Guangzhou Restaurant (603043) Company Review： Proposed Acquisition of Tao Taoju Food Co., Ltd. to Further Strengthen Cantonese Mooncake Business Strength
Guangzhou Restaurant (603043) Company Review: Proposed Acquisition of Tao Taoju Food Co., Ltd. to Further Strengthen Cantonese Mooncake Business Strength
Event: On the evening of July 4, Guangzhou Restaurant issued an announcement to acquire 100% of the equity of Guangzhou Taotaoju Food Company held by Guangzhou Industrial Development Group.
Tao 深圳桑拿网 Taoju has a long history. It was formerly an old tea house in Shifu Road, Xiguan, Guangzhou in 1880.
After undergoing the “public-private partnership” transformation in 1956, it became a conventional enterprise in 1966. It is currently a subsidiary of Guangzhou Industrial Development Group, which is 100% owned by Guangzhou State-owned Assets Supervision and Administration Commission.
In 2012, Guangzhou Industrial Development Group established Guangzhou Taotaoju Food Company (100% holding).
Tao Taoju’s main food business is supplemented by catering brand authorization.
In 2018, Taotaoju Food Company’s revenue was 82.56 million yuan. We estimate that the food / brand licensing business income was 77.649.4 million yuan, accounting for 94% / 6%; net profit was 10.29 million yuan and net assets were 50.78 million yuan;Among them, the food business is dominated by mooncakes (data from the national corporate credit information publicity system).
At present Tao Taoju has 17 restaurants in operation across the country (14 in Guangzhou / 1 in Beijing / 1 in Shenzhen / 1 in Xiamen).
In July 2015, Guangzhou Taotaoju Food Co., Ltd. invited tenders for restaurant service items in the “Taotaoju” trademark, and Guangzhou Food Shangguowei Food Group (hereinafter referred to as “Food Shangguo”) won the bid.
Taotaoju Foods will use the “Taotaoju” brand usage fee based on the turnover point, with a guaranteed minimum of 279.
There are many “Tao Tao Ju Tea Houses” that have been established for 5 years with a price of RMB 110,000 and require food to taste.
The acquisition is in line with the company’s strategic development plan, which will help the company continue to focus on the main business of “food + catering”.
Tao Taoju’s main business is similar to the company. It is also Cantonese-style pastry and catering.
We believe that the acquisition of Taotao Residence will help the company increase its brand matrix and broaden its sales channels, helping to digest some additional production capacity in the future.
In addition, Tao Taoju’s consolidation can directly increase the company’s performance.
We believe that under the guidance of the Guangzhou State-owned Assets Supervision and Administration Commission, “Strengthening, Better, Bigger”, the company will gradually increase “bigger and stronger” in the future.
Interim report performance forecast: We predict that in 19H1 the company will deduct non-attributed net profit and attributable net profit + 10% per year?
The second quarter is the lightest season for juniors. The main income is food and baking.
The total number of direct-operated stores in restaurants increased, but the contribution to performance is expected to be limited (the new store has a climbing period). Therefore, the 19H1 results are expected to have only a small increase in profit compared to the same period last year. Estimates and investment recommendations: Maintain the “overweight” level.
We predict that the company’s net profit attributable to the mother in 19/20/21 will be 4 respectively.
50,000 yuan, CAGR for 2019-2021 is 22.
8%, EPS is 1.
61 yuan, corresponding to the current expected PE is 30/23/20 times.
Considering the company’s strong future price increase ability of mooncake products and the expected high growth range (PEG is easy to underestimate the company’s valuation with a long growth range), we believe that the company’s reasonable city size is 15.1 billion, with a 19-year target price of 37.
39 yuan, corresponding to 35 times the PE.
Risk Warning: Channel construction is less than expected, market expansion is uncertain, and the risk of acquisition failure.