【行业研究报告】九毛九-Resilient margin in 2H23 with positive outlook

26Mar2024
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
Jiumaojiu(9922HK)
Resilientmarginin2H23withpositiveoutlook
MaintainBUYandraiseTPtoHK$8.39(wenowassumeagradualimprovement
inSSSrecoveryrateonwardsasthegroupisrollingoutmorenewinitiatives
thisyear).Wearestillcautiousaboutcateringsector,butJMJ’snumbershave
stabilizedlately.Areboundinsharepriceispossiblegivenundemanding
valuation(12xFY24EP/E)whileourTPisbasedon17xand3-yearsales/NP
CAGRareat20%/25%.
FY23resultswereroughlyinlinebutGPmarginanddividendwere
surprisinglygood.Saleshasincreasedby49%YoYtoRMB6.0whilenet
surprisinglygood.Saleshasincreasedby49%YoYtoRMB6.0whilenet
profithassurgedby820%toRMB453mn,botharehighlyinlinewiththe
previouspositiveprofitalert.However,wearecertainlyimpressedbythe
GPmarginexpansion(esp.in2H23)from63.9%inFY22to64.2%inFY23,
becausetheindustryenvironmentwasstillratherpromotional(TaiErdid
providemorediscountcoupons).Weattributedthattothegreateruseof
centralkitchen,refinementofsourcingcostsandrampupofSongHotPot.
Wearealsodelightedtoseepayoutratiotoberaisedtoaround43%(from
26%),effectivelyimplyingahistoricalyieldof3%.
SSSGwasdowninJan-Feb2024,butmanagementisguidingfor
positivegrowthforFY24E.ManagementdidmentionthattheSSStrend
inJan-Feb2024wasrathersimilartothatin4Q23(CMBIest.SSSrecovery
of75%+forbothperiod).TheSSSGinJan-Feb2024wasnegativedueto
highbaselastyear(demandwasexplosiverightafterChina’sre-opening),
butinFY24E,managementisexpectingthattoturnpositive.
ItislikelytoseemoreinitiativesinFY24Eandthemanagementisalso
lookingforabettermargin.WhilethenumbersinFY23mayhavemissed
theCompany’sinternaltarget,themanagementdidnotgiveupandwill
continuetoimproveitssupplychain,productandmarketing,andweare
certainlyexcited.Intermsofproduct,theclickrateofnewproductswas
goodinFY23(higherthan30%),andmanagementwillrolloutmorein
FY24E,alsothetotalnumberofSKUsavailableinbothTaiErandSongwill
beincreased,soasthenumberoftastesandfavour(e.g.thesoupbase).
Intermsofmarketing,themanagementisgoingtoinvestmore.Theyhave
donecrossoverswithbloggersandlivestreamingonDouyininFY23,which
areallquitesuccessfulandtheywilldoubledownonitandmaydomore
activeadvertisingtodrawofflinetraffic.Intermsofsupplychain,the
Companyislikelytodomoreproductengineeringandfurtherreducethe
sourcingcosts.
MaintainBUYandraiseTPtoHK$8.39.OurnewTPisbasedon17x
FY24EP/E(downfrom20x,tofactorintheindustryde-rating).Wecutour
netprofitforecastsby39%/37%inFY24E/25Etofactorinbetter-than-
expectedSSSGoutlook,robustGPmarginandhencetheoperative
leverage.The2H23Eresultswerebetterthanourestimatesandsoasthe
FY24Eoutlook.Givensuchanundemandingvaluation(12xFY24EP/E),
roomforareboundispossible,esp.whenturnaroundmaystartatsome
pointinFY24E-25E.