Core Insights - Green Tea Group is a leading casual Chinese cuisine restaurant group in China, ranking as the 4th largest brand in the industry with a 0.7% market share in 2023, generating RMB 3.6 billion in sales from 360 stores in FY23, and achieving a 20% sales CAGR during FY19-23 despite the pandemic [1][3] Group 1: Sales Performance - Green Tea's sales per store recovery rate is at 94% in FY23 compared to FY19, outperforming competitors like Haidilao and KFC, both at 87%, and JMJ at 77% [1] - The company has a strong sales performance driven by its outstanding price to product quality and a distinctive store environment, making it popular for group dining [1] Group 2: Delivery Business Potential - The delivery business has significant growth potential, with delivery sales accounting for only 14% of total sales in FY23, compared to an industry average of 32% [2] - Green Tea is implementing a strategic shift to enhance its delivery offerings, including competitively priced delivery menus that are about 5% cheaper than dine-in options [2] Group 3: Future Growth Projections - Forecasts indicate an 18% sales CAGR from FY23-26E, driven by a 32% store CAGR and adjustments in sales per store [3] - The adjusted net profit is expected to grow by 25% CAGR during the same period, supported by menu adjustments, supply chain improvements, and economies of scale [3] Group 4: Valuation and Investment Outlook - The company is projected to achieve over 20% sales growth and over 30% net profit growth in 1H25E [4] - Initiating coverage with a BUY rating and a target price of HK$ 9.73, based on a 12x FY25E adjusted P/E, which reflects a 30% discount to the median of China peers [4]