According to a research report released by Open Source Securities, maintaining Tehai International's (09658) “buy” rating, the localization strategy has gradually succeeded, various regions have clearly turned upside down, and there is plenty of room for Chinese food to go overseas for a long time. The company achieved revenue of US$686 million/yoy +23% in 2023 and net profit of US$25.257 million, turning a year-on-year loss into a profit. The turnover rate in 2023 was 3.5, of which the 2023H2 turnover rate was 3.8, which is a significant increase from 3.3 in 2023H1. In 2023, the profit margin at the restaurant level was 9.0%, up 4.9pct from the previous year; 5 new restaurants were opened throughout the year, and the UAE market was entered for the first time.
The report's main points are as follows:
Opening stores focus on quality rather than quantity. The climbing cycle for new stores has been drastically shortened, and store opening will be accelerated in 2024
Store side: As of 2023/12/31, the company operated 115 restaurants, of which 70 were located in Southeast Asia, 17 in East Asia, 18 in North America, and 10 in other regions. In 2023, 5 new restaurants were opened, and 1 was closed due to the transformation of its own property. The overall number of stores opened was lower than expected at the beginning of the year due to the elimination of unqualified projects, but the newly opened stores all achieved break-even within 3 months, and the quality of operation was excellent. As of the announcement of the results, Haidilao has opened 4 new stores in 2024 and entered the Philippines for the first time.
The bank believes that all regional models have basically worked. The opening of stores in 2024 is expected to be faster than in 2023. It is expected that 2024/2025/2026 will open new stores 11/14/19. Expense side: The share of raw materials/employee costs/depreciation and amortization in 2023 was 34.2/32.9/ 11.4%, respectively, compared with -1.0/-0.9/-1.6pct, which was greatly optimized. Along with the continued implementation of piece-rate pay+low base salary and high dividends, the refined management fee ratio continues to be optimized. The net interest rate is expected to continue to rise in 2024 without considering changes in exchange rates.
Adhere to the standardisation+localization strategy, focus on product innovation, and drive continuous growth through management optimization
By region, the company's turnover rate in Southeast Asia, East Asia, North America and other regions in 2023 was 3.5/3.6/3.7/3.8 times per day, up 0.1/0.6/0.6/0.7 times per day over the previous year. East Asia, North America and other regions saw significant increases in turnover, and the localization strategy achieved phased success. The company added a “regional manager” level to reduce the management radius, give regions and countries greater autonomy and flexibility, enhance the continuous customer experience and optimize profit margins.