[ET Net News Agency, 12 November 2019] Huatai Research initiated coverage on Xiabuxiabu
Catering (00520) with a "buy" rating and a target price of HK$12.8.
The research house said Xiabu operates the largest hotpot restaurant network in China by
store count. Huatai likes its increased initiatives in XBXB brand building and looks for
increased per-capita spending at its stores to act as a major driver of SSSG.
It also expects a rise in the sales contribution of Coucou brand (with better labor
efficiency than XBXB and rising store productivity) to lead to improved operating
leverage.
Huatai forecast 28/26% net profit growth in 2020/2021, recovery from a 15% decline in
2019 thanks to improved SSSG on enhanced brand equity. (KL)