Taste Gourmet: Solid Execution in Challenging Times

Taste Gourmet Group Ltd (8371 HK) continued its solid execution in challenging times. With the overhang of dining restrictions past us for the time being, we believe that Taste Gourmet Group Ltd (8371 HK) presents a fabulous opportunity to invest in. For more details on the company, refer to my past insights:

• Taste Gourmet - Small Is Beautiful
• Taste Gourmet and the Game-Changing Joint Venture
• Taste Gourmet: Executing Well in a Tough Environment

We continue to like the company as it :

1. Represents a high growth opportunity in the restaurant space with a foray into China.
2. Cheap on PE with trading at 7.0x PE FY22 and 5.7x FY23. Net Cash of 80 mn HKD representing 18% of market capitalization.
3. Despite the challenging environment, it increased its dividend from 3 cents to 4 cents. This represents a trailing yield of 3.3%. Adjusted for the listing expenses, the payout ratio is 42.7%. If the company maintains its payout ratio in the 40% range, then stock trades at yields of 5.7%/7% for FY22/23.