Investment Rating - The report downgrades the investment rating of Jiujiu (9922 HK) to "Overweight" from a previous higher rating, reflecting the company's short-term performance pressure but acknowledging its potential for stable growth post-adjustments [5] Core Views - Jiujiu's H1 2024 performance was under pressure, with revenue increasing by 6 4% YoY to RMB 3 064 billion, but net profit attributable to shareholders plummeting by 67 5% YoY to RMB 72 291 million [3] - The company faced challenges with declining demand, leading to both volume and price drops across its major brands, including Tai Er, Song Hotpot, and Jiujiu [3] - Jiujiu has adjusted its full-year store opening guidance downward due to weak consumer demand and intensified industry competition, with Tai Er and Song Hotpot reducing their expansion plans [4] Performance by Brand Tai Er - H1 2024 revenue increased by 2 7% YoY to RMB 2 248 billion, but same-store sales declined by 15 5% YoY [3] - The brand added 36 new stores, bringing the total to 614 nationwide, but saw a decline in key metrics such as seat turnover rate (down to 2 7 times/day from 3 1 times/day in H1 2023) and table turnover rate (down to 3 8 times/day from 4 3 times/day) [3] - Average customer spending decreased by RMB 4 to RMB 71, reflecting menu and pricing adjustments [3] Song Hotpot - H1 2024 revenue grew by 22 5% YoY to RMB 431 million, but same-store sales dropped sharply by 34 7% YoY [3] - The brand added 11 new stores, but experienced declines in seat turnover rate (down to 2 0 times/day from 2 8 times/day) and table turnover rate (down to 2 9 times/day from 3 9 times/day) [3] - Average customer spending decreased by RMB 11 to RMB 110 [3] Jiujiu - H1 2024 revenue decreased by 8 1% YoY to RMB 292 million, with same-store sales down by 8 5% YoY [3] - The brand closed 5 stores during the period, but saw a slight improvement in seat turnover rate (up to 1 8 times/day from 1 7 times/day) [3] - Average customer spending decreased by RMB 3 to RMB 56 [3] Cost Structure - Employee costs as a percentage of revenue increased significantly by 4 3 percentage points YoY to 29 2% in H1 2024, driven by store network expansion and preparations for a new central kitchen [4] - Raw material costs as a percentage of revenue decreased slightly by 0 4 percentage points to 35 8%, benefiting from reduced procurement costs [4] - The company's net profit margin dropped by 5 4 percentage points YoY to 2 4% in H1 2024 [4] Strategic Adjustments - Jiujiu has opened up franchising for Tai Er and its new brand Shan Waimian to accelerate regional and international expansion [4] - The company is focusing on product quality improvement, menu diversification, and promotional activities to attract customers and increase repeat purchases [4] - Song Hotpot has simplified its brand positioning and is focusing on the Guangdong market, while planning to close some underperforming stores in other regions [4] Financial Forecasts - The report significantly lowers Jiujiu's net profit forecasts for 2024-2026, with 2024 estimates reduced by 68% to RMB 210 million [5] - The company's PE ratios for 2024-2026 are projected at 15x, 10x, and 8x respectively, reflecting the current valuation levels [5]
九毛九：2024年中报点评：上半年业绩承压，建议持续跟踪调整进展