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Jiumaojiu International Holdings Ltd Ordinary Shares 09922

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Stock XHKG Rating as of
HKD 4.98 +0.19 (3.97%)
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As of Delayed Price Closed
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Company Report

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Diving Deeper Into Jiumaojiu's 2023 Results

Ivan Su

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.

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Price vs Fair Value

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09922 is trading at a 67% discount.
Price
HKD 4.57
Fair Value
HKD 94.10
Uncertainty
High
1-Star Price
HKD 74.68
5-Star Price
HKD 2.78
Economic Moat
Brt
Capital Allocation
Jnmmbzdg

Bulls Say, Bears Say

Bulls

Average unit sales (CNY 7.8 million), cash payback periods (around 10 months), and cash-on-cash returns (above 100%) for new Tai Er units far exceed the economics of most of the chains in the region.

Bears

Although the zero-COVID-19 policy is now over, restaurants still contend with cautious spending patterns.

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Trading Information

Previous Close Price
HKD 4.79
Day Range
HKD 4.74–5.00
52-Week Range
HKD 4.42–17.90
Bid/Ask
HKD 4.97 / HKD 4.98
Market Cap
HKD 7.15 Bil
Volume/Avg
34.0 Mil / 15.4 Mil

Key Statistics

Price/Earnings (Normalized)
25.46
Price/Sales
1.05
Dividend Yield (Trailing)
0.20%
Dividend Yield (Forward)
3.01%
Total Yield
0.21%

Company Profile

Jiumaojiu International is a Chinese multibrand restaurant operator. The firm generates most of its revenue from Tai Er, a restaurant chain that is known for its sauerkraut fish (steamed fish smothered in pickled cabbage). Established in 2015, Tai Er is immensely popular, with over 400 outlets in China, and is frequented particularly by the post-1990s generation.Other key concepts include the namesake concept Jiu Mao Jiu (nearly 80 units) and a newly created restaurant concept Song Hot Pot (almost 30 outlets), but the company's portfolio also includes other brands such as Uncle Chef (Cantonese cuisine) and Lai Mei Li (Chinese grilled fish). All of Jiumaojiu's restaurants are company-owned, as the firm is focusing more on the quality of its restaurants over quantity.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Mid Core
Total Number of Employees
22,467
Website
http://www.jiumaojiu.com

Competitors

Valuation

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Metric
09922
YUMC
00520
Price/Earnings (Normalized)
 25.4619.78627.64
Price/Book Value
 1.872.521.45
Price/Sales
 1.051.520.28
Price/Cash Flow
 6.999.101.70
Price/Earnings
09922
YUMC
00520

Financial Strength

Metric
09922
YUMC
00520
Quick Ratio
 2.471.190.54
Current Ratio
 2.761.420.82
Interest Coverage
 4.25—−0.84
Quick Ratio
09922
YUMC
00520

Profitability

Metric
09922
YUMC
00520
Return on Assets (Normalized)
 4.51%7.07%−1.37%
Return on Equity (Normalized)
 7.77%12.88%−4.00%
Return on Invested Capital (Normalized)
 5.48%7.47%0.19%
Return on Assets
09922
YUMC
00520
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