Morningstar

Xiabuxiabu Catering Management (China) Hldgs Co Ltd Shs Unitary 144A/Reg S 00520

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Stock XHKG Rating as of
HK$1.56 +0.03 (1.96%)
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As of Delayed Price Open

Company Report

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Xiabuxiabu Earnings: Continues to Report Losses; Uncertainty Raised to Very High

Ivan Su

Xiabuxiabu’s first-half earnings were hit by impairment losses on its underperforming restaurants. Excluding these noncash impairments, net loss was in line with our estimate. Given the company’s continued market share loss, we see lesser visibility over its long-term recovery trajectory and raise our Morningstar Uncertainty Rating on the company to Very High. However, we maintain our fair value estimate at HKD 2 given the in-line results. About 30% of our valuation stems from Xiabuxiabu’s CNY 521 million net cash position as at the end of June. Our top pick in the restaurant sector remains Yum China.

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Price vs Fair Value

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00520 is trading at a 778% premium.
Price
HK$1.53
Fair Value
HK$2.00
Uncertainty
Very High
1-Star Price
HK$1.10
5-Star Price
HK$8.00
Economic Moat
Tchd
Capital Allocation
Mtbmgyysp

Bulls Say, Bears Say

Bulls

Value-oriented operations like the Xiabuxiabu brand tend to outperform during times of economic uncertainty.

Bears

Although the zero-covid policy is over, restaurants still contend with cautious spending patterns.

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Trading Information

Previous Close Price
HK$1.53
Day Range
HK$1.54–1.70
52-Week Range
HK$0.68–3.34
Bid/Ask
HK$1.55 / HK$1.56
Market Cap
HK$1.65 Bil
Volume/Avg
17.8 Mil / 9.7 Mil

Key Statistics

Price/Earnings (Normalized)
—
Price/Sales
0.27
Dividend Yield (Trailing)
3.96%
Dividend Yield (Forward)
3.96%
Total Yield
3.96%

Company Profile

Xiabuxiabu Catering Management is a Chinese multibrand restaurant operator. The firm generates most of its revenue from two hot pot restaurant chains—Xiabuxiabu and Coucou. Started in 1998, the namesake Xiabuxiabu brand is known for serving the Chinese hot pot format in a value-oriented, quick-service setting. Diners of Xiabuxiabu usually sit on bar counters, and a pot is provided for each diner. The Coucou brand was launched in 2016 as part of the group's foray into the high-end hot pot market. Unlike the group's namesake restaurant, Coucou serves Taiwanese-style hot pot in a beautifully decorated sit-down setting. The group does not franchise any of its restaurant brands, meaning all of its restaurants are self-operated and company-owned.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Small Value
Total Number of Employees
24,606
Website
https://www.xiabu.com

Competitors

Valuation

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Metric
00520
YUMC
09922
Price/Earnings (Normalized)
 —24.0015.86
Price/Book Value
 1.673.352.16
Price/Sales
 0.271.861.08
Price/Cash Flow
 1.5411.448.35
Price/Earnings
00520
YUMC
09922

Financial Strength

Metric
00520
YUMC
09922
Quick Ratio
 0.601.041.28
Current Ratio
 0.851.231.64
Interest Coverage
 −4.55—4.21
Quick Ratio
00520
YUMC
09922

Profitability

Metric
00520
YUMC
09922
Return on Assets (Normalized)
 −3.48%7.25%5.18%
Return on Equity (Normalized)
 −11.97%13.62%10.13%
Return on Invested Capital (Normalized)
 −2.78%7.78%6.40%
Return on Assets
00520
YUMC
09922

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1-Day Chart
Name
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Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
McDonald's Corp
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 Chipotle Mexican Grill Inc
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 Yum Brands Inc
YUM
NftxfxpgvMgfd$38.4 Bil
 Restaurant Brands International Inc
QSR
TcpldfxnJcwyp$23.3 Bil
 Darden Restaurants Inc
DRI
QwqpkfvbdXgwjpp$19.4 Bil
 Yum China Holdings Inc
YUMC
HysgvdxwMjqn$19.2 Bil
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MmrgkbdfkwMzz$14.9 Bil
 Wingstop Inc
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ChdxlkbrnGxnfs$12.2 Bil

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