【行业研究报告】奈雪的茶-Acquiring LELECHA at a bargain price

Whatisnew?NayukiispayingRMB525mnfor43.64%stakeof
“LELECHA”,atabout1.4xFY21P/S.Nayukiannouncedthatitwillacquire
“LELECHA”,atabout1.4xFY21P/S.Nayukiannouncedthatitwillacquire
43.64%stakeof“LELECHA”brandatatotalconsiderationofRMB525mn,
andthesimpleimpliedvaluationofRMB1,203mnisat1.4xFY21(53%
discountstopeers’average)or1.6xFY20P/S.Thetotalconsideration
consistsof:1)sharestransferofRMB325mn(RMB260mnforloans
repaymentandRMB65mnforseller);and2)capitalincreasesofRMB200mn.
Nayukiwillalsoutilizeashort-termloanofnomorethanRMB80mn.Nayuki
shallbecomethesinglelargestshareholderuponcompletion,basedonour
estimates.LELECHAhasgeneratedsalesofaroundRMB870mnand
recordednetlossesofaroundRMB18mninFY21andhasabout148stores
in1H23.
Strategy:Nayukibelievesthatitisinthebestinterestofbothcompaniesto
remainoperationallyindependent,andthereforeitwillassureLELECHAto
havetheir:1)branding,2)managementteam(Mr.LiMingBowillbecomethe
GeneralManager)and3)operationunchanged.Moreover,Nayukiisintended
toprovideandshareallsortsofresourcesonstoredevelopment,supplychain
anddigitalization,inordertofacilitateLELECHA’sfuturegrowth.
Ourview:positive,bothfinanciallyandoperationally,thankstolow
entrypriceandmeaningfulsynergies.
1)valuationisfairlyattractive,LELECHAwasonlypricedat1.4xFY21P/S,
about53%discountstopeers’averageof3.0xandNayuki’s2.4x;
2)potentialfinancialreturncanbesignificant,ifLELECHAcanexpandits
numberofstoresto300-500(fromitscurrent150)andimproveitsnetprofit
marginto~10%(fromcurrent-2.1%),ifwewanttobenchmarkStarbuckChina;
3)itsexpertiseandassistanceiscriticalforNayukitopenetrateintoShanghai
andEasternChina,asLELECHAhasdoneamuchbetterjobinShanghai,
whereitsdailysalesperstorecouldbeashighasRMB20-25K(vsNayuki’s
RMB17K)inFY21,thankstoitswell-recognizedandpopularbranding;
4)itcanmeaningfullyreducecompetitioninthehigh-endteadrinkmarket,
sinceLELECHAandNayukiusedtobidforsimilarlocationsinshoppingmalls;
5)thesynergycanbehugetoo,byleveragingonthesupplychains,marketing
aswellasproductlaunchingcampaign,etc.,OPmarginforLELECHAand
NayukiShanghaicanbothbeboosted.