20230621-招银国际-大家乐集团-00341.HK-Turnaround_is_here_but_weaker_than_expected_8页_1mb

Summary of Càfe de Coral (341 HK) Company Update

• Analyst Certification: Provided by CMB International Global Markets, with standard disclosures included in the report.
• Company Overview: The turnaround is confirmed but weaker than initially expected. SSSG in FY23 was 1-2%, missing the estimated 4% growth, primarily due to slower sales recovery and higher costs in the Hong Kong market, where SSS recovery reached about 87% in FY23.
• Financial Estimates:
  • Revenue growth is projected at 9.8% for FY24E and 7.0% for FY25E, driven by stores in China.
  • Net profit estimates are cut by 35-36% for FY24E and FY25E, due to slower SSSG, higher other losses, and reduced operating leverage.
  • EPS declined, with a higher-than-expected dividend payout (around 200%), offsetting some negative impacts from weaker performance.
• Valuation:
  • Current price is HK$10.64, trading at a P/E of 24.0x, which aligns with a 5-year average.
  • Target price is lowered to HK$12.32 (down 15.8% from current level), based on a 23x forward price-to-earnings multiple.
  • Peer comparison shows average P/E around 17.1x for consumer staples, positioning Càfe de Coral as relatively well-valued.
• Outcomes:
  • Maintain "BUY" rating, reflecting potential returns despite slower recovery.
  • Suggested factors for margin improvement include ASP increases and better menu mix, but labor and rental costs remain pressure points.

Additional financial details, such as sales segments, profitability metrics, and P/E valuations, support the revised growth outlook.