研究报告全文：17Feb2023CMBInternationalGlobalMarketsEquityResearchCompanyInitiationXiabuXiabuCatering520HKBUYInitiationMuchneededreformstobringXBXBnationwideTargetPriceHK1161UpDownside466InitiateBUYonXiabuXiabuCateringandputitasoursectortoppickWeforecastCurrentPriceHK7922053ofsalesrestaurantlevelOPCAGRinFY21-24Evs9-15inFY18-21drivenbyimprovementsin1internalcommunication2incentivesystem3ChinaCateringSectorsourcessharingandsynergiesand4pricetoqualityandstoredecorationetcNotedthatourFY23E-24Enetprofitestareabout60highertheBBGestWalterWooAleadingmulti-brandrestaurantgroupcoveringallpricerangesXiabu85237618776XiabuCateringisthe2ndlargesthotpotrestaurantgroupinChinawith12walterwoocmbicomhkmarketsharesin2021IthasthreebrandsXiabuXiabuXBXBCouCouandShaoHotAsatFY21ithad841XBXB183CouCourestaurantsandgeneratedRMB615bnsalesandRMB029bnnetlossRaphaelTse85239000856ReformstobettercommunicatemotivatestaffsandunlocksynergiesraphaeltsecmbicomhkAftertheChairmantookbackinchargeinmid-2021manyreformsweremade1simplificationofmanagementlayers2set-upofduo-headquarters3StockDataresourcesconsolidationbetweentwobrandsand4formedanewincentiveMktCapHKmn8603systemtorightyaligninterestsbetweenstaffscustomersandthegroupAvg3mthstoHKmn1720352wHighLowHK1026281ReturnofvaluestorefinecostsmarginsandbecomeanationwideTotalIssuedSharesmn10862brandInShanghaiasmorevalue-for-moneycombomealsareaddedmoreSourceBloombergstoreinteriordesignarerevampeditscustomerratingfromdianpingcomhadsurgedto44fornewstoresvs39foroldstoresWebelievethissuccessShareholdingStructurecanbereplicatedelsewhereandturnXBXBintoanationwidebrandMoreoverMrHoKuangChi418thanksto1closuresoflossmakingstores2higherproductivitywithbetteredCICC135incentives3moresynergiesyieldedand4lowercapexandDAexpansesGoldmanSachs50webelieveitsOPmarginatrestaurantlevelforXBXBCouCoucanreach17FreeFloat39713inFY23EfairlyclosetothelevelinFY19InfactXBXBsSSSGwastheSourceBloombergHKExfastestamongalllistedbrandsat24YoYduring2023CNYSharePerformanceRoomofexpansionisstilllargeforbotholdandnewbrandsWeseeAbsoluteRelativehugeroomforXBXBtotapintotheeasternandsouthernChinaandforCou1-mth-67-263-mth116-16CoutoexpandtolowertiercitiesandoverseasWeforecastanumberof6-mth154614511246XBXBand444CouCoustoresbyFY25Eimplying10and2512-mth413654CAGRduringFY21-25Eonly83and85ofcompanystargetof1500andSourceBloomberg520NotethatwehavenotfactoredinmuchfromthenewbrandShaoHot12-mthPricePerformanceWeforecast20salesand140OPCAGRinFY21-24EKeydriversareHK520HKHSIrebased1increasesinstorecounts2seatturnoverimprovement3moresavings11onstaffcostsrentalDAexpensesand4operatingleverage109InitiateBUYwithTPofHK1161basedonSOTPvaluation23x35xfor8XBXBCouCoualsoimplieda28xFY23EPE4discounttoindustry76averageWefindXBXBattractivegivena2053salesrestaurantlevel5OPCAGRinFY21-24EdrivenbyvariousreformsandrecoveryItistrading4at19xFY23EPEand11xFY23EPSvspeersaverageof29xand20x32EarningsSummaryFeb-22May-22Aug-22Nov-22Feb-23YE31DecFY20AFY21AFY22EFY23EFY24ESourceBloombergRevenueRMBmn545561475814843110507YoYgrowth9512754450246AuditorDeloitteNetincomeRMBmn2-293-189408697DilutedEPSRMB00020273017403760641YoYgrowth993nanana707ConsensusEPSRMBnana017402170403PEx39104nana188110PBx3135413224Yield0000000000ROEna1689119248NetgearingNetcashNetcashNetcashNetcashNetcashSourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk17Feb2023ContentsInvestmentThesis3FocusChartsandTables5CompanyOverview6Aleadingmulti-brandrestaurantgroupcoveringallpriceranges6Companyskeypositivesandgrowthdrivers91Reformstobettercommunicatemotivatestaffsandunlocksynergies92Returnofvaluesrefinecostsmarginsandbecomeanationwidebrand133Roomofexpansionisstilllargeforbotholdandnewbrands19IndustryAnalysis241Hotpotbarbequeindustryarenotonlysizablebutalsofast-growing242Cateringsectorisstillfragmentedbutitisconsolidatingquick273Roomforgrowthisstillenormousinthelowertiercities30Assumptions32Earningsrevision33FinancialAnalysis34Weforecastsalesgrowthof-54525YoYinFY22E23E24E34WeforecastnpatttoreturninFY23Eanda71YoYgrowthinFY24E37BalancesheetandCashflow39Valuation40InitiateBUYonXiabuXiabuCateringwithaTPofHK1161basedonSOTPvaluationimplyinga28xFY23EgrouplevelPE41ShareholdingStructure44ManagementProfile45KeyRisks46FinancialSummary47PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE217Feb2023InvestmentThesisAleadingmulti-brandrestaurantgroupcoveringallpricerangesXBXBCateringisthe2ndlargesthotpotrestaurantgroupinChinawithroughly12marketsharesin2021basedonFrostSullivanandCMBIestIthasthreebrandsXBXBCouCouandShaoHotwhichfocusonfast-foodstylehotpotmidtohighendTaiwanesehotpotandmidtohighendTaiwanesebarbequeAsatFY21ithad841XBXB183CouCourestaurantsandgeneratedRMB615bnsalesandRMB029bnnetlossesReformstobettercommunicatemotivatestaffsandunlocksynergiesXBXBsseatturnoverwerealreadydroppingfrom34xinFY16to26xinFY19evenbeforetheCOVID-19webelieveitwasdueto1ineffectiveinternalcommunication2overcompetitionandlackofsynergiesbetweenXBXBandCouCou3lackofincentiveofemployeesand4undesirablelocationofnewstoresHoweveraftertheChairmantookbackinchargeinmid-2021hehasintroducedvariousreformsincluding1simplificationofmanagementlayers2set-upofduo-headquarters3resourcesconsolidationbetweentwobrandsand4establishmentofnewincentivesystemtorightyaligninterestsbetweenstaffscustomersandthegroupThesestrategiesinourviewwouldeffectivelyhelptheXBXBCateringtoidentifyandmeettheconsumerdemandandreacttothemarketinamoreagileefficientandproductivewayReturnofvaluestorefinecostsmarginsandbecomeanationwidebrandWebelieveonekeyreasonforXBXBsunderperforminginShanghaiwasduetoitsinaccuratebrandpositioningasitwaspushingtoohardonpremiumizationhenceleadingtodeclineinpricetoqualityandpushingoffcustomersHoweverinitslatestreformithascloseddownover200unproductivestoresimprovedthemenuwithmorevalueformoneycombomealsacrossthecountryandrefinedtheinteriordesignformanyofitsstoresIfwetakeShanghaiasanexampletheaveragecustomerratingfromdianpingcomhadsurgedtoover44fornewstoresopenedduring2020to2022fromaround39foritsoldstoresWebelievethissuccessstorymaybecopiedtootherplacesinChinaandturnXBXBintoanationwidebrandMoreoverthanksto1lesslossmakingstores2higherproductivitydrivenbyabetteredincentivesystem3moresynergiesyieldedand4lowerDAexpanseswithlowercapexwebelieveitsOPmarginatrestaurantlevelforXBXBCouCoucanreach1713inFY23EevenhigherthanthelevelinFY19RoomofexpansionisstilllargeforbotholdandnewbrandsThankstoXBXBsrecentsuccessinShanghaiwebelieveitspricetoqualityratioandstoredesignarecompetitiveenoughforamoreaggressiveexpansionintoeasternandsouthernChinaandthesimplificationofmanagementlayerscanalsoallowgreaterflexibilityandmorelocalizationThereforewenowforecast1246storesforXBXBbyFY25Eimplyinga10CAGRstillbelowmanagementstargetof1500SimilarlyforCouCouwebelieveitsexpansionwillreaccelerateafterCOVID-19inbothmainlandchinaandoverseashencewebelievetherewillbe444storesbyFY25Eimplyinga25CAGRvsmanagementguidanceof520BothhotpotbarbequeindustryshouldoutperformpostCOVID-19butgrowthpotentialisbiggerforbarbequeHotpotisthelargesttypeofChinesecuisineinChinaanditwashithardduringCOVID-19NeverthelessweexpectittooutperformafterwardEventhoughChineseBarbequeisonlyrankedno6intermsofmarketsizeinChinawebelieveithasexcellentpotentialthankstoitshighlystandardizednaturelowmarketconcentrationChineseBarbequesCR5isonlyat15whilehotpotsCR5isatabout109andrapidgrowth511salesCAGRduringFY19-22FY22-25EPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE317Feb2023InitiateBUYwithTPofHK1161basedonSOTPvaluation23x35xFY23EPEforXBXBCouCouandimplyinga28xFY23EPEabout4discounttoindustryaverageWefindXBXBattractiveandbelieveapotentialre-ratingislikelygivena2053salesrestaurantOPCAGRduringFY21-24Ewhichisfarbetterthan9-15CAGRduringFY18-21thankstovariousreformsandpostCOVID-19recoveryItistradingat19xFY23EPEand11xFY23EPSfarlowerthanindustrysaverageof29xand20xCatalysts1outstandingmonthlySSSGandrecovery2betterthanexpectedFY23outlookandguidance3betterthanexpectedXBXBstransformation4fasterthanexpectedstoreexpansion5excellentreceptionofthenewShaoHotstoresinotherregionsRisks1weakerthanexpectedeconomicgrowthandrecovery2slowerthanexpectedXBXBstransformation3greaterthanexpectedindustrycompetitionorpricewar4greaterthanexpectedrawmaterialinflations5labourshortageorstrongerthanexpectedwagesinflation6involvementsoflethalorseverefoodsafetyscandal7departureofcriticalmanagement8outbreakofdiseasethatmayaffectcustomertrafficPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE417Feb2023FocusChartsandTablesFigure1SalesandnetprofitattyearlyFigure2GPOPNPattmarginyearly12000RMBmn75010507631610619626629632100008431600800060306147450545558146000300400010091112150402000697142882408-15000484866-18900-48-32-2000-293-150FY19FY20FY21FY22EFY23EFY24EFY19FY20FY21FY22EFY23EFY24ESalesNetprofitattGPmarginOPmarginNPattmarginSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure3KPIandreturnbeforevsafterreformsFigure4XBXBscustomerratinginSHimprovedBeforeRolesAfter改革后2021后50Outof50改革前20201Sales44454443442OperatingprofitMajorKPIs1Sales3Customer39393939Store40satisfactionmanager店長1Salary1Salary35Return2Bonus2Bonus3Profitsharing1Sales302OperatingprofitMajorKPIs1SalesSenior3Customer25managementsatisfactionTasteEnvironmentservicesAverage高管和区域总1Salary经理1Salary2BonusOpenedin2020to2022Return2Bonus3ProfitsharingTop5mostcommentedOpenedin2010to20124ShareoptionsSourceCompanydataCMBIGMestimatesSourcedianpingcomCMBIGMestimatesFigure5SensitivitytestseatturnvsOPmarginFigure6StorenumbersCMBIestvsLT-targetXBXB3000Seatturnoverx152025303525002020Staffcostssales-34-25-20-17-1520001690Rentalexpenses520-17-13-10-8-7sales150044411241024RestOPmargin-3112026301021000183CouCou150012465001022841Seatturnoverx20253035400Staffcostssales-36-29-24-21-18FY19FY21FY25EFY25ERentalexpensesCMBIestCompany-12-9-8-7-6guidancesalesXBXBCouCouTotalRestOPmargin-38162125SourceCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE517Feb2023CompanyOverviewAleadingmulti-brandrestaurantgroupcoveringallpricerangesXiabuXiabuCateringisoneoftheleadersinthecateringaswellasHotpotindustryinChinaXiabuXiabuXBXB呷哺呷哺brandwasfoundedbyMrHoKuangChiin1998Itfocusesonfastfoodstylehotpotespeciallyaneasypotforoneperson一人一锅TheCouCou湊湊brandwasfoundedin2016servingmidtohigh-endTaiwaneseHotpotwhichisperfectforgatheringsandhaveteadrinks休憩茶憩asittendstopairwithasmallteahousecalledTeaMiTea茶米茶LatelytheShaoHot趁烧brandwasfoundedin2022whichsellsmidtohigh-endTaiwanesebarbequeAsatFY21ithad841XBXB183CouCourestaurantsandgeneratedRMB615bnsalesandRMB029bnnetlossTheCompanyalsohasoneShaoHotrestaurantinFY22EItwaslistedin2014andcurrentlyhastwoheadquartersBeijingandShanghaisinceFY21Figure7SalesandnetprofitattyearlyFigure8SalesmixbybrandFY2112000RMBmnOthers1050741000084318000603061475455581460004000CouCou3820006972882408XBXB057-189-2000-293FY19FY20FY21FY22EFY23EFY24ESalesNetprofitattSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure9SalesmixbytiercityandHKFY21Figure10NumberofrestaurantbybrandTier3Others12501136belowHK7102210611016111000841886750Tier1445003823152431832501021400Tier2FY19FY20FY21FY22EFY23EFY24E38XBXBCouCouSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE617Feb2023Figure11BranddetailsasatFY21FY22EforShaoHotBrandsXiabuXiabuCouCouShaoHotLogoYearFound199820162022Midtohigh-endTaiwanesehotMidtohigh-endTaiwaneseThemecuisinesFastfoodstylehotpotpotbarbequeAveragespendingpercustomerRMB50-70130-150250NumberofrestaurantsasatFY218411831asatFY22EFY21SalesRMBmn35252354naFY21SSSG-83-09naChinaT146ChinaT147ChinaT248SalesmixChinaT234naChinaT3andbelow1ChinaT3andbelow19HongKong5SourceCompanydataCMBIGMestimatesXiabuXiabuCateringisthesecondlargestrestaurantgroupinthehotpotindustryinChinaXiabuXiabuCateringisrankednumber2HotpotenterpriseinChinabyChinaHospitalityAssociation中国饭店协会inits2021AnnualReportofChinasCateringIndustry2021中国餐饮业年度报告AlsobasedonFrostSullivanandCMBIestXBXBisthe2ndlargesthotpotrestaurantgroupintermsofsalesinChinawithroughly12marketsharesin2021Figure12LeadingenterprisesintheChinahotpotindustrySourceChinaHospitalityAssociationCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE717Feb2023Figure13XiabuXiabuCateringsMilestonesYearKeybusinessmilestonesofXBXB1998XBXBcommencedfastcasualbar-stylehotpotoperations1999EstablishedthefirstrestaurantinBeijing2001ExpandedtherestaurantnetworktoTianjinTheCompanyandXiabuHongKongwereestablishedinMay2008EstablishedtheCompanysoperatingsubsidiaryXiabuBeijinginSepReceivedaRMB144millioninvestmentfromActisinNovAdoptedtheCompanysPre-IPOShareIncentivePlaninAug