Monday, March 31st, 2025

Jiumaojiu International Holdings (9922 HK): Resilient Recovery and Optimistic Outlook for 2H24

Date of Report

October 22, 2024

Broker

UOB Kay Hian

Company Overview

Jiumaojiu International Holdings is a leader in China’s north-western cuisine and specializes in Chinese sauerkraut fish. The company operates several catering brands, including Jiu Mao Jiu, Tai Er, Song Hotpot, Lai Mei Li, and Uncle Chef.

Stock Data

  • GICS Sector: Consumer Discretionary
  • Bloomberg Ticker: 9922 HK
  • Shares Issued: 1,410.6 million
  • Market Capitalization: HK$4,542.0 million (US$584.4 million)
  • 3-Month Average Daily Turnover: US$18.6 million
  • 52-Week High/Low: HK$9.16 / HK$2.14

Recent Performance

  • Share Price: HK$3.22
  • Target Price: HK$5.20 (Previous Target Price: HK$3.80)
  • Upside Potential: 61.5%

Operational Updates for 3Q24

  • Sequential Improvement: The company reported improvements in table turnover rates and same-store sales (SSS) during 3Q24, particularly during the Golden Week.
  • Average Spending Per Customer (ASP):
    • Tai Er: Rmb69
    • Song Hot Pot: Rmb97
    • Jiu Mao Jiu: Rmb54
  • Table Turnover Rates:
    • Tai Er: 3.6x
    • Song Hot Pot: 3.0x
    • Jiu Mao Jiu: 2.8x

Revenue Insights

  • Business Operations: Improvement was observed in 3Q24 compared to 2Q24, with management expecting operating margins to enhance in the second half of the year, driven by lower labor costs and amortization expenses.
  • Same-Store Sales Growth (YoY %):
    • Tai Er: -18%
    • Song Hot Pot: -33%
    • Jiu Mao Jiu: -10%

Store Expansion Plans

  • Cautious Store Opening Target:
    • Management has reduced Tai Er’s 2024 store opening target to 70 new stores from the previous 80.
    • For Song Hot Pot, the target remains at 25 new stores.
  • Store Openings in 9M24:
    • 62 Tai Er stores and 17 Song Hot Pot stores have been opened, achieving approximately 89% and 68% of their respective annual targets.

Financial Projections

  • Net Turnover (Rmbm):
    • 2023: 5,986
    • 2024F: 6,380
    • 2025F: 7,861
    • 2026F: 9,215

Analyst Recommendations

  • Recommendation: Maintain a BUY rating on Jiumaojiu International Holdings.
  • Valuation: The target price implies a price-to-earnings (PE) ratio of 21.4x for 2024F and 14.7x for 2025F, compared to the current trading PE of 13.6x for 2024F and 9.4x for 2025F.

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