Research on social service industry: Laowang handed over the table again, and the consumption of catering to stores is under pressure

Zhou’s views and investment suggestions

Laowang holdings submitted the prospectus again: in 2021, the company achieved revenue of 1.3 billion yuan / + 15.5% and net profit of 14 million yuan / – 79.3%. The company has 150 restaurants, covering 30 cities in China and Taiwan, China city. In 2020, the company ranked first in the Guangdong hot pot industry in terms of the number of stores and revenue, accounting for 1.7% of the market share (by revenue). We believe that the competitive advantage of the company is that the company has a variety of brands, including Cantonese hot pot, single hot pot and leisure fast food, which can meet the diversified consumption needs of consumers. The company carries out standardized operations in procurement, production, food processing and staff training to support the rapid expansion of business. Under the pressure of the epidemic. The funds raised by the company are mainly used to expand stores, improve retail channels and build new factories. The company plans to open 44, 60 and 80 new restaurants each year in 22, 23 and 24; Strengthen strategic cooperation with boutiques, super large chain convenience stores and mainstream e-commerce platforms; It is planned to realize the full operation of No. 2 central plant by December 2023 and strengthen the supply chain support capacity.

Food and beverage data tracking last week: the epidemic relapsed seriously last week, the consumption pressure of local food and beverage stores was large, and the recovery rate of takeout consumption was better. According to the data of last week (2022 / 3 / 12 ~ 2022 / 3 / 18), the catering flow is still under pressure, the turnover is down 79.8% compared with the benchmark day, and the number of outlets and takeout outlets are down 53.6% and 43.7% compared with the benchmark day; The consumption intensity of in store and takeout decreased by 32.4% and increased by 13.9% compared with the benchmark day.

Investment suggestion: Catering suggestions focus on the main brand single store model, which is efficient and maintains a stable rhythm of expanding stores; Social scenes can replace Helen’s company with weak substitutability and high degree of standardization. The hotel pays attention to the industrial rebound opportunities in the future recovery process, and it is suggested to pay attention to Shanghai Jin Jiang International Hotels Co.Ltd(600754) , Btg Hotels (Group) Co.Ltd(600258) , Huazhu group.

Data and announcement tracking

Market review: last week (2022 / 3 / 14 ~ 2022 / 3 / 18), CSI 300 and hang seng index fell 0.9%, 4.2% and social services (Shenwan) rose 0.9% respectively. In breakdown, catering A shares and Hong Kong stock indexes fell 2.6% and 8.2% respectively, and hotel A-Shares and Hong Kong stock indexes rose 4.2% and 5.2% respectively.

Industry news: 1) from January to February 2022, the press released zero data, the margin of catering consumption has improved, and the performance of Catering Enterprises above the quota continues to be better than that of the industry as a whole. 2) Naixue’s tea has fallen sharply.

Announcement of key companies: Guangzhou Restaurant Group Company Limited(603043) controlling shareholder was changed from Guangzhou SASAC to Guangzhou urban investment. At present, Guangzhou urban investment holds 288 million shares, accounting for 51% of the total share capital. Huazhu group issued a dividend announcement, with a cash dividend of 0.021usd per share.

Risk tips

The epidemic situation is repeated, the effectiveness of single stores is less than expected, the expansion of stores is less than expected, the cost of raw materials rises, food safety problems, the recovery of terminal demand is less than expected, the risk is less than expected, and the industry competition is fierce.

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