20220331-招银国际-奈雪的茶-02150.HK-Looking_forward_to_the_digitalization_in_FY22E_9页_1mb

Nayuki Holdings Limited (2150 HK) - Equity Research Summary

Core Content

Nayuki Holdings Limited (2150 HK) is a company under the ownership of China Merchants Bank. The report outlines the company's performance and future outlook for the fiscal year 2022 (FY22E), with a focus on its digitalization initiatives and financial performance.

Main Points

• Current Valuation and Target Price:

  • Current price: HK$5.04
  • Target price (TP) revised down to HK$5.69, representing a 12.9% upside.
  • The DCF model suggests a ~64x FY22E P/E and ~1.4x FY22E P/S.
  • The current P/S is 1.3x, which is below the industry median of 1.6x.

• FY21 Performance:

  • Sales grew by 40.5% YoY to RMB 4.297 billion, inline with CMBI estimates but slightly below BBG estimates.
  • Adjusted net profit was RMB 127 million, below the estimated RMB 192 million.
  • Adjusted net profit margin was 2.3%, lower than the previous year.

• FY22E Outlook:

  • The year is described as the "year of digitalization," with the implementation of new technologies such as in-store crew scheduling, inventory management, and automated tea drink machines.
  • These are expected to be rolled out in most stores by 3Q22E and should improve efficiency and reduce staff costs.
  • The company aims to open 350 new stores (mostly PRO stores) in FY22E, despite the low OP margin for PRO stores compared to regular stores.

• Challenges:

  • The company has faced challenges due to the pandemic, particularly in Shanghai and Shenzhen, leading to a significant drop in sales in January–February 2022.
  • The adjusted net profit estimate was revised down by 33% due to higher-than-expected operating expenses and lower-than-expected gross profit margins.

• Earnings Revision:

  • Revenue estimates for FY22E and FY23E were revised down by 4.7% and 5.1% respectively.
  • Adjusted net profit estimates were revised down by 33.4% and 3.9% for FY22E and FY23E.
  • Adjusted EPS was revised down by 33.3% and 3.9% for FY22E and FY23E.

• Valuation Assumptions:

  • The DCF model assumes a 29% sales CAGR and 48% EBITDA CAGR for FY20–25E.
  • The WACC is estimated at 12.2%, lower than both international and Greater China peers.
  • Terminal growth rate is set at 2.0%.

• Sensitivity Test:

  • The valuation is sensitive to changes in WACC and terminal growth rate.
  • The TP is adjusted accordingly, with a range from HK$4.39 to HK$8.08 based on different WACC scenarios.

• Peer Comparison:

  • Compared to peers, Nayuki's valuation is considered rich in terms of P/E but reasonable in terms of P/S.
  • The report highlights the company's potential for improvement in profitability as the PRO stores mature and rental terms improve.

Key Information

• Pricing Strategy:

  • Introduced a "light series" with products priced between RMB 9 to 19, attracting new customers without significantly affecting high-end product sales.

• Financial Metrics:

  • Revenue: RMB 5,621 million for FY22E.
  • Adjusted Net Profit: RMB 127 million for FY22E.
  • Adjusted EPS: RMB 0.074 for FY22E.
  • P/S: 1.3x for FY22E (vs. industry median of 1.6x).
  • ROE: 2.8% for FY22E.

• Shareholding Structure:

  • Mr. Zhao Lin & Ms. Peng Xin: 56.98%
  • Tiantu Capital: 11.09%
  • Employee incentive platform: 5.35%
  • PAGAC Nebula: 5.28%
  • Shenzhen Capital Group: 2.82%
  • Free Float: 18.47%

• Share Performance:

  • 1-month: -18.4%
  • 3-months: -41.1%
  • 6-months: -55.2%
  • 12-months: n/a

• Auditor: KPMG

• Related Reports:

  • Nayuki Holdings (2150 HK, HOLD) – SSSG recover in 4Q21, but we remain cautious – 10 Jan 2022
  • Nayuki Holdings (2150 HK, HOLD) - Softening demand and operating leverage - 1 Nov 2021

• Market Cap:

  • HK$8,644 million

• Valuation Table:

  • FY22E EV/EBITDA: 16.7
  • FY22E adj. P/E: 64.0
  • FY22E P/S: 1.4

Summary

Nayuki Holdings Limited is maintaining a HOLD rating with a revised target price of HK$5.69. The company is focusing on digitalization to improve efficiency and reduce costs, which are expected to be implemented in most stores by 3Q22E. Despite a slight miss in FY21 results, the company remains committed to its expansion plan for FY22E. The revised estimates for FY22E and FY23E reflect the impact of the pandemic and increased operating expenses. The company's valuation is considered rich in terms of P/E but reasonable in terms of P/S. The DCF model suggests a 12.2% WACC and 2.0% terminal growth rate. The report highlights the potential for improved profitability as PRO stores mature and rental terms become more favorable.