Diving Deeper Into Jiumaojiu's 2023 Results

We dive deeper into our view on Jiumaojiu following our original take on its 2023 results release. Although we cut our operating profit forecasts by an average 8.2% for 2024-32, the impact to our fair value estimate is offset by increased free cash flow due to reduced working capital needs and the pushing back of expected expansion to 2026. Hence, our fair value estimate remains at HKD 13.70, which implies a 2024 price-to-earnings ratio of 30 times, valuing the company at a premium compared with peers. We believe the firm deserves this premium due to its stronger brand image, better unit economics, and compelling unit expansion potential.