivery network that ensures timely service [2] Group 3: Expansion Strategy and Sales Performance - The company is in a store expansion phase, planning to add 240 new stores in 2024, with a target of reaching 2,000 stores by 2027 and 3,000 by 2029-2030 [3] - The average sales per store are projected to decline by 7% in 2023 and 5% in 2024 due to new store openings and business restructuring, but a recovery is expected in the medium to long term [3] - The membership system is being refined, with an expected membership count of 24.5 million by the end of 2024, contributing significantly to revenue [3] Group 4: Profit Forecast and Investment Rating - The company is projected to achieve net profits of ¥1.29 billion, ¥1.96 billion, and ¥2.56 billion from 2025 to 2027, with growth rates of 133%, 53%, and 31% respectively [4] - The company is considered to have a favorable valuation, with a PEG ratio of 0.73x for 2025 and 1.21x for 2026, indicating potential for investment [4]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is experiencing rapid expansion and improving profitability despite challenges in the broader dining market [25] - The company has achieved a compound annual growth rate (CAGR) of 41% in revenue from 2020 to 2024, with a significant increase in store count and same-store sales [25][27] - The company is well-positioned in the growing Chinese pizza market, with a focus on both high-end urban consumers and lower-tier markets [56][62] Summary by Sections 1. Company Overview - The company is the exclusive franchisee of Domino's Pizza in mainland China, Hong Kong, and Macau, with a significant expansion strategy initiated in 2017 [14][18] - As of the end of 2024, the company operates 1,008 stores across 39 cities, with a strong focus on delivery and menu optimization [25][27] 2. Market Potential - The Chinese pizza market is growing rapidly, with a CAGR of 12% from 2010 to 2024, significantly outpacing global averages [41][42] - The company has a competitive advantage due to its efficient delivery system and a diverse product matrix that appeals to various consumer segments [56][62] 3. Expansion Strategy - The company plans to continue its aggressive store expansion, with net new store openings projected at 300 and 350 for 2025 and 2026, respectively [25] - The focus will be on penetrating lower-tier cities and enhancing the existing urban structure, with expectations of increased market share in these areas [25] 4. Financial Projections - The company forecasts net profits of 128.59 million, 196.21 million, and 256.47 million yuan for 2025, 2026, and 2027, respectively, with significant year-on-year growth rates [1] - The report highlights that the company's valuation remains attractive, with a PEG ratio of 0.73x for 2025, indicating potential for future growth [1]

Core Insights - Domino's China has achieved a significant milestone with the opening of its 100th store in the Huaxi market, indicating effective implementation of its regional development strategy and substantial progress in its national expansion plan [1] - The company has successfully entered six new markets during the New Year holiday and expanded into additional cities such as Zhenjiang and Shantou during the May Day period, demonstrating its aggressive market expansion strategy [2] Market Expansion - The company has completed the strategic placement of 100 stores in less than three years since entering the region in December 2022, showcasing its commitment to enhancing brand penetration and influence in the Midwest market [1] - Domino's China is focusing on long-term sustainable development by accurately understanding regional consumer characteristics and optimizing store layout strategies [1] Product Innovation - The company is enhancing its product innovation strategy by launching a diverse menu that blends Chinese and Western flavors, including unique offerings like the "Fortune Pizza" and "Wellington Beef Pizza" [3] - The latest product, "Cocoa Lava Cheese Roll," combines Malaysian cocoa powder with French cheese sauce, reflecting the brand's commitment to both international and local product development [3] Marketing Strategies - Domino's China is exploring innovative marketing models through diverse collaborations to enhance brand influence, such as partnering with NetEase Games for an interactive online and offline experience during the Spring Festival [5] - The "芽趣萌生" package launched during Children's Day creatively combines food experiences with planting blind boxes, strengthening emotional connections with young consumers [5] Strategic Outlook - The company plans to continue its national market expansion while driving brand competitiveness through product innovation and marketing upgrades, focusing on localized strategies to meet the diverse dining needs of Chinese consumers [10]

Investment Rating - The report maintains a positive outlook on the Hong Kong stock market, indicating a strong risk appetite and suggesting investment opportunities in various sectors, particularly in virtual assets and Web 3.0 [3][10]. Core Insights - The Hong Kong stock market is experiencing a significant increase in risk appetite, with improved asset quality and trading volume, highlighting the value of asset trading platforms [3][10]. - There is a notable uptrend in multiple sectors such as AI, new consumption, and innovative pharmaceuticals, with a particular focus on small and mid-cap stocks in media and consumer sectors [3][10]. - The report emphasizes the ongoing development of virtual assets and the Web 3.0 market, driven by stablecoin policies and recent IPOs, suggesting that more regulatory frameworks will emerge [3][10]. - The trend of Chinese companies returning to Hong Kong for IPOs is gaining momentum, with increased trading of companies like NetEase and Ctrip in the Hong Kong market [3][10]. - The valuation of overseas Chinese assets remains influenced by US-China trade relations and the broader economic environment, necessitating close monitoring of trade policies and domestic economic changes [3][10]. Summary by Sections Education - The K12 education sector maintains high growth, with leading institutions reporting over 20% revenue growth during the winter training period, and an increase in non-academic course retention rates [5][11]. Luxury Goods - The luxury goods market shows slight pressure due to macroeconomic factors, but brands that align with demand trends are performing well, with cautious price increases observed [5][20]. Coffee and Tea Drinks & OTA - Coffee and tea remain key categories for delivery platforms, with strong performance from major brands like Luckin Coffee, which continues to expand its store presence [5][25]. E-commerce - The e-commerce sector faces slight pressure, but major platforms like Alibaba and JD.com are expected to benefit from ongoing promotional activities [5][26]. Streaming Platforms - Music streaming platforms are viewed as high-quality internet assets, with sustained profitability driven by scale effects [5][34]. Virtual Assets & Internet Brokers - The stablecoin leader Circle's IPO saw a 168% increase on its first day, marking a significant event in the virtual asset space [5][38]. Real Estate Transactions - Recent data shows a slight decline in second-hand housing transactions in major cities, suggesting a need for caution in the real estate market [5][50]. Automotive Services - The automotive aftermarket is under pressure, with traditional fuel vehicle service visits declining, while new energy vehicle service visits are increasing [5][45].

Investment Rating - The report assigns a "Buy" investment rating for the company, marking its initial coverage [10]. Core Insights - The company is experiencing steady revenue growth, with a projected revenue of 4.314 billion yuan in 2024, representing a year-on-year increase of 41% [6][12]. - The net profit is expected to recover to 0.552 billion yuan in 2024, compared to a loss of 0.27 billion yuan in 2023, indicating a significant turnaround [6][12]. - The company is expanding rapidly, with plans to open 300 new stores in 2025, contributing to its growth strategy [8]. Summary by Sections Financial Performance - In 2024, the company achieved a gross margin of 72.88%, with a decrease in raw material costs to 27.12% [6]. - The net profit margin is projected to increase to 1.28% in 2024, up by 2 percentage points from the previous year [6]. Market Expansion - By the end of 2024, the company plans to increase its store count to 1,008, with significant growth in new markets [7]. - The average daily sales per store are expected to reach 13,100 yuan, driven by a 10% increase in daily order volume [7]. Future Projections - The company forecasts earnings per share (EPS) of 1.13 yuan in 2025, with a corresponding price-to-earnings (PE) ratio of 78 [10][12]. - Revenue is projected to grow to 5.666 billion yuan in 2025, reflecting a year-on-year growth of 31.34% [12].

Core Viewpoint - The Chinese restaurant industry is experiencing a notable recovery driven by a shift in policy focus towards expanding domestic demand, with significant growth in consumer confidence and spending observed in the first quarter of 2024 [1][2]. Group 1: Market Performance - The Hong Kong restaurant index has rebounded over 20% since April 22, reaching around 787 points, with several restaurant companies like Xiaobai Xiaobai and Jiumaojiu showing positive performance [1]. - In Q1 2024, the offline consumption heat index increased by 14.2% year-on-year, with the dining sector growing by 14.5% [1]. - The overall revenue of the domestic restaurant industry in 2024 is projected to reach 55,718 billion yuan, marking a 5.3% increase compared to the previous year [2]. Group 2: Revenue and Profit Growth - The restaurant sector has shown double-digit growth in both revenue and profit, with 17 listed restaurant companies reporting an 11% increase in revenue and a 10% increase in profit for 2024 [5][6]. - The coffee and tea segment leads in revenue growth at 22.5%, while traditional Chinese dining (excluding hot pot) and fast food show growth rates of 6.3% and 5.6%, respectively [7]. Group 3: Store Expansion and Market Dynamics - The total number of restaurant stores increased by 20% in 2024, reaching 133,549, with coffee and tea stores growing by 24% [9][11]. - The closure rate of restaurants has risen to 61.2%, indicating a significant industry reshuffle [5]. - The trend of down-market expansion is evident, with 52% of restaurant stores located in third-tier cities and below [13]. Group 4: Strategic Adjustments and Innovations - Companies like Haidilao are adopting franchise models to penetrate lower-tier markets, with over 70% of franchise applications coming from these areas [14]. - New business models are being explored, such as Kudi Coffee's convenience store concept and Guoquan's community kitchen strategy [15]. - The restaurant sector is expected to stabilize in Q2 2025, with a potential recovery in valuation and fundamentals as seasonal demand increases [16].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is in a store expansion phase, with strong revenue and profit potential. The scale effect is gradually becoming evident, and cost reduction and efficiency improvement efforts are ongoing. The company plans to open 300 and 350 new stores in 2025 and 2026, respectively, with a target of approximately 3,000 stores by 2029-2030 [7] - The company has a strong brand and product offering, with over 21,000 global stores as of Q3 2024, leading in both store count and sales, achieving the highest market share globally. The product's convenience aligns with urban consumer trends, and the diverse menu caters to various price points [7] - The membership system is maturing, with 27 million members as of Q1 2025, enhancing customer loyalty and repeat purchase rates [7] - Revenue and profit forecasts have been adjusted to reflect strong growth, with projected revenues of 56.79 billion, 73.27 billion, and 90.51 billion yuan for 2025-2027, representing year-on-year growth rates of 31.64%, 29.01%, and 23.53%, respectively. Net profit is expected to reach 0.95 billion, 1.50 billion, and 2.39 billion yuan for the same period, with growth rates of 71.97%, 57.76%, and 59.29% [7] Financial Summary - Total revenue is projected to be 4,314 million yuan in 2024, increasing to 5,679 million yuan in 2025, and reaching 7,327 million yuan in 2026 [8] - The net profit for 2024 is expected to be 55.20 million yuan, growing to 94.92 million yuan in 2025, and 149.75 million yuan in 2026 [8] - The company’s earnings per share (EPS) is forecasted to be 0.42 yuan in 2024, increasing to 0.73 yuan in 2025, and 1.14 yuan in 2026 [8]

Core Insights - In 2024, Dashi Co. (Domino's China) reported significant revenue and profit growth, solidifying its leading position in the pizza market despite overall industry challenges [1][6]. Financial Performance - Total revenue for 2024 reached 4.314 billion yuan, a 41.4% increase from 3.051 billion yuan in 2023 [2]. - The new growth markets contributed 2.665 billion yuan, a staggering 77% increase, raising their share of total revenue from 49.4% to 61.8% [2]. - Net profit attributable to shareholders was 55.2 million yuan, with adjusted net profit soaring from 8.8 million yuan in 2023 to 131 million yuan, marking a 1394.2% increase [2]. Cost Management and Profitability - Despite rising costs in raw materials (up 39.8% to 1.17 billion yuan), rent (up 39.2% to 428 million yuan), and employee compensation (up 28.1% to 1.509 billion yuan), the company improved its EBITDA margin from 18.9% to 19.3% [3]. - Adjusted EBITDA grew by 64.1% to 495 million yuan, showcasing enhanced operational efficiency through centralized kitchen delivery and digital order management [3]. Expansion Strategy - Dashi Co. opened 240 new stores in 2024, bringing the total to 1,008 across 39 cities, with plans to open an additional 300 stores in 2025 [4]. - The company focuses on low-tier cities with a "small store model" averaging 130 square meters to reduce costs while ensuring product quality through centralized kitchens [4]. Market Position and Innovation - The company has maintained 30 consecutive quarters of same-store sales growth, with a same-store sales growth rate of 3.6% in 2024 [4]. - Product innovation includes localized offerings like "volcano" crust and shrimp-flavored pizzas, catering to diverse consumer preferences [5]. - Membership growth from 14.6 million to 24.5 million, with membership revenue contribution rising to 64.5%, indicates strong customer retention [3][5]. Future Outlook - The Chinese pizza market is projected to reach 77.1 billion yuan by 2027, providing ample growth opportunities for Dashi Co. [5]. - Recent target price adjustments by analysts reflect confidence in the company's long-term value, with a target price of 118.57 HKD [5].