Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

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<a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet (8371 HK)</a> reported its Q1 FY24 with revenues up 47% YoY and core profits up 349% YoY.  We believe that the company will report stronger revenues in Q2.</li>
<li>The restaurant count increased from 39 to 42 by the end of Q1 FY24 for HK. As of the latest date, the company has 46 restaurants in HK. </li>
<li>The company also had 126.5 mn HKD of net cash at the end of Q1 FY24 (vs 118 mn HKD in FY23), almost 20% of the current market capitalization. </li>
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Taste Gourmet (8371 HK) reported its Q1 FY24 with revenues up 47% YoY and core profits up 349% YoY.  We believe that the company will report stronger revenues in Q2.
The restaurant count increased from 39 to 42 by the end of Q1 FY24 for HK. As of the latest date, the company has 46 restaurants in HK. 
The company also had 126.5 mn HKD of net cash at the end of Q1 FY24 (vs 118 mn HKD in FY23), almost 20% of the current market capitalization. 


Taste Gourmet : Strong Q1 FY24 In The Bag, H1 FY24 and Future Looking Solid

Value Investing in Asia, Oriental Value

Oriental Value

Value Investing in Asia

<ul><li>With that out of the way, let’s dive into Taste Gourmet, a catering group listed in the secondary market (or GEM board) of the Hong Kong Stock Exchange.</li><li>Catering is usually a business with little moat, characterised by low barriers to entry. </li><li>While some brands are widely recognizable, humans generally want to devour something different each day, therefore it is an everyday struggle for restaurants to stand out among competition.</li></ul>

With that out of the way, let’s dive into Taste Gourmet, a catering group listed in the secondary market (or GEM board) of the Hong Kong Stock Exchange.Catering is usually a business with little moat, characterised by low barriers to entry. While some brands are widely recognizable, humans generally want to devour something different each day, therefore it is an everyday struggle for restaurants to stand out among competition.

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<li>We estimate <a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet (8371 HK)</a> to deliver 39% YoY revenue growth and about 13% YoY profit growth (adj 350% YoY) for Q1 FY24e, to be declared on August 10th.</li>
<li>The company is expected to go ex-dividend on the 4th of August and pay out a 5.2-HK cent final dividend by the 24th of August for FY23.  </li>
<li>Trading at 6x FY24e PE /20% of the market capitalization in cash and a 9-10% dividend yield ( based on a 50-60% payout ratio) represents a great investment opportunity.</li>
</ul>


We estimate Taste Gourmet (8371 HK) to deliver 39% YoY revenue growth and about 13% YoY profit growth (adj 350% YoY) for Q1 FY24e, to be declared on August 10th.
The company is expected to go ex-dividend on the 4th of August and pay out a 5.2-HK cent final dividend by the 24th of August for FY23.  
Trading at 6x FY24e PE /20% of the market capitalization in cash and a 9-10% dividend yield ( based on a 50-60% payout ratio) represents a great investment opportunity.


Taste Gourmet: Q1 FY24 Preview, Another Strong Quarter in the Making

<ul>
<li>
<a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet (8371 HK)</a> reported earnings of 68 mn HKD for FY23 (including impairments of 3.2 mn HKD). Adjusting for impairments, earnings were in line with our estimates.</li>
<li>The company signed ten new leases in HK, which are expected to commence over the next 5-6 months taking the total restaurant count in HK to 49. </li>
<li>Trading at 5.6x PE FY24e with a dividend yield of 10.7% based on a 60 payout ratio, we see a further inflection in earnings in FY24 with new restaurant openings.</li>
</ul>



Taste Gourmet (8371 HK) reported earnings of 68 mn HKD for FY23 (including impairments of 3.2 mn HKD). Adjusting for impairments, earnings were in line with our estimates.
The company signed ten new leases in HK, which are expected to commence over the next 5-6 months taking the total restaurant count in HK to 49. 
Trading at 5.6x PE FY24e with a dividend yield of 10.7% based on a 60 payout ratio, we see a further inflection in earnings in FY24 with new restaurant openings.


Taste Gourmet: Expansion in Full Swing, Set Up For A Great 2024

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<li>Earnings for Q3 2023 came in at 17.5 mn HKD up 5% YoY, about 15% below our expectations due to closure costs incurred on some restaurants in November. </li>
<li>The company added four restaurants in December 2022 which should result in strong revenue growth in January 2023. We expect monthly revenue to surpass HKD 80 mn. </li>
<li>Post the recent rally, the stock trades at 8.2x/5.2x FY23e/24e, with a 7.3%/11.5% FY23e/24e dividend yield assuming a 60% payout. We see this as an extremely cheap HK recovery play. </li>
</ul>


Earnings for Q3 2023 came in at 17.5 mn HKD up 5% YoY, about 15% below our expectations due to closure costs incurred on some restaurants in November. 
The company added four restaurants in December 2022 which should result in strong revenue growth in January 2023. We expect monthly revenue to surpass HKD 80 mn. 
Post the recent rally, the stock trades at 8.2x/5.2x FY23e/24e, with a 7.3%/11.5% FY23e/24e dividend yield assuming a 60% payout. We see this as an extremely cheap HK recovery play. 


Taste Gourmet: Encouraging 3Q 2023, Super Set Up for Q4.

Hong Kong

Taste Gourmet Group Limited operates as a holding company. The Company, through its subsidiaries, manages a chain of restaurants. Taste Gourmet Group serves clients worldwide.

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Taste Gourmet (8371 HK)

Taste Gourmet : Strong Q1 FY24 In The Bag, H1 FY24 and Future Looking Solid

Taste Gourmet trades at a cheap valuation of 6.7x FY24 with a 9% yield and 20% of the market capitalization in cash. The company disclosed strong...

Sameer Taneja