HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tao-heung" target="_blank" data-smartkarma-citation="entities:2668:1" rel="noopener">Tao Heung (573 HK)</a>, a Chinese cuisine restaurant operator, has lost significant shop-days in 1H22 due to the pandemic. However, this is behind us and 2H22 outlook is better.</li>
<li>The recovery of Hong Kong operations will be supported by further relaxation of social distancing measures while, for mainland China, business has rebounded following removal of lockdowns.   </li>
<li>Its Chairman has upped his stake, signaling a vote of confidence. The stock's valuations are not expensive, but given low turnover, there will be potential share price volatility.</li>
</ul>



Tao Heung (573 HK), a Chinese cuisine restaurant operator, has lost significant shop-days in 1H22 due to the pandemic. However, this is behind us and 2H22 outlook is better.
The recovery of Hong Kong operations will be supported by further relaxation of social distancing measures while, for mainland China, business has rebounded following removal of lockdowns.   
Its Chairman has upped his stake, signaling a vote of confidence. The stock's valuations are not expensive, but given low turnover, there will be potential share price volatility.


Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

<ul><li>With the easing of the COVID-19 pandemic, most of the anti-pandemic measures in Hong Kong were lifted at the end of 2022, and the market sentiment of the catering industry began to recover.</li><li>As a result, Tai Hing Group (“THG”) delivered a satisfactory recovery in 1H23 with revenue surging by 28.8% y/y to HK$1.6bn, while the bottom line turned to a profit of HK$45.3mn, from a loss of HK$52.5mn in 1H22.</li><li>An interim DPS of 3.40 HK cents was declared, translating into a payout ratio of 75%. </li></ul>

With the easing of the COVID-19 pandemic, most of the anti-pandemic measures in Hong Kong were lifted at the end of 2022, and the market sentiment of the catering industry began to recover.As a result, Tai Hing Group (“THG”) delivered a satisfactory recovery in 1H23 with revenue surging by 28.8% y/y to HK$1.6bn, while the bottom line turned to a profit of HK$45.3mn, from a loss of HK$52.5mn in 1H22.An interim DPS of 3.40 HK cents was declared, translating into a payout ratio of 75%. 

Tai Hing Group - Satisfactory Recovery After 3-Yr Pandemic

<ul><li>Tai Hing Group (“THG”) is poised to benefit from the imminent recovery in local catering demand, thanks to its effective multi-brand strategy, broad store footprint, solid management and execution capabilities.</li><li>We have adjusted our earnings forecasts and TP, given the unfavourable operating environment caused by the COVID-19 outbreak in both HK and China in 1H22.</li><li>We reiterate our Buy rating for THG and revised our TP to HK$1.69 based on 13x 2023E P/E, which implies a 69% upside potential. </li></ul>

Tai Hing Group (“THG”) is poised to benefit from the imminent recovery in local catering demand, thanks to its effective multi-brand strategy, broad store footprint, solid management and execution capabilities.We have adjusted our earnings forecasts and TP, given the unfavourable operating environment caused by the COVID-19 outbreak in both HK and China in 1H22.We reiterate our Buy rating for THG and revised our TP to HK$1.69 based on 13x 2023E P/E, which implies a 69% upside potential. 

Tai Hing Group (6811 HK) – Expecting Decent Recovery and Dividend Yield

<ul><li>Affected by the negative impact caused by the COVID-19 pandemic around the world in 1H22, Tai Hing Group (THG) reported an attributable net loss of HK$52.5mn for the period, compared with an attributable net profit of HK$33.4 in 1H21.</li><li>As the pandemic eased and consumer sentiment in HK gradually improved, THG’s operating performance in June has been recovering.</li><li>Going forward, THG will step up marketing efforts to seize the post-pandemic market recovery momentum and will also focus on strengthening internal operations, optimising the restaurant network and dining experience.</li></ul>

Affected by the negative impact caused by the COVID-19 pandemic around the world in 1H22, Tai Hing Group (THG) reported an attributable net loss of HK$52.5mn for the period, compared with an attributable net profit of HK$33.4 in 1H21.As the pandemic eased and consumer sentiment in HK gradually improved, THG’s operating performance in June has been recovering.Going forward, THG will step up marketing efforts to seize the post-pandemic market recovery momentum and will also focus on strengthening internal operations, optimising the restaurant network and dining experience.

Tai Hing Group (6811 HK; BUY; TP: HK$2.87)

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

<ul>
<li>The HK SAR government is set to relax the dining-in restrictions and a number of listed F&amp;B operators shall benefit</li>
<li>
<a href="https://www.smartkarma.com/entities/tsui-wah-holdings-ltd" target="_blank" data-smartkarma-citation="entities:7198:1" rel="noopener">Tsui Wah Holdings (1314 HK)</a> is the odd one out as it has only 50% of its revenues from HK and the rest are from China. </li>
<li>
<a href="https://www.smartkarma.com/entities/cafe-de-coral-holdings-ltd" target="_blank" data-smartkarma-citation="entities:2568:1" rel="noopener">Cafe De Coral Holdings (341 HK)</a> and <a href="https://www.smartkarma.com/entities/tam-jai-international-co-ltd" target="_blank" data-smartkarma-citation="entities:34227:1" rel="noopener">Tam Jai International (2217 HK)</a> are set to benefit the most given the market capitalization and the outstanding profitability. </li>
</ul>


The HK SAR government is set to relax the dining-in restrictions and a number of listed F&amp;B operators shall benefit

Tsui Wah Holdings (1314 HK) is the odd one out as it has only 50% of its revenues from HK and the rest are from China. 

Cafe De Coral Holdings (341 HK) and Tam Jai International (2217 HK) are set to benefit the most given the market capitalization and the outstanding profitability. 


Hong Kong F&B: Restrictions Lifting Winners and Losers

Hong Kong

Tai Hing Group Holdings Limited operates as a restaurant group. The Company provides various prepared specialties, meals, and, drinks, as well as offers banquet arrangement, restaurant management, and other related services. Tai Hing Group Holdings serves customers in Hong Kong, China, Macau, and Taiwan.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Tai Hing (6811 HK)

Tao Heung (573 HK): Bon Appetit

Tao Heung should have a better 2H22 given recovery of Hong Kong operations as consumer spending improves. Also, mainland China market is not...

Osbert Tang, CFA

Tai Hing Group - Satisfactory Recovery After 3-Yr Pandemic

With the easing of the COVID-19 pandemic, most of the anti-pandemic measures in Hong Kong were lifted at the end of 2022, and the market sentiment...

Quam Securities

Tai Hing Group (6811 HK) – Expecting Decent Recovery and Dividend Yield

We have adjusted our earnings forecasts and TP, given the unfavourable operating environment caused by the COVID-19 outbreak in both HK and China...

Quam Securities

Tai Hing Group (6811 HK; BUY; TP: HK$2.87)

As the pandemic eased and consumer sentiment in HK gradually improved, THG’s operating performance in June has been recovering.

Quam Securities

Hong Kong F&B: Restrictions Lifting Winners and Losers

Cafe de Coral is a familiar name but Tam Jai has a different offering and the management is capable to upsell other products incorporated in the...

Henry Soediarko

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)