2009OpenedtheCompanys100threstaurantoutletinDecTheCompanywasnamedasonetotheTop-100CateringCompaniesinChinaEstablishedtheCompanysotheroperatingsubsidiaryXiabuShanghaiinJune2010FurtherrestaurantnetworkexpansiontoShanghaiinSepafterXiabuShanghaiwasestablishedFurtherexpandedrestaurantnetworktoHebeiandShenyanginSep2011OpenedtheCompanys200threstaurantoutletinSepOpenedtheCompanys300threstarantoutletinSep2012GASFacquiredalltheCompanyssharesheldbyActisinDecReceivedinvestmentfromMagiCapitalGroupthroughacquisitionofsharesfromGASFanddirectsubscriptionfrom2013theCompanyinMarFurtherexpandedrestaurantnetworktoShandongProvinceinOctFurtherexpandedrestaurantnetworktoShanxiandHenanProvinceTheCompanysrestaurantnetworkcovered252014citiesovernineprovincesandcentrallyadministeredmunicipalitiesinChinaListedintheHongKongStockExchangeinDecStockCode520HK2015ProvidedeliveryservicesXiabuXiaoxian呷哺小鮮2016EstablishedanotherhotpotbrandCoucou湊湊ThefirststorewassetupinBeijinginJunEstablisheddeliverybrandXiazhuXiatang呷煮呷燙Providedseasoninggoodsandbrands2017EstablishedanotherteabrandChamicha茶米茶inNovCooperatedwithChamichatoprovideHotpotTeaservicestocustomers2019EstablishedanotherhotpotbrandunderXiabuXiabuinxiabuxiabuasahigher-endbrandcomparedtoXiabuXiabuOpened1200resturantsinDecember2020Providedabrandnewthemelight-potinnewbranchesAddeddeliveryservicesforXiabutorespondtoCOVID-19pandemicnamedxiazhuxiashuan呷煮呷涮2022EstablishedanotherbrandShaohot趁烧ThefirststorewasopenedinShanghaiSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE817Feb2023Companyskeypositivesandgrowthdrivers1ReformstobettercommunicatemotivatestaffsandunlocksynergiesWebelievetheissuesXBXBCateringhasegineffectivecommunicationovercompetitionbetweenbrandslackofmotivationandsentimentfromitsemployeeswronglypricedproductsandwronglyplacedstoreshaveallbeenaddressedaccordinglywiththenewreforms11ReformingthemanagementsystemtodrivebetterinternalcommunicationXBXBwashighlysuccessfulforitsone-personhotpotespintheBeijingareaanditisstillundoubtedlythenumber2afterHaidilaointheHotpotindustryinChinaintermsofstorenumberandsalesHoweverregardlessofCOVID-19itsperformanceesptheseatturnoverwasnotasgoodasitwasinthepastWebelievethatwasdueanumberofreasonssuchas1IneffectiveinternalcommunicationwheretheissuesfoundinthefrontlinecannotbesolvedeasilyasthemessageswerenoteffectivelypassedontothetopmanagementortothemiddleandbackofficeAgoodexampleisthepremiumizationofXBXBwhichcausedthelossoforiginalcustomerbase2OvercompetitionbetweenthetwobrandsXBXBandCouCouSincetheirinterestswerenotalignedmanyinternalconflictsoccurredanddraggedtheperformanceofmanyemployeeshenceresultinginduplicationofresources3Employeesarenotpro-activeenoughastheyarenotrightlymotivatedandcarelessabouttheinterestsoftheCompanyandcustomers4LocationsofnewstoresarenotasgoodwhichhadresultedinlowerthanexpectedcustomertrafficandslowerregionalexpansionFigure14PreviousissuesandfivenewreformstofixthemPreviousissues5newreforms5大战略Actions1Cuttingthereportinglinefrom5layerstojust3LackofcommunicationsbetweenlocalandReformingthecultureoftheenterpriselayers1headquartershencetopmanagementwasnot企业文化重塑2Settinguptheduo-headquartersmodelwellinformedabouttheissuesinthefrontlineBeijingShanghai1PromotingtopmanagementfromCouCoutoheadXBXBInterestwerenotalignedbetweenthebrandsConsolidatingresourceswithinthegroup2Centralizingthestoreopeningierental2hencethesyngerieswerenotstrong集团资源整合negotiationandproductRDprocesses3SharingresourceslikesupplychainmembershipsystermandtalentdevelopmentEmployeesarenotpro-activeenoughtogothe1IntroducinganewcompensationandincentiveReviewingthecompensationandincentive3extremilesinterestbetweenemployeessystemnewKPIandreturndrivethesystem薪酬激励计划companyandcustomerswerenotalignedemployeestobecomemorecostsconsciousIntroducingthepartnershipsystem4SameasaboveCurrentlysuspended合伙人制度1TobringbackthevalueformoneyforXBXBwaspushingtoohardtobecomeamidtoTheXBXBbrandwillreturntoitsmissioncustomerspriceandportionetc5high-endbrandhencedrivendownthepricetostatement呷哺品牌回归初心2TorevamptherestaurantsandmakeitmorequaltyratioandpushedoffcustomersmodernandnotoverfancySourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE917Feb2023ThereforewhenFounderChairmanMrHotookbackinchargeofCEOin2021heintroducedfivenewstrategiestofixtheseissuesandthefirststepistoreformthemanagementstructure1Simplifyingthemanagementlayersfrom5tiersto3tiersEachregionalmanagercouldhavemoredecision-makingpoweraboutthedirectionanddevelopmentofhisownregionRestaurantmanagerscanalsospeaktotheheadofotherdepartmentdirectlyMoredirectcommunicationisveryhelpfulinsolvingsomeoperationalissuesand2Implementationofduo-headquartersaddingShanghaiasheadquartersontopofBeijingAstheCompanytargetstoputmorefocusandresourcesonShanghaitheadditionofShanghaiheadquartershelpsstrengtheningthemanagementofbusinessineasternChinaandtheexpansiontosouthernChinaFigure15ManagementlayersbeforevsafterFigure16ImagesofthenewlyopenedrevampedreformsXBXBstoresinShanghaiReportingBeforeReportingAftersinceunitsreformsunits20211GeneralHeadquartersHeadquartersManager1负责人总部总部市场总经理RegionalRegional2Directorof2RegionalManagementManagementoperationsmanagerCentreCentre营运总监区域经理区域管理中心区域管理中心3DistrictOperationslargedistrictlargemanager营运大区大区经理Operations4DistrictSourcedianpingcomCMBIGMestimatesdistrictsmallsmall小区经理营运小区5Restaurant3RestaurantRestaurantsRestaurantsmanagersmanagers餐厅餐厅餐厅经理餐厅经理SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1017Feb202312ConsolidatingtheresourceswithinthegrouptounlockmoresynergiesThesecondsteptoreformistobringoutmoresynergiesbetweenXBXBandCouCouBecauseoflegacyissuesthemanagementsystemareindependentbetweenthesetwobrandswhichhasledtoovercompetitionandminimalsynergiesThereforeafterthedepartureofCEOsofthesetwobrandsMrHohadsetuptwonewCOOstoreplacetheCEOsforXBXBandCouCouSincethesetwonewCOOsMrBaiandMrYeungworkedinCouCouandXBXBlongenoughandcertainlytalentedwebelievetheyareabletobringthebestoutofthesetwobrandsWebelievemergingtheXBXBandCouCouteamscanbringoutmanymeaningfulsynergiessuchas1betterlocationandbetterrentaltermsbycombingXBXBandCouCousstoreexpansionandcontractnegotiationswiththelandlords2mergingtheproductRDteamsandleveragethesuccessfultrackrecordsofCouCoutoimprovethenewproductqualityforXBXB3moresharinginthesupplychainsupplierslogisticsetcsotogainmoreoptionsvarietyanddrivedowntheinputcostsand4consolidatingthemembershipsbetweenallbrandstoboostthepotentialcross-sellingFigure17ListofpotentialsynergiesArea领域Benefits利好CentralizingtherentalnegotiationsforbothXBXB打通两个品牌选址和租金谈判从而能够降低租金Storeexpansion开发选址andCouCouhenceabletodrivedownrentalrates并确保更好的位置andsecurebetterlocationsCentralizingtheproductRDbetweentwobrands打通两个品牌产品研发将凑凑经验应用于呷哺呷ProductRD产品研发andleverageonCouCoushighlysucessfultrack哺品牌recordsandexperienceCanreducecostsandimproveefficiencyby在食材采购供应链配合供应商筛选等方面产生Supplychain供应链sharingthesupplychainbetweentwobrandsin了较大的协同效应termsofrawmaterialsupplierslogisticsetc在8月底上线了多品牌会员系统消费者一键注册Launchedthenewmembershipsystemwhichisfit可同时成为呷哺呷哺凑凑茶米茶呷哺食品Membershipservice会员服务forallbrandsundertheXBXBgroupenablingthe趁烧等多个品牌的会员可以积分通兑储值礼包sharingandtransferofpointsandgifts共享和转增Willinvestmoreontalentdevelopmentincluding将加大人才发展投入包括提升服务水平留住员Stafftraining人员培养improvingtheservicelevelemployeesretention工培养更多管理培训生等andcultivationofmoremanagementtraineesetcSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1117Feb202313ReformingtheincentivesystemtobringoutthepotentialoftheemployeesThethirdstepistointroducethenewincentiveschemeWhetheritwasthesluggishsamestoresalesgrowthordeclineinperstoreseatturnoverperhapsduetolossofcustomerbaseasXBXBbecomeslessvalueformoneyorfailuretoexpandtootherregionsShanghaihadbeenlossmakingforalongperiodoftimeandstoreopeninginsouthernChinawasslowwhichdraggedtheCompanysperformancetheemployeesofXBXBinourviewaregenerallynotmotivatedenoughinthepastLogicallyspeakingtheseemployeestendtocarelessaboutcustomerssatisfactionastheircompensationisnotalignedwiththatHoweverthatshouldbeverydifferentinthefutureasXBXBintroducedanewincentiveschemewhichisslightlysimilartothatatHaidilaowheretheKPIsformostoftheemployeesfromthetopmanagementtostoremanagersandtotheaveragestaffswillberevisedbyaddingmorenewfactorssuchasoperatingprofitsaswellascustomersatisfactionsontopoftheoriginalsalesandoperationaltargetsThisshouldhelpaligninginterestsbetweenemployeestheCompanyandcustomersandtheemployeesshouldbemotivatedtobehavemorelikeanownerofthestorestopro-activelysolveproblemsandcaremoreaboutcostsandprofitsFigure18ListofmanagementbeforevsafterFigure19NewKPIandrewardsbeforevsafterreformsreformsBeforeBefore改革前After改革后RolesAfter改革后2021后Period时期20202021后改革前2020MrHoKuang-ChiMrHoKuang-Chi1Sales2OperatingprofitMajorKPIs1SalesChairman主席贺光启贺光启3CustomerStoreMrHoKuang-Chisatisfactionmanager店長1SalaryCEOMsZhaoYi赵怡贺光启1SalaryReturn2BonusMsYuXiaofangMrFengHuihuang2Bonus3ProfitsharingCFO于小芳冯辉煌1SalesXBXBCEOMsZhaoYi赵怡na2OperatingprofitMajorKPIs1SalesXBXBCOOnaMrBaiYang白杨Senior3CustomerMrZhangZhenweimanagementsatisfactionCouCouCEO张振纬na高管和区域总1Salary经理1Salary2BonusReturnMrZhaoMuquan2Bonus3ProfitsharingCouCouCOOna赵木铨4ShareoptionsSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1217Feb20232ReturnofvaluesrefinecostsmarginsandbecomeanationwidebrandSupportedbyourobservationintheShanghaimarketwherethedianpingcustomerratinghadimprovedsignificantlyinallareaswedobelieveXBXBsvalueformoneyandmodernandfastfoodstyleseatingsarebackagainIftheperformanceofthesenewstorescanbereplicatedelsewhereXBXBsmargincouldsoonfarexceeditspre-COVID-19levelandcouldeventuallybecomeanation-widebrand21BringingbackthevalueformoneyThefourthstepofthereformistobringbackthecorecompetencyofXBXBwhichistomakeitsproductmorevalueformoneylikeitwasinpastThiswouldincludeincreasingtheportionofferingmorecheaperpricedcombomealsusuallypricedataboutRMB60perpersonandlaunchingmoredeliciousnewproductsetcWebelievethisistherightstrategyforXBXBandwoulddriveupitsperstorecustomertrafficietheseatturnoverFigure20ImageofthecombomealFigure21XBXBsavgspendingperpersonASP70RMB656263615960605655504540FY19FY20FY21FY22EFY23EFY24EXBXBSourcedianpingcomCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure22ExamplesofcombomealsforonepersonorfortwopeopleSourcedianpingcomCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1317Feb2023InfactwecanusetheXBXBinShanghaiasagoodexampleWehavecollectedthedataaboutXBXBsstoresinShanghaiandidentifiedthatthecustomerratingfromdianpingcomismuchhigherforthenewlyopenedstoresfrom2020to2022atabout44outof50comparedtothoseolderstoresopenedin2010to2012andstillexistcurrentlyataroundonly39Actuallyitisanall-roundbeatasthescoresforallsegmentsrangingfromtasteenvironmenttoserviceshaveimprovedsignificantlyFigure23YoYSSSGbybrandduringCNY2023andFigure24DianpingcustomerratingfornewstoresinJan2023inShanghaiishigherfornewstoresvsoldstores4550Outof5036443545444344242539393939401556534335500030-525-15-10-10XBXBYumTaiErJMJCouHDLNayukiTasteEnvironmentservicesAverageChinaCouOpenedin2020to2022CNY2023Jan-23Top5mostcommentedOpenedin2010to2012SourceCompanydataCMBIGMestimatesSourcedianpingcomCMBIGMestimatesFigure25DianpingcustomerratingfornewstoresinShanghaihasimprovedin2020-2022bystoreageOpenedin2020to2022Top5withmost55avg44commentsOpenedin48472010to201246avg3942434541424141393938383525SourcedianpingcomCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1417Feb202322BacktothefastfoodstyleinteriordesignsanddecorationSincethelaunchandthesuccessofCouCouin2016XBXBhadtwisteditsdevelopmentstrategyandtriedtobecomemorehigh-endandmoregathering-friendlyThisisevidencedbyitssurgeinASPinthepastyearsfromaroundRMB48in2017toRMB63in2021vsonlyaroundRMB40toRMB48during2013to2017IntermsofstoreformatandinteriordesignXBXBrestaurantsinShanghaiatthetimearemorelikethelow-endversionofCouCouThoserestaurantstendtohavemore2to4peopletablesforgatheringsbutthispremiumizationwassoonprovenineffectiveTomakethingsrightagainXBXBisnowgoingbacktothebasicsbringingbackitseasyhotpotforoneanditsvalueformoneythereforewecanseeitsnewrestaurantsinShanghaitendtohavemoresoloseatsandbar-stoolstheinteriordesignanddecorationarelessoverlyfancyandlessspaciouswhichisinlinewithmanyotherfastfoodshopsbutmoremodernbrighterlightingandcleanFigure26Newstoresinteriordesign1Figure27Newstoresinteriordesign2SourcedianpingcomCMBIGMSourcedianpingcomCMBIGMFigure28DianpingcustomerratingonenvironmentinShanghaibystoreageOpenedin2020to2022Top5withmost55avg44commentsOpenedin4848462010to20124344avg394541414142393938373525SourcedianpingcomCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1517Feb202323DecentroomformarginimprovementlesslossmakingstoresnewincentivesystemsynergiesbetweenbrandslowercapexWebelievetheroomformarginimprovementisenormousfortheCompanythankstoamultipleofdrivers1Closuresofmanyunder-performingstoresTheCompanyrecordedprofitofaroundRMB300mnbackin2019butithasalsoincludedmanystoreswithlowproductivitywhichgeneratedaroundRMB200mnlossperyearAftertheclosuresin2021suchdragsshouldnolongerexistOntopofthatXBXBhasadoptedanewstorelocationpickingsystemsinceOct2022whichassessesthedemographicsandpsychographicsintheareasofpotentialexpansionhenceitisabletofindtherightlocationwiththerightcustomertrafficthereforetherisksofhavinglosses-makingstoresgoingforwardshouldreducesignificantlyFigure29NumberofstoresbytypeinFY19FY23EandFY24E1800151815001331112410611200966900792600230243300183132139218150750FY19FY23EFY24EXBXB-DecentstoresXBXB-UnderperformingstoresCouCou-morethan2yearsCouCou-Lessthan2yearsTotalSourceCMBIGMestimatesFigure30NetprofitCMBIestbytypeinFY19FY23EandFY24E900RMBmn697515600461408394316289254300571616--398-65-113-73-101-300-236FY19FY23EFY24EXBXB-DecentstoresXBXB-UnderperformingstoresCouCou-morethan2yearsCouCou-Lessthan2yearsOthersTotalSourceCMBIGMestimatesFigure31NetprofitmarginCMBIestbytypeFY19FY23EandFY24E2515131089107105555-5-5-5-8-20-10-35-33-35-50FY19-50FY23EFY24EXBXB-DecentstoresXBXB-UnderperformingstoresCouCou-morethan2yearsCouCou-Lessthan2yearsOthersTotalSourceCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1617Feb20232IntroductionofthenewincentivesystemStaffcostscouldincreaseaccordinglybuttheoverallstoreproductivitywillcertainlyberaisedtooHoweverwithoutdoubtsitwillleadtomorecostsavingsandgreateroperatingleveragehencetheoperatingmarginwillgoupaswell3MergingofthetwobrandsOncethesimilarfunctionsbetweenXBXBandCouCouarecombinedandresourcesaresharedmanysynergiescanbeyieldedForexamplesasthebargainingpowerincreasesespwhentheindustryconsolidationhasacceleratedinthepastfewyearsgiventhepandemictherentalexpensesratioandthecostsofrawmaterialscanallbedrivendowninthefuture4NormalizationofthefurnishmentanddecorationexpensesWebelievethedepreciationandamortizationexpensesperrestaurantcanbedrivendownbystandardizingandrefiningthecapexwherethespendingpersqmcanbecuttoaboutRMB4500RMB7000fromRMB8000RMB10000inthepastforbothXBXBandCouCouFigure32XBXBscurrentexpensesandmarginlevelFigure33CouCouscurrentexpensesandmarginvslongtermtargetlevelvslongtermtarget40asofbrandsales40asofbrandsales33282929302728273020252419201920172020161615151612131110101010810810500FY19FY21FY23EFY24ELongtermFY19FY21FY23EFY24ELongtermtarget-RentalexpensesLabourcoststarget-RentalexpensesLabourcostsCompanyCompanyRestaurantsOPmarginguidanceRestaurantsOPmarginguidanceSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1717Feb2023NotethatthebreakevenseatturnoverforXBXBandCouCouareatabout15xand20xinFY22EaccordingtoCMBIestimatesbutwewillnotbesurprisedtoseemoreroomforimprovementsinthefutureeginFY23E-25EFigure34SensitivitytestofperstoreeconomicsforXBXBandCouCoufrom15xto40xseatturnoverSensitivityforbrandsXBXBCouCouSalestrafficandASPNumberoftableCMBIest54545454543030303030Seatsturnover15202530352025303540AveragespendingperguestRMB6060606060140140140140140StaffcostsNumberofstaffperstore23232323233838383838MonthlysalaryperstaffRMB3500350035003500350080008000800080008000RentalexpensesStoreareaSqm120120120120120400400400400400MonthlyrentpersqmRMB330330330330330250250250250250CapexandDACapexperstoremn10101010104040404040CapexpersqmRMB833383338333833383331000010000100001000010000PerstoreeconomicCMBIestSales2938485767101127152178203COGS10141721244049596979Grossprofit1824303643627793108124Staffcosts10101010103636363636Rentalexpenses05050505051212121212DAexpenses02020202020808080808Utilitiesexpenses01020202030404050607Otherexpenses02020303040506070809Operatingprofit01040915200311243851Financecosts00000001010101020202Pre-taxprofit01040914190409233649Tax00010204050002060912Netprofit01030711140407172737AsoftotalsalesGPmargin640640640640640610610610610610Staffcosts-339-254-203-169-145-360-288-240-206-180Rentalexpenses-167-125