Jiumaojiu (9922. HK): 2022 Annual Report Review, the performance is in line with expectations, looking forward to the resilience of recovery and the potential of new business formats

The company released the 2022 performance announcement. The annual revenue is 4.01 billion yuan (yoy-4.2%), of which restaurant operating income is 3.20 billion yuan (yoy-9.1%), and take away payment is 790 million yuan (yoy+26.6%). The estimated revenue loss due to the suspension of restaurant operations or dine-in services in 2021 is about RMB 1.37 billion (RMB 370 million in 2021). In 2022, the net profit attributable to the parent will be 49.28 million yuan (yoy-85.5%), and the performance is in line with our expectations. In 2022H2, the company achieved a revenue of 2.11 billion yuan (yoy-2.4%). The changes in the prevention and control situation and exchange losses affected the net profit. The net profit attributable to the parent recorded a loss of 8.42 million yuan (yoy-104.1%, including 56.1 million exchange losses).

Taier Suancai Fish: The annual revenue in 2022 will be 3.11 billion yuan (yoy-5.6%), accounting for 78% of the total revenue, and the store operating profit margin will be 14.3% (compared with -7.5pct in 2021). By the end of 2022, the number of stores will reach 450 (gross opening of 102 stores, two closed due to non-renewal of the lease contract, a net increase of 100 stores). The unit price of customers is 77 yuan (yoy-3.8%, mainly due to the introduction of low-priced drainage packages & downloads Due to the lower pricing of Shenyang stores), the seat turnover rate was 2.6 times (3.4 times in 2021, mainly due to the Q4 epidemic), and the same-store growth rate was -22.3%. In 2022H2, due to the continuous recurrence of the epidemic, Taier's operations were under pressure, and the revenue was 1.62 billion yuan (yoy-4.0%).

Jiumaojiu Restaurant: The revenue in 2022 will be 610 million yuan (yoy-20.4%). By the end of 2022, the number of stores will reach 76 (a net decrease of 7), the unit price of customers will be 55 yuan (yoy-6.8%), and the turnover rate will be 1.6 times. The same store growth rate was -11.0%.

Other brands: Counseling Chongqing Hot Pot Factory has a revenue of 260 million yuan (yoy+196.8%), accounting for 6.5% of the group's total revenue (yoy+4.4pct). By the end of 2022, the number of stores will reach 27 (a net increase of 18), the unit price per customer 128 yuan (yoy-0.8%), the turnover rate will be 2.5 times (2.5 times in 2021), and the same store growth is 6.4%. Lai Meili Grilled Fish's two stores have achieved initial results. In 2022, they will reach a revenue of 12.8 million yuan, a unit price of 77 yuan, and a turnover rate of 2.7 times. With the expansion of multi-brand stores & the gradual accumulation of brand potential, we are optimistic about the company's diversified growth potential.

1) The company continued adjusting its business strategy during the epidemic. It introduced some measures to reduce costs and increase efficiency to offset the impact of the epidemic, including optimizing the supply chain system through self-produced perch, centralized procurement, etc., reducing raw material procurement costs, negotiating with property owners to obtain more favorable rent or lease terms, and optimizing single-store employee allocation to control labor costs, with good results.

2) From January to February 2023, the year-on-year operating recovery rates of Jiumaojiu and Taier same stores will be 97% and 101%. With the recovery of offline consumption scenes, marginal operations will continue to improve.

3) We expect that Taier will add 120 new stores (including 15 overseas) in 2023, reaching 583 by the end of 2023; counseling will add 25 new stores and earn 52 by the end of 2023.

Considering the mild recovery of catering and the steady expansion of stores, we adjust the net profit attributable to the parent to 680 to 1.11 billion yuan in 2023-24 (the previous value was 7.0/1.20 billion yuan), and the net profit attributable to the parent in 2025 is expected to be 1.46 billion yuan. The latest closing price corresponds to a dynamic PE of 33/20/16 times in 2023-25, maintaining the "overweight" rating.