TongQingLou Catering (605108) 国信证券·2024-12-09 01:05Investment Rating - The report maintains an "Outperform" rating for the company [6] Core Views - The company is a regional leader in large-scale banquet and daily dining services, with a strong presence in Anhui and Jiangsu provinces [6] - The company has successfully navigated industry challenges, including the "anti-corruption" campaign in 2013, by upgrading its business model to a one-stop banquet service [6] - In 2023, the company achieved record-high performance due to a rebound in wedding banquet demand, but faced a decline in 2024 due to weakened rural customs and rapid expansion [6] - The company's revenue increased by 11% YoY in the first three quarters of 2024, while net profit attributable to shareholders decreased by 59% [6] - Wedding banquet demand is expected to rebound in 2025, driven by a 7.3% YoY increase in marriage registrations in Hefei and favorable rural customs [7] - The company plans to balance its investment pace, with capital expenditure expected to decline in 2025, which could support profit release from existing stores [7] Business Review - The company has a strong foothold in Hefei, benefiting from the city's growing high-tech industry and increasing consumer spending [12] - The company has iterated its store models multiple times, transitioning to a one-stop banquet service in 2014 and launching high-end wedding brands like Rose Manor and Palace in 2017-2019 [13] - The company went public in July 2020 and has since focused on investing in the Fuma Hotel model, which has higher operational barriers and enhances banquet competitiveness [13] - Banquet and private dining rooms each contribute nearly half of the company's revenue, with banquets, especially wedding banquets, contributing more to profits [15] - The company's revenue structure is estimated to be 47% banquets, 43% private dining rooms, and 10% food products [15] Future Outlook - If demand recovers, the company's store expansion is expected to enter a harvest period [8] - Existing stores have shown stable performance, with revenue in the first three quarters of 2024 close to 2019 levels despite industry challenges [8] - New stores are the core driver of profit elasticity, with 19 traditional stores opened between 2020-2024, covering 160,000 square meters [8] - The Fuma Hotel model is expected to contribute approximately RMB 280 million in profit at maturity, with 10 hotels expected to be operational by the end of 2024 [8] - The company's financial expenses increased to RMB 48 million in the first three quarters of 2024, but are expected to be more controllable with a balanced expansion pace [8] Investment Recommendation - The company is a regional leader in the large-scale dining industry, actively expanding its store models [9] - Under a neutral scenario, the company's net profit attributable to shareholders is forecasted to be RMB 138 million, RMB 280 million, and RMB 384 million for 2024-2026, with dynamic P/E ratios of 48x, 23x, and 17x, respectively [9] - In an optimistic scenario, if the operating environment improves significantly, net profit could reach RMB 344 million and RMB 481 million in 2025-2026, with dynamic P/E ratios of 19x and 14x [9] - The company's valuation is currently at a relatively low level, with potential support from pro-consumption and fertility-friendly policies [9] Fuma Hotel Model - The Fuma Hotel model is divided into three brands: Fuma Grand Hotel, Fuma Garden, and Fuma International, each targeting different market segments [33] - The Fuma Hotel model focuses on large-scale banquet services, with over 70% of revenue coming from dining [34] - By the end of 2024, the company expects to have 10 Fuma Hotels in operation, with a total area exceeding 400,000 square meters [38] - The Fuma Hotel model is expected to contribute approximately RMB 280 million in profit at maturity, based on the performance of the flagship Binhu Fuma Hotel [38]