Core Viewpoint - The company is positioned as a cost-effective leader in the mass-market Chinese dining sector, with plans to list on the Hong Kong Stock Exchange on December 20, 2024, raising HKD 790 million by issuing 101 million shares at an offer price of HKD 8.5. As of 2024, the company operates 667 stores, with revenue projected at CNY 5.21 billion, a year-on-year increase of 14.5%, and a net profit of CNY 580 million, up 9.1% year-on-year [1]. Industry Trends - The company aligns with two major trends in the Chinese dining industry: 1) the trend towards cost-effective consumption and 2) the standardization trend, positioning itself as a potential leader in standardized cost-effective Chinese cuisine. The mass-market Chinese dining industry is estimated to be around CNY 4 trillion, with a projected CAGR of 8.9% from 2023 to 2028. The chain restaurant penetration rate in China is expected to rise from 15% in 2020 to 23% in 2024, reflecting the industry's standardization [1]. Competitive Advantages - The company's core competitiveness stems from its positioning in the CNY 50-100 price range, appealing to mainstream tastes, and its high standardization in operations. The company has achieved a store-level operating profit margin of 19.7% in 2023. The average investment payback period from 2021 to August 2024 is 13.8 months, shorter than the industry average of 18 months [2]. - The company has established a large logistics supply chain system, including a central kitchen and 14 warehouses, integrating procurement, processing, storage, and distribution. This is supported by a self-owned transportation fleet [2]. - The company employs a robust team incentive mechanism, including equity incentives, salary incentives, and growth incentives, to motivate employees [2]. Growth Outlook - The company is expected to experience same-store sales recovery and is entering a rapid store expansion phase over the next three years. After facing pressure from previous price reductions, same-store growth has returned to positive territory as of May, with pricing base disturbances expected to diminish in the second half of the year. Projected new store openings for 2025, 2026, and 2027 are 130, 160, and 175, respectively, with a theoretical maximum of 1,810 stores under neutral assumptions and up to 4,308 stores under optimistic assumptions [2]. Financial Projections - Revenue forecasts for 2025, 2026, and 2027 are CNY 6.26 billion, CNY 7.68 billion, and CNY 9.29 billion, representing year-on-year growth of 20.14%, 22.66%, and 20.95%, respectively. Net profit forecasts for the same years are CNY 720 million, CNY 910 million, and CNY 1.1 billion, with year-on-year growth of 24.3%, 26.4%, and 21.1%. Corresponding EPS figures are projected at CNY 0.61, CNY 0.78, and CNY 0.94, with PE ratios of 16.29, 12.89, and 10.65, respectively. A target price of HKD 18.07 is set for 2026, based on a 20X PE, translating to a market value of CNY 183 billion and HKD 201 billion [3].
小菜园(00999.HK)：高性价比中餐龙头 门店扩张进行时