Investment Rating - The report initiates coverage with a "Buy" rating for the company [3] Core Views - The company is positioned as a high-cost-performance leader in the mass-market Chinese dining sector, with a robust growth trajectory and a focus on standardization and cost efficiency [1][2] - The mass-market Chinese dining industry is projected to grow at a CAGR of 8.9% from 2023 to 2028, with the company expected to capitalize on this trend through its expansion strategy [1][12] - The company has established a strong supply chain and operational standardization, which enhances its competitive edge in the market [2][46] Summary by Sections Company Overview - The company went public on December 20, 2024, raising HKD 790 million by issuing 101 million shares at an IPO price of HKD 8.5 [1] - As of 2024, the company operates 667 stores, with revenue of CNY 5.21 billion, reflecting a year-on-year growth of 14.5%, and a net profit of CNY 581 million, up 9.1% [1][22] Industry Trends - The mass-market Chinese dining sector is valued at approximately CNY 40 trillion, with a significant shift towards cost-effective dining options [12][15] - The chain restaurant penetration rate in China is expected to rise from 15% in 2020 to 23% in 2024, indicating a trend towards standardization in the industry [1][15] Competitive Advantages - The company targets the CNY 50-100 price range, aligning with consumer preferences for value dining, and has a strong operational model that allows for rapid store expansion [2][36] - The average investment payback period for new stores is 13.8 months, shorter than the industry average of 18 months, indicating strong growth potential [2][49] - The company has built a comprehensive supply chain system, including a central kitchen and 14 warehouses, enhancing its operational efficiency [2][46] Growth Outlook - The company is expected to open 130, 160, and 175 new stores in 2025, 2026, and 2027 respectively, with a theoretical maximum of 1,810 stores under neutral assumptions and 4,308 under optimistic scenarios [2][3] - Revenue projections for 2025, 2026, and 2027 are CNY 62.6 billion, CNY 76.8 billion, and CNY 92.9 billion, respectively, with corresponding net profits of CNY 7.2 billion, CNY 9.1 billion, and CNY 11 billion [3][6] Financial Projections and Valuation - The company is projected to achieve an EPS of CNY 0.61, CNY 0.78, and CNY 0.94 for 2025, 2026, and 2027, respectively, with a target price of HKD 18.07 based on a 20X PE for 2026 [3][6]
小菜园（00999）：高性价比中餐龙头，门店扩张进行时