同庆楼：好赛道+强运营，富茂弹性可期

Investment Rating - The report assigns a "Buy" rating to Tongqinglou (605108 SH) with a target price of 27 41 RMB [2] Core Views - Tongqinglou is a century-old brand established in 1925 and has formed a three-wheel drive business layout of catering + hotel + food As of H1 2024 the company has 118 directly operated stores and is a regional leader in banquets in Anhui and Jiangsu [2] - The company operates in a low-frequency but essential consumption sector with strong resilience Its net profit margin has been less volatile compared to other catering enterprises since 2019 and it has maintained a relatively leading position [3] - Tongqinglou has established a comprehensive management system from front-end supply chain to back-end kitchen and store services ensuring high-quality products and services through standardized operations [3] - The company is expected to achieve net profits of 150 million 300 million and 420 million RMB in 2024 2025 and 2026 respectively The banquet sector has high barriers to entry and the company has a strong position in the regional banquet market [4] Business Overview - Tongqinglou was founded in 1925 and is recognized as a "China Time-Honored Brand" by the Ministry of Commerce The company has a three-wheel drive business model consisting of catering hotels and food [52] - As of H1 2024 the company has 118 directly operated stores including 44 Tongqinglou restaurants 10 wedding venues 7 Fuma hotels and 57 new brand stores The company is a regional leader in banquets in Anhui and Jiangsu [53] - In 2023 the company's catering hotel and food businesses accounted for 86% 6% and 8% of total revenue respectively [53] Industry Analysis - The banquet industry is characterized by low-frequency but essential consumption with strong demand for weddings baby celebrations and birthday banquets The industry has high barriers to entry due to heavy investment scarce high-quality properties and complex management [61] - The wedding banquet market in China is vast with a market size of 642 billion RMB in 2023 accounting for 50% of the total wedding consumption in China [64] - The number of marriage registrations in China has been declining but the average spending per wedding has been increasing supporting the growth of the banquet market [65] Competitive Advantages - Tongqinglou has a strong presence in economically developed regions such as Anhui and Jiangsu where the consumption capacity is relatively high The company's "good taste affordable and prestigious" business philosophy has helped it build a broad customer base [88] - The company has established a comprehensive supply chain and standardized service processes ensuring high-quality products and services Its digitalization efforts have also improved operational efficiency [90][93] - Tongqinglou has a one-stop banquet service capability with over 200 banquet halls and a mature wedding and banquet management system The company has also developed three major brands under its wedding banquet business [96][99] Growth Potential - The Fuma hotel model which combines catering banquets and hotel services has shown strong growth potential The company plans to open 10 Fuma hotels by the end of 2024 and expects significant performance elasticity as these hotels mature [101][104] - The company's food business has been growing rapidly with products such as mooncakes and frozen foods achieving significant sales growth The company has also expanded its online and offline sales channels [112][113] - The Fuma International brