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].

Financial Performance - The company achieved a revenue of RMB 4.31 billion in 2024, maintaining a record of positive same-store sales growth for 30 consecutive quarters[10]. - Total revenue for the fiscal year ended December 31, 2024, was RMB 4,314.1 million, an increase of 41.4% compared to RMB 3,050.7 million in 2023[22]. - The adjusted net profit for 2024 was RMB 1.312 billion, marking the first year of positive after-tax reported net profit[10]. - The adjusted net profit for the fiscal year was RMB 131.2 million, a significant increase of 1,394.2% from RMB 8.8 million in 2023[22]. - Net profit for FY2024 was RMB 55.2 million, compared to a net loss of RMB 26.6 million in FY2023[52]. - The adjusted EBITDA for 2024 was RMB 495.16 million, up from RMB 301.74 million in 2023, reflecting a growth of 64.2%[59]. - The adjusted EBITDA margin improved to 11.5% in 2024, compared to 9.9% in 2023[59]. - Store-level EBITDA reached RMB 831.37 million in 2024, an increase from RMB 576.62 million in 2023, representing a growth of 44.1%[61]. - The store-level EBITDA margin was 19.3% in 2024, slightly up from 18.9% in 2023[61]. Store Expansion - A total of 240 new stores were opened in 2024, bringing the total to 1,008 stores across 39 cities by December 31, 2024[11]. - The company plans to open approximately 300 new stores in 2025, with 82 already opened and 26 under construction as of March 14, 2025[13]. - The number of cities entered increased to 39 as of December 31, 2024, up from 29 in the previous year[18]. - The company opened 240 new stores during the reporting period, bringing the total to 1,008 stores by the end of the year, with 371 located in Shanghai and Beijing, and 637 in new growth markets[24]. Membership Growth - The membership program grew from 14.6 million at the end of 2023 to 24.5 million by December 31, 2024, adding nearly 10 million new members in one year[12]. - Membership numbers grew to 24.5 million, up from 19.4 million in the previous year[20]. - Membership increased from 14.6 million as of December 31, 2023, to 24.5 million as of December 31, 2024, with member contributions to total revenue rising from 59.2% to 64.5%[27]. Operational Efficiency - The average payback period for the 80 new stores opened in 18 new cities from December 2023 to December 2024 was within 12 months[11]. - Same-store sales growth for the fiscal year was 2.5%, compared to 8.9% in the previous year[19]. - EBITDA at the store level reached RMB 831.4 million, up 44.2% from RMB 576.6 million in the previous year[22]. - The EBITDA margin at the store level improved to 19.3%, an increase of 0.4 percentage points from 18.9%[22]. - The operating profit margin at the store level improved to 14.5%, an increase of 0.7 percentage points from 13.8%[22]. Cost Management - Raw material and supply costs increased by 39.8% to RMB 1,169.8 million, but the percentage of these costs to revenue decreased from 27.4% to 27.1%[36]. - Employee compensation expenses rose by 28.1% to RMB 1,509.5 million, compared to RMB 1,178.7 million in the fiscal year 2023[38]. - Rent expenses rose to RMB 428.2 million in FY2024, a 39.2% increase from RMB 307.7 million in FY2023, while rent expenses as a percentage of revenue decreased from 10.1% to 9.9%[41]. - Utilities expenses rose to RMB 164.1 million in FY2024, a 42.9% increase from RMB 114.8 million in FY2023, with utilities expenses as a percentage of revenue remaining stable[44]. - Advertising and promotion expenses increased to RMB 217.6 million in FY2024, a 36.7% increase from RMB 159.2 million in FY2023, while the percentage of total revenue decreased from 5.2% to 5.0%[46]. Employee Growth - As of December 31, 2024, the total number of full-time employees is 9,160, an increase of 40.0% from 6,536 on December 31, 2023[75]. - The total employee cost for the fiscal year 2024 is RMB 1,509.5 million, up from RMB 1,178.7 million in 2023, representing a year-over-year increase of 28.1%[76]. - The company has 19,640 part-time employees as of December 31, 2024, compared to 15,635 on December 31, 2023, indicating a growth of 25.0%[75]. Awards and Recognition - The company received several awards in 2024, including the Best Digitalization Award and the title of Best Employer from Mercer[12]. - The company received the "2024 Best Employer" award from Mercer, marking the third consecutive year of this recognition[77]. Corporate Governance - The board did not recommend the distribution of a final dividend for the 2024 fiscal year, similar to 2023[101]. - The company has no pledged assets or contingent liabilities as of December 31, 2024[72][73]. - The company has not entered into any derivative instruments to hedge foreign exchange risks but will monitor the situation closely[74]. - There were no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the fiscal year 2024[71]. Future Plans and Investments - The company has not made or held any significant investments during the fiscal year 2024[70]. - The company has no significant future investment or capital asset plans beyond what is disclosed in the management discussion and analysis section[80]. - The expected timeline for utilizing the net proceeds for store expansion has been extended from the end of 2025 to the end of 2026[191]. Social Responsibility - The company is committed to social responsibility, employee welfare, environmental protection, and community contributions[197]. - The company made charitable donations in the form of food, amounting to approximately RMB 22,300 during the reporting period[198]. - There are no significant lawsuits or claims threatening the company or its subsidiaries as of December 31, 2024[199]. - The company has complied with all relevant laws and regulations without any significant violations during the reporting period[200].

Summary of DTC Dash Limited Full Year 2024 Earnings Conference Call Company Overview - **Company**: DTC Dash Limited - **Industry**: Fast Food / Pizza Franchise - **Franchisee**: Exclusive master franchisee of Domino's Pizza in mainland China, Hong Kong, and Macau - **Global Franchisor**: Domino's Pizza Inc. with over 21,300 stores in more than 90 markets as of December 31, 2024 [2][3] Key Financial Highlights - **Total Revenues**: RMB 4.3 billion, a 41.4% increase from RMB 3.1 billion in 2023 [3][8] - **Average Daily Sales per Store**: Increased by 4.3% to RMB 13,126 from RMB 12,580 in 2023 [3][8] - **Same-Store Sales Growth (SSG)**: Achieved 2.5% in 2024, following 8.9% in 2023, marking the 30th consecutive quarter of positive sales [3][4] - **Store Network Expansion**: Expanded to 1,008 stores with a net addition of 240 stores in 2024 [3][4] - **Store-Level Operating Profit Margin**: Increased to 14.5% from 13.8% in 2023, with store-level operating profit reaching RMB 624 million, a 48.7% increase [4][12] - **Adjusted EBITDA**: Rose to RMB 495.2 million, a 64.1% increase from RMB 301.7 million in 2023 [4][12] - **Adjusted Net Profit**: Reached RMB 131.2 million, up from RMB 8.8 million in 2023 [4][12] - **Reported Net Profit**: Positive at RMB 55.2 million compared to a net loss of RMB 26.6 million in 2023 [4][12] Strategic Insights - **4D Strategy**: Focus on Development, Delicious Pizza Value, Delivery, and Digital [3][4] - **Expansion Strategy**: Balanced approach of deepening presence in existing markets while entering new cities; entered six new cities in January 2025 [4][5] - **Revenue Mix**: New growth markets contributed 61.8% of total revenue, up from 49.4% in 2023, with revenue from these markets increasing by 77% [5][6] - **Menu Development**: Introduced over 30 pizza varieties and approximately 20 crust options, with pizza products accounting for more than 75% of total sales [6][7] Operational Highlights - **Delivery Services**: Delivery percentage decreased from 59.2% in 2023 to 46.1% in 2024 due to high dine-in and carry-out volumes in new markets [6][7] - **Loyalty Program**: Membership increased from 14.6 million to 24.5 million, with revenue from loyalty members growing from 59.2% to 64.5% of total sales [7][8] - **Capital Expenditure**: Anticipated at approximately RMB 570 million for 2025, funded through existing cash reserves [7][8] Market Position and Competition - **Market Ranking**: Ranked second nationally in China based on 2024 pizza sales [3][4] - **Competitive Landscape**: Addressing competition from Pizza Hut and other QSR brands by focusing on product quality and service rather than solely on pricing [19][20] Future Outlook - **Store Opening Plans**: Plans to open about 300 stores in 2025, with a focus on operational excellence and service quality [7][8] - **Market Dynamics**: The company remains confident in its business model despite global uncertainties, aiming for sustainable growth and long-term shareholder value [7][8] Additional Insights - **Cost Management**: Raw materials and consumables cost increased by 39.8%, but the ratio to revenue improved from 27.4% in 2023 to 27.1% in 2024 [9][10] - **Staff Compensation**: Total staff compensation expenses increased by 28.1% to RMB 1.51 billion, with a focus on hiring for new store openings [10][11] This summary encapsulates the key points from the earnings call, highlighting the company's performance, strategic initiatives, and future outlook in the competitive fast-food industry.