Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

This insight focuses on a small "gem" listed in HK, <a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet Group Ltd (8371 HK)</a> a restaurant operator with all its revenue currently in HK.  While it is small with a 315 mn HKD market cap, for investors who can stomach the liquidity this provides the potential to have  a  4-5(x) return over the next 4-5 years. The key investment highlights for the company are :
1) It has a strong and efficient pipeline of restaurants with 10+% net margins representing the highest in its peer group in HK and China.  I expect its pipeline of restaurants to expand by 20-25% at least per annum.
2) Being small it is undiscovered and currently trades at a 6x FY20 fwd P-E ( March Yr End ). I forecast 25-30% CAGR growth in earnings at least over the next five years, given its pipeline of restaurants and strong balance sheet.
3) With 23% of the market cap in net cash ( around 70 mn HKD ), the balance sheet is strong and the company is in a position to expand its restaurant count by 25% CAGR. It also buys back stock on share price weakness and distributes 55% of its net profits as dividends. Currently the dividend yield is around 6.5% based on FY20 earnings.
I think this stock could easily trade at a substantial premium to its current multiple of 6x.  A 15x multiple for a company growing 25-30% CAGR would imply this company could be a 4 HKD/share stock in 4-5 years. The current stock price is 0.81 HKD/share.

This insight focuses on a small "gem" listed in HK, Taste Gourmet Group Ltd (8371 HK) a restaurant operator with all its revenue currently in HK.  While it is small with a 315 mn HKD market cap, for investors who can stomach the liquidity this provides the potential to have  a  4-5(x) return over the next 4-5 years. The key investment highlights for the company are :
1) It has a strong and efficient pipeline of restaurants with 10+% net margins representing the highest in its peer group in HK and China.  I expect its pipeline of restaurants to expand by 20-25% at least per annum.
2) Being small it is undiscovered and currently trades at a 6x FY20 fwd P-E ( March Yr End ). I forecast 25-30% CAGR growth in earnings at least over the next five years, given its pipeline of restaurants and strong balance sheet.
3) With 23% of the market cap in net cash ( around 70 mn HKD ), the balance sheet is strong and the company is in a position to expand its restaurant count by 25% CAGR. It also buys back stock on share price weakness and distributes 55% of its net profits as dividends. Currently the dividend yield is around 6.5% based on FY20 earnings.
I think this stock could easily trade at a substantial premium to its current multiple of 6x.  A 15x multiple for a company growing 25-30% CAGR would imply this company could be a 4 HKD/share stock in 4-5 years. The current stock price is 0.81 HKD/share.

Making sense of the Global Market, Euromonitor International Ltd.

Yu Mitsuhashi

Making sense of the Global Market

Euromonitor International Ltd.

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Thematic (Sector/Industry)

<ul class=""><li>Full-service restaurants increased by 4% in current value terms to HKD81.9 billion in 2017, with 1% growth in the number of outlets (to 8,872) and transactions.</li><li>Stable demand for Chinese food supported the growth of full-service restaurants.</li><li>European full-service restaurants experienced the highest current value growth in 2017 with 4%.</li><li>Fulum Group Ltd remained the leading player in 2017.</li><li>Full-service restaurants are expected to see a positive value CAGR of 1% at constant 2017 prices over the forecast period to reach HKD87.4 billion in 2022.</li></ul>

Full-service restaurants increased by 4% in current value terms to HKD81.9 billion in 2017, with 1% growth in the number of outlets (to 8,872) and transactions.Stable demand for Chinese food supported the growth of full-service restaurants.European full-service restaurants experienced the highest current value growth in 2017 with 4%.Fulum Group Ltd remained the leading player in 2017.Full-service restaurants are expected to see a positive value CAGR of 1% at constant 2017 prices over the forecast period to reach HKD87.4 billion in 2022.

Sector Capsule: Full-Service Restaurants in Hong Kong, China

Hong Kong

Fulum Group Holdings Limited is an investment holding company that owns and operates various restaurants in Hong Kong. The Company provides group banquet and wedding banquet services in its restaurants, and sells packaged Chinese festival products such as mooncakes during the Chinese Mid-Autumn festivals and rice cakes during the Chinese New Year festivals through its restaurants.

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Fulum Group Holdings (1443 HK)

Taste Gourmet - Small Is Beautiful

This insight focuses on a small "gem" listed in HK, Taste Gourmet Group Ltd (8371 HK) a restaurant operator with all its revenue currently in HK. ...

Sameer Taneja

Sector Capsule: Full-Service Restaurants in Hong Kong, China

Full-service restaurants increased by 4% in current value terms to HKD81.9 billion in 2017, with 1% growth in the number of outlets (to 8,872) and...

Euromonitor International Ltd.

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