TongQingLou Catering (605108) 长江证券·2024-09-03 06:44Investment Rating - The report maintains a "Buy" rating for Tongqinglou (605108 SH) with a target PE of 14X 11X 9X for 2024-2026 [1][5] Core Views - Tongqinglou achieved revenue of 12 71 billion yuan in H1 2024 up 17 5% YoY but net profit declined 27 96% YoY to 756 427 million yuan [1][4] - The company's three-pronged strategy (catering hotel food) is taking shape with new store expansions and product innovations expected to drive long-term growth [1][5] - In H1 2024 Tongqinglou opened 5 new stores including 3 large Fuma hotels 1 large catering store and 1 wedding venue bringing the total to 118 directly operated stores [4] - The company plans to open 4-6 new stores in H2 2024 and complete 10 Fuma hotels by year-end [4] Financial Performance - In Q2 2024 revenue grew 7 04% YoY to 580 million yuan but net profit dropped 79 47% YoY to 15 million yuan [4] - Gross profit margin and net profit margin in H1 2024 were 21 56% and 6 37% respectively down 3 17pct and 7 09pct YoY [4] - The company's overall expense ratio increased by 1 01pct YoY to 13 31% in H1 2024 [4] Business Development - The food business saw strong growth with new products like zongzi and shaomai driving a 119 54% YoY increase in sales during the Dragon Boat Festival [5] - The company has opened 80 fresh meat bun stores with 60 more planned [5] - The hotel business leveraging Tongqinglou's catering and banquet expertise is expected to mature in 2025 contributing to future performance [5] Future Outlook - Tongqinglou is expected to achieve net profits of 315 401 and 495 million yuan in 2024-2026 respectively [1][5] - The company's focus on affordable high-quality dining and social consumption aligns with current consumer trends [5]