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

<ul>
<li>The relaxing of restrictions by Hong Kong makes <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 great reopening play, trading at 8.8x FY22e and 5.6x FY23e. </li>
<li>Despite a challenging environment, the company has executed well, maintaining net margins north of 7-8%, which are far superior to other listed competitors.</li>
<li>With &gt;60% payout ratios, it trades at a dividend yield of 6.7%/11.4% FY22e/FY23e. Since 29% of the market capitalization is cash, we are confident in the dividend payments. </li>
</ul>


The relaxing of restrictions by Hong Kong makes Taste Gourmet Group Ltd (8371 HK) a great reopening play, trading at 8.8x FY22e and 5.6x FY23e. 
Despite a challenging environment, the company has executed well, maintaining net margins north of 7-8%, which are far superior to other listed competitors.
With &gt;60% payout ratios, it trades at a dividend yield of 6.7%/11.4% FY22e/FY23e. Since 29% of the market capitalization is cash, we are confident in the dividend payments. 


Taste Gourmet: Multibagger Reopening Play

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

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

Cross Asset Strategy

<ul>
<li>The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.</li>
<li>The past week has seen Insights on <a href="https://www.smartkarma.com/entities/grab-holdings-inc" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (GRAB US)</a>, <a href="https://www.smartkarma.com/entities/sumber-alfaria-trijaya-tbk-pt" target="_blank" data-smartkarma-citation="entities:15659:1" rel="noopener">Sumber Alfaria Trijaya (AMRT IJ)</a>, <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a>, and the <a href="https://www.smartkarma.com/entities/mapletree-commercial-trust" target="_blank" data-smartkarma-citation="entities:106:1" rel="noopener">Mapletree Commercial Trust (MCT SP)</a> deal.</li>
<li>We also explored online groceries in South-East Asia as we see increasing interest in the space plus <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a> also lays out his top picks for 2022 performance.</li>
</ul>


The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week has seen Insights on Grab (GRAB US), Sumber Alfaria Trijaya (AMRT IJ), Semen Indonesia (Gresik) (SMGR IJ), and the Mapletree Commercial Trust (MCT SP) deal.
We also explored online groceries in South-East Asia as we see increasing interest in the space plus Nicolas Van Broekhoven also lays out his top picks for 2022 performance.


The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

We received a positive profit alert for H1 2022 for <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>, as expected in our last insight, <a href="https://www.smartkarma.com/insights/taste-gourmet-conviction-growing-as-execution-remains-solid" target="_blank" data-smartkarma-citation="insights:57186" rel="noopener">Taste Gourmet: Conviction Growing As Execution Remains Solid</a>,  the numbers based on the profit alert though are below our expectations which we largely believe is due to higher employee and food costs (we will get more clarity on this when the results are fully published on the 12th of November 2021). We calculate the H1 FY22 profits based on the alert released at 24 mn HKD (vs. our expectation of around 27 mn HKD).
We believe that the company is still on track to hit a 60 mn HKD profit number for FY22, putting it at 6.5x FY22 PE. We also believe that the management will adhere to a 50% payout ratio, resulting in a dividend yield of 7.9%. With close to 90 mn HKD of net cash on the balance sheet, the stock trades an even cheaper ex-cash at 4.5x FY22 PE. 
<h3></h3>
The only major near-term risk we see is the resurfacing of Covid restrictions on dine-ins.

We received a positive profit alert for H1 2022 for Taste Gourmet Group Ltd (8371 HK), as expected in our last insight, Taste Gourmet: Conviction Growing As Execution Remains Solid,  the numbers based on the profit alert though are below our expectations which we largely believe is due to higher employee and food costs (we will get more clarity on this when the results are fully published on the 12th of November 2021). We calculate the H1 FY22 profits based on the alert released at 24 mn HKD (vs. our expectation of around 27 mn HKD).
We believe that the company is still on track to hit a 60 mn HKD profit number for FY22, putting it at 6.5x FY22 PE. We also believe that the management will adhere to a 50% payout ratio, resulting in a dividend yield of 7.9%. With close to 90 mn HKD of net cash on the balance sheet, the stock trades an even cheaper ex-cash at 4.5x FY22 PE. 

The only major near-term risk we see is the resurfacing of Covid restrictions on dine-ins. 

Taste Gourmet: Positive Profit Alert for H1 2022

We believe that <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> can deliver a stellar Q2 FY22/H1 FY22  if operations remain uninterrupted in Hong Kong. 
<ul>
<li>In Q1 FY22, the company delivered its highest quarterly revenue of 145 mn HKD ( Vs. its last highest of 103 mn in Q3 FY21), despite operation being interrupted for over 1.5 weeks in April. We believe that revenue can average over 160 mn HKD in Q2 FY22.</li>
<li>Profit margins for Q1 FY22 averaged 7.6% due to COVID interrupting operations in April, and the company also took the opportunity to refurbish 2 of its existing restaurants and rebrand its Vietnamese La'Taste brand. With its operations uninterrupted in Q2 FY22 net margins can trend up to 10% on the revenue of 160 mn HKD. </li>
</ul>
We expect the company to deliver a profit alert for H1 FY2022. We believe that <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>  can deliver revenue above 300 mn HKD ( FY21 revenue 379 mn HKD ) and a profit of 28 mn HKD ( equivalent to FY21 profit) for H1 FY22.
The stock trades at an appealing multiple of 6.9x FY22 and 5.7x FY23. With increasing cash flows, we believe the company can increase its dividend payout ratio to 50%. We believe at this payout ratio, the dividend yield for FY22/FY23 equates to 7.2%/9.1%.

We believe that Taste Gourmet Group Ltd (8371 HK) can deliver a stellar Q2 FY22/H1 FY22  if operations remain uninterrupted in Hong Kong. 

In Q1 FY22, the company delivered its highest quarterly revenue of 145 mn HKD ( Vs. its last highest of 103 mn in Q3 FY21), despite operation being interrupted for over 1.5 weeks in April. We believe that revenue can average over 160 mn HKD in Q2 FY22.
Profit margins for Q1 FY22 averaged 7.6% due to COVID interrupting operations in April, and the company also took the opportunity to refurbish 2 of its existing restaurants and rebrand its Vietnamese La'Taste brand. With its operations uninterrupted in Q2 FY22 net margins can trend up to 10% on the revenue of 160 mn HKD. 

We expect the company to deliver a profit alert for H1 FY2022. We believe that Taste Gourmet Group Ltd (8371 HK)  can deliver revenue above 300 mn HKD ( FY21 revenue 379 mn HKD ) and a profit of 28 mn HKD ( equivalent to FY21 profit) for H1 FY22.
The stock trades at an appealing multiple of 6.9x FY22 and 5.7x FY23. With increasing cash flows, we believe the company can increase its dividend payout ratio to 50%. We believe at this payout ratio, the dividend yield for FY22/FY23 equates to 7.2%/9.1%.

Taste Gourmet: Conviction Growing As Execution Remains Solid

<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> continued its solid execution in challenging times. With the overhang of dining restrictions past us for the time being, we believe that <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> presents a fabulous opportunity to invest in. For more details on the company, refer to my past insights:<ul>
<li>
<a href="https://www.smartkarma.com/insights/taste-gourmet-small-is-beautiful" target="_blank" data-smartkarma-citation="insights:34128" rel="noopener">Taste Gourmet - Small Is Beautiful</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/taste-gourmet-and-the-game-changing-joint-venture" target="_blank" data-smartkarma-citation="insights:40860" rel="noopener">Taste Gourmet and the Game-Changing Joint Venture</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/taste-gourmet-executing-well-in-a-tough-environment" target="_blank" data-smartkarma-citation="insights:37378" rel="noopener">Taste Gourmet: Executing Well in a Tough Environment</a> </li>
</ul>We continue to like the company as it :<ol>
<li>Represents a high growth opportunity in the restaurant space with a foray into China.</li>
<li>Cheap on PE with trading at 7.0x PE FY22 and 5.7x FY23. Net Cash of 80 mn HKD representing 18% of market capitalization.</li>
<li>Despite the challenging environment, it increased its dividend from 3 cents to 4 cents. This represents a trailing yield of 3.3%. Adjusted for the listing expenses, the payout ratio is 42.7%. If the company maintains its payout ratio in the 40% range, then stock trades at yields of 5.7%/7% for FY22/23.</li>
</ol>

Taste Gourmet Group Ltd (8371 HK) continued its solid execution in challenging times. With the overhang of dining restrictions past us for the time being, we believe that Taste Gourmet Group Ltd (8371 HK) presents a fabulous opportunity to invest in. For more details on the company, refer to my past insights:

Taste Gourmet - Small Is Beautiful 

Taste Gourmet and the Game-Changing Joint Venture 

Taste Gourmet: Executing Well in a Tough Environment 
We continue to like the company as it :
Represents a high growth opportunity in the restaurant space with a foray into China.
Cheap on PE with trading at 7.0x PE FY22 and 5.7x FY23. Net Cash of 80 mn HKD representing 18% of market capitalization.
Despite the challenging environment, it increased its dividend from 3 cents to 4 cents. This represents a trailing yield of 3.3%. Adjusted for the listing expenses, the payout ratio is 42.7%. If the company maintains its payout ratio in the 40% range, then stock trades at yields of 5.7%/7% for FY22/23.


Taste Gourmet: Solid Execution in Challenging Times

Hong Kong

Taste Gourmet Group Limited operates as a holding company. The Company, through its subsidiaries, manages a chain of restaurants. Taste Gourmet Group serves clients worldwide.

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Taste Gourmet (8371 HK)

Taste Gourmet: Multibagger Reopening Play

The relaxing of restrictions by Hong Kong makes Taste Gourmet Group Ltd (8371 HK) a great reopening play, trading at 8.8x FY22e/5.6x FY23e PE and a...

Sameer Taneja

The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity...

Angus Mackintosh

Taste Gourmet: Positive Profit Alert for H1 2022

Taste Gourmet is a small restaurant operator in Hong Kong trading at 6.5x FY22 PE with a 7.9% dividend yield and around 24% of its market...

Sameer Taneja

Taste Gourmet: Conviction Growing As Execution Remains Solid

Taste Gourmet trades at a multiple of 6.9x FY22 and 5.7x FY23. The company can increase its dividend payout ratio to 50%, implying a dividend yield...

Sameer Taneja

Taste Gourmet: Solid Execution in Challenging Times

Trading at 7.0xFY22/5.7x FY23 PE with net Cash of 80 mn HKD representing 18% of market capitalization, Taste Gourmet is a great investment with...

Sameer Taneja

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