[ET Net News Agency, 17 June 2019] HSBC GlobalResearch said Cafe de Coral Holdings
(CDC)(00341) reported strong FY2019 results, with a net profit of HK$590m.
The revenue was nearly flat on the back of its store rationalization strategy, but the
gross profit margin benefited from lower raw material costs and rents, as well as the
disciplined control of staff costs, the research house noted.
Looking into the coming fiscal year, HSBC believes the company will focus more on network
expansion, which should deliver faster revenue growth. It regards CDC as a stable business
franchise amidst the possible macro uncertainties and believes it will benefit from the
expansion in the Greater Bay Area region.
HSBC maintained its "buy" rating and HK$28 target price. It revised its EPS forecasts by
7% and 4% upward in FY2020 and FY2021, respectively, to reflect a higher gross profit
margin assumption. (KL)