Core Viewpoint - Haitong International forecasts Green Tea Group (06831) to achieve revenues of 4.91 billion, 6.23 billion, and 7.65 billion CNY for 2025-2027, representing year-on-year growth of 28.0%, 26.7%, and 22.9% respectively, with adjusted net profits of 500 million, 650 million, and 800 million CNY, reflecting year-on-year increases of 37.9%, 30.0%, and 24.3% respectively, assigning a target price of 12.1 HKD based on a 15x PE for 2025, leading to a reasonable market value of 8.2 billion HKD [1] Company Overview - Green Tea is a well-known casual Chinese dining brand founded in 2008 in Hangzhou, characterized by affordable pricing, fusion cuisine, and Chinese aesthetic spaces, holding a 0.7% market share in the casual Chinese restaurant market in mainland China, ranking fourth by revenue and third by the number of restaurants with a total of 465 outlets [2] Industry Insights - The chain restaurant penetration rate in China is continuously increasing, with a projected compound annual growth rate (CAGR) of 8.2% for chain dining from 2024 to 2029, significantly higher than the 6.8% for non-chain dining and the overall average of 7.1%. The casual Chinese dining segment is the fastest-growing niche, expected to reach a market size of 0.5 trillion CNY in 2024, accounting for 17% of the Chinese restaurant market, and projected to grow to 0.8 trillion CNY by 2029, increasing its market share to 19% with a CAGR of 9.1% [3] Competitive Advantages - Brand Strength: High brand recognition and effective organizational structure drive growth, with 203 new dishes launched in 2024 and 68.07 million customers served, alongside over 16.2 million members, indicating significant brand loyalty and influence [4] - Supply Chain Efficiency: The supply chain combines third-party food processing and direct procurement, enhancing food consistency, safety, efficiency, and supporting rapid expansion. Plans include building small to medium-sized central kitchens in densely populated areas and integrating upstream capacity through partnerships [4] - Store Expansion Strategy: The company focuses on a direct-operated model with small store formats, expanding from high-tier to lower-tier cities, with a total of 502 stores by the end of 1H25, an increase of 37 stores from the end of 2024, and plans to open 150, 200, and 213 new restaurants in 2025-2027 [4] Store Performance - Despite a decline in same-store sales growth, average daily sales, and customer spending due to the current economic environment, the company has optimized its store model, reducing the payback period for new stores from 18 months to 14.5 months. The focus on small restaurants and cost optimization in rent and labor is expected to yield an operating profit margin of approximately 17% at the store level in 2025 [5]
海通国际:首予绿茶集团“优于大市”评级 目标价12.1港元