Nayuki Holdings Limited (2150 HK) Company Update Summary
Core Content
Nayuki Holdings Limited (2150 HK) is a company under CMB International Securities, which has issued a company update with a HOLD rating and revised its target price to HK$7.83. The report discusses the company's performance in the fourth quarter of 2021 (4Q21), as well as its outlook for fiscal year 2022 (FY22E).
Main Points
4Q21 Performance
- SSSG (Same Store Sales Growth): Improved significantly, returning to the same level as in the previous year in December 2021, after a high double-digit decline in August-September 2021.
- Performance Drivers: Successful product launches (e.g., "Phoenix Oolong Milk Tea/ 鳥屎香寶藏茶") and increased promotional activities helped improve traffic.
- Catering Industry Demand: Despite the recovery, the catering industry demand remained weak, as evidenced by a sharp drop in shopping mall traffic.
Operating Performance
- Operating Deleveraging: Less than expected in 4Q21, due to increased pressure from promotions and industry-wide pay raises.
- OP Margin Revision: Revised up the operating profit margin forecast due to better-than-expected SSSG and operating leverage.
- Cautious Outlook for FY22E: The company remains cautious due to the high uncertainty of future COVID-19 outbreaks, which could impact performance in the Shenzhen area.
Store Openings
- FY21 Store Openings: Missed the target of 350+ by a small margin, with a total of 326 net openings.
- FY22E Plan: The store opening target is expected to remain 350-400, with delays due to the pandemic, especially in Beijing and Shanghai.
Key Financials
Revenue
| Year |
Revenue (RMB mn) |
YoY Growth (%) |
| FY19A |
2,502 |
130.2% |
| FY20A |
3,057 |
22.2% |
| FY21E |
4,225 |
38.2% |
| FY22E |
5,897 |
39.6% |
| FY23E |
7,719 |
30.9% |
EBITDA
| Year |
EBITDA (RMB mn) |
| FY19A |
143 |
| FY20A |
227 |
| FY21E |
98 |
| FY22E |
553 |
| FY23E |
870 |
Net Profit
| Year |
Net Profit (RMB mn) |
YoY Growth (%) |
| FY19A |
(39) |
n/a |
| FY20A |
(202) |
n/a |
| FY21E |
(169) |
n/a |
| FY22E |
167 |
n/a |
| FY23E |
337 |
n/a |
Adjusted Net Profit
| Year |
Adjusted Net Profit (RMB mn) |
YoY Growth (%) |
| FY19A |
(11) |
n/a |
| FY20A |
26 |
n/a |
| FY21E |
(117) |
n/a |
| FY22E |
190 |
n/a |
| FY23E |
353 |
n/a |
Adjusted EPS
| Year |
Adjusted EPS (RMB) |
| FY19A |
(0.006) |
| FY20A |
0.015 |
| FY21E |
(0.068) |
| FY22E |
0.111 |
| FY23E |
0.206 |
Valuation Metrics
- Current P/S (Price-to-Sales): ~1.7x FY22E
- Industry Average P/S: 2.0x
- DCF Valuation: Implies ~1.9x FY22E P/S
- Target Price: HK$7.83
- Current Price: HK$6.92
- Up/Downside: 13.2% (from previous target price of HK$10.15)
Share Performance
| Period |
Absolute Return (%) |
Relative Return (%) |
| 1-mth |
-19.3% |
-17.6% |
| 3-mth |
-38.8% |
-35.3% |
| 6-mth |
-56.8% |
-50.1% |
Shareholding Structure
| Shareholder |
% Ownership |
| Mr. Zhao Lin & Ms. Peng Xin |
56.98% |
| Tiantu Capital |
11.09% |
| Employee incentive platform |
5.35% |
| PAGAC Nebula |
5.28% |
| Shenzhen Capital Group |
2.82% |
| Free Float |
18.47% |
Earnings Revisions
| Metric |
New Estimate (RMB mn) |
Old Estimate (RMB mn) |
Diff (%) |
| Revenue |
4,225 |
4,271 |
-1.1% |
| Gross Profit |
2,787 |
2,854 |
-2.4% |
| EBIT |
(84) |
(115) |
n/a |
| Adjusted Net Profit |
(117) |
(142) |
n/a |
DCF Valuation Assumptions
- Sales CAGR (FY20-25E): 31%
- EBITDA CAGR (FY20-25E): 48%
- EBITDA Margin (FY25E): 13.6% (from 7.4% in FY20)
- WACC: 10.3% (lower than international peers and Greater China leading peers)
- Terminal Growth Rate: 3.0%
DCF-Based Valuation
| Year |
EBITDA (RMB mn) |
EV (End-21E) |
Fully Diluted Equity Value/Share (HK$) |
| FY21E |
98 |
10,930 |
7.83 |
| FY22E |
553 |
- |
- |
Key Financial Ratios
- Adjusted P/E (FY22E): 51.8x
- Adjusted P/S (FY22E): 1.9x
- ROE (FY22E): 4.3%
- Effective Tax Rate (FY22E): 15.0%
- Net Gearing: Net cash
Related Reports
- Nayuki Holdings (2150 HK, HOLD) - Softening demand and operating leverage - 1 Nov 2021
- Nayuki Holdings (2150 HK, BUY) - Structural improvement are still on track - 27 Aug 2021
- Nayuki Holdings (2150 HK, BUY) – A prestigious teahouse brand in the market – 10 Aug 2021
Conclusion
The report maintains a HOLD rating and lowers the target price due to caution around the sales trend and margins in FY22E. While the 4Q21 performance showed a better-than-expected recovery, the company's outlook is still influenced by the uncertain macroeconomic environment and operating leverage. The current valuation is considered fair compared to the industry, and the DCF model suggests a target price of HK$7.83 based on a 1.9x FY22E P/S. The company's store expansion plans are expected to remain intact for FY22E, despite a slight miss in FY21E.