-100-83-71-118-95-79-68-59DAexpenses-70-53-42-35-30-79-63-53-45-39Utilitiesexpenses-40-40-40-40-40-35-35-35-35-35Otherexpenses-55-55-55-55-55-45-45-45-45-45OPmargin-31113200257298-2785159212252Financecosts-10-10-10-10-10-10-10-10-10-10Pre-taxmargin-41103190247288-3775149202242Tax00-250-250-250-25000-250-250-250-250NPmargin-4177142185216-3756112151181SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1817Feb20233RoomofexpansionisstilllargeforbotholdandnewbrandsWebelievetheaddressablemarketislargeforhotpotandbarbequeandHaidilaohasalreadyprovedthatabout1500storesforasinglebrandispossibleWithafairlylowpenetrationrateforXBXBintheeasternandsouthernChinaandforCouCouinthelowertiercitiesandoverseaswestillthinktheroomforgrowthisample31XBXBwillfurtherpenetratethemarketineasternChinaandexpandtosouthernChinaXBXBhasintroducedtheset-upofduo-headquartersBeijingShanghaisince2021thisinourviewcouldbetterleveragetheCompanysresourcestodeveloptheShanghaimarketaswellastheareasnearbyInfactwehavealreadyseenthepositivebeingyieldedinFY22EwhereseatturnoverforthosestoresinShanghaicanbemuchhigherCMBIest5to10xforsomepopularstoresthanbeforeCMBIest1xto2xonlyAsthemanagementlayersweresimplifiedandthelocalmanagementhasbeengivengreaterflexibilityintermsofdevelopmentstrategywebelievetheCompanywillhavemorelocalizationinthefuturewhichisfairlypositiveforitsexpansioninsouthernChinaFigure35Numberofstoresand2025targetforFigure36DianpingcustomerratingsinShanghaiisXBXBlikelytocatchup1600150050Outof5012464545444445441200454443434410224242841393980040393940035030FY19FY21FY25EFY25ETasteEnvironmentservicesAverageCMBIestCompanyguidanceBeijingShanghaiGuangzhouShenzhenSourceCompanydataCMBIGMestimatesSourcedianpingcomCompanydataCMBIGMestimatesFigure37XBXBandCouCousareamixSZGZSHFigure38XBXBandCouCousnumberofstoresinandBJvsHDLKFCandPizzaHuttier1citiesasoftotalvsHDLKFCandPizzaHut50040334003030027520172001178811081005664841413144361427201000ShenzhenGuangzhouShanghaiBeijingShenzhenGuangzhouShanghaiBeijingXBXB呷哺呷哺CouCou凑凑HDL海底撈XBXB呷哺呷哺CouCou凑凑HDL海底撈KFC肯德基PizzaHut必胜客KFC肯德基PizzaHut必胜客SourcedianpingcomCMBIGMestimatesSourcedianpingcomCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1917Feb2023AlsotheCompanyisnowtargetingtohave1500XBXBstoresbytheFY25Eimplyinga16CAGRduringFY21-25Eandwearemoreconservativeandassumeonly1246storesatthattimeimplyinga10CAGRNotedthatXBXBhasalreadyopeneditsfirststoreinSingaporeinJanandwillopennewstoresinTaiwanandMalaysiainFY23EWebelievetheoverseasexpansioncouldbeanothernewgrowthdriverinthelongrun32CouCoushallreaccelerateitsstoreopeningsandfurtherexpandoverseasCouCouisalreadyasuccessfulbrandnamenation-widebutitstoresareslightlymoreskewedtoSouthernandEasternChinaWebelieveitwillcontinuetostrengthenitsexistenceinNorthernChinaAlsotheCompanyisnowtargetingtohave520CouCoustoresbytheFY25Eimplyinga30CAGRduringFY21-25Eandwearemoreconservativeandassumeonly444storesatthattimeimplyinga25CAGRFigure39Numberofstoresand2025targetforCouFigure404MedianrankingofstoresandcustomerCouratinginSingaporeHaidilaovsCouCou6002500500520222748344420004804501500460300100044041518350042086150102-400HaidilaoCouCou0-13-3380storesstoresHaidilaoCouCouFY19FY21FY25EFY25ECMBIestCompanymedianrankcustomerratingguidanceSourceCompanydataCMBIGMestimatesSourceentripadvisorcomhkCMBIGMestimatesMoreoverwebelieveitsexpansioninoverseascanbefairlyencouragingbecausethepotentialmarketisquitesizablewhereHaidilaoalreadyhasover100storesoutsideGreaterChinabutCouCouonlyhasabout12atthemoment9inHongKong3inSingaporeInfactCouCouhasbeenprovensuccessfulgivenitsexcellentperformanceinHongKongwhereithasabout8storesmorethanHaidilaos5storesinFY21andthecustomerratingfromopenricecomisfairlysimilartoHaidilaoInadditionCouCouhasalsolandedSingaporesinceearly2022andalreadyhasthreestoresoverthereSimilartoHongKongtheperformanceofthosearemuchbetterthantheHaidilaosevidencedbyhighercustomerratingat483outof5vsHaidilaos415andthose3storesarerankedat8485145outofall10010restaurantsinSingaporepostedontripadvisorvsmedianrankof2227forHaidilaos13storesWebelieveitwillexpandtoTaiwanandMalaysiainFY23EaswellPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE20