29 Mar 2023

Tai Hing’s FY22 revenue declined by 15.7% YoY to HK$2.68bn, with revenues from HK & Macau/China dropped by 10.9%/32.3% YoY to HK$2.19bn/HK$0.48bn mainly due to the resurgence of pandemic in both markets. GPM slightly increased by 0.3ppt to 72.6% despite inflation and food cost pressure, as the company relied more from its two owned food factories for food processing to obtain greater economies of scale. While staff costs as a % of revenue increased by 1.4ppt YoY to 35.5% as this cost item is more inelastic during pandemic, absolute staff expense dropped by 12% YoY, thanks to the Employment Support Scheme and also the increased usage of digital system and automation technology such as QR code self-ordering system and self-payment machines. Rental and related costs was down by 4% YoY as the company actively negotiated for one-time rent reduction. FY22 recorded a net loss of HK$43.2m (FY21: NP of HK$99.7m), which included a HK$40.2m (FY21: HK$46.5m) one time impairment losses on PPE and right-of-use assets. By the end of FY22, Tai Hing’s group has 158/50/1 restaurants in HK/Mainland China/Macau. The company declared a full year DPS of HK$5.0 cents for FY22.

CROSBY Research – Tai Hing (6811 HK): Benefiting from the return of tourists