CMSC: Raised target price of Jiumaojiu (09922) to HK$3.2, upgraded the rating to "hold"

CMSC released a research report stating that JIUMAOJIU (09922) performance in the second half of last year met the earlier profit forecast. Although the group's same-store sales growth is still negative, the bank estimates that the group will open a net of 24 stores this year, mainly focusing on Tai Er and Song hot pot. The bank has lowered the group's sales and net profit forecast by 6% and 43% respectively for this year, and by 11% and 31% respectively for next year, to reflect the latest performance. The target price has been raised from HK$2.7 to HK$3.2, and the rating has been upgraded from "sell" to "hold". The bank expects the group's cost structure to be more stable, and the impact of business deleveraging will gradually fade away this year, with restaurant profit margins likely having bottomed out at 12.3% last year. The bank believes that the worst situation for the group is already in the past with progress in store reform and cost savings, but the transformation of revenue still needs to be observed and there is still uncertainty.