Goldman Sachs: Initiates Neutral Rating on JIUMAOJIU (09922) with a Target Price of 3.2 Hong Kong Dollars.

Goldman Sachs has released a research report stating that they rate JIUMAOJIU (09922) as neutral with a 12-month target price of 3.2 Hong Kong dollars, based on an EV/EBITDA multiple of 8x for the year 2025. The company will hold an earnings conference on March 31st. The bank expects investors to focus on the following at the earnings conference: 1) recovery of same-store sales (SSS) since the beginning of the year and post-Chinese New Year trends; 2) profit margin outlook and cost savings potential; 3) criteria for opening new stores, economic conditions of franchised stores, and updates; 4) trends in average selling price (ASP) and store management strategies; 5) progress in brand product upgrades and diversification; 6) shareholder return plan. JIUMAOJIU announced revenue/net profit (after non-controlling interests) of 3 billion yuan/16 million yuan for the second half of 2024, in line with previous profit warning. Net profit was 32 million yuan lower than the bank's expectations mainly due to impairment losses being higher than expected (totaling 11.2 million yuan for the year, related to store closures and non-store operating expenses/related projects). However, restaurant profits exceeded expectations, with gross margin improving and rental expenses lower than expected. The company announced a dividend of 0.02 Hong Kong dollars, with a total dividend for the midterm and end of 0.02 Hong Kong dollars, representing a dividend payout ratio of approximately 92.5% for 2025. The company has not set specific store opening targets and will adjust plans based on market conditions to ensure new stores achieve satisfactory performance. Key risks: 1) demand and SSSG recovery stronger or weaker than expected; 2) expansion speed faster or slower than expected; 3) competition and industry consolidation trends; 4) upward/downward profit margins; 5) food safety.