Jinwu Financial News | SPDB International Development Research Report shows that the sharp increase in Techai International's (09658) 2H23 turnover rate drove the company to achieve profit for the first time in 2023. Management aims to maintain the 2024 net interest rate at a level similar to that of last year, but considering that the turnover rate and operating efficiency are expected to continue to improve in 2024, the bank believes that the 2024 profit margin performance is expected to be superior to management's guidance. In terms of stores, the company aims for a significant increase in the number of stores in the next 3-5 years. The bank expects the company's overall number of stores to reach more than 200 in 5 years (compared to 115 at the end of 2023).
According to the bank, as the only listed catering company with overseas markets, after the split from Haidilao, Tehai's vast expansion space has not yet been reflected in its current valuation. The bank believes that compared to catering players in the Chinese market, Tehai's expansion in overseas markets will not be limited by regional economic development, so the number of stores may have a higher ceiling than Chinese catering players. On the other hand, the hot pot chain has only just started in overseas markets, and competition has not yet fully started, so the expansion of the company's short-term store network has had limited impact on the turnover rate. The bank is optimistic about the accelerated expansion of TEHAI stores and the continued increase in store profit margins after 2024, which is expected to drive the market to give TEHAI a higher valuation level again. Under the current strong trend, the bank believes that the company's valuation still has potential to be unleashed. The bank raised its target price to HK$18.6 (11x2024EV/Ebitda), maintaining a “buy” rating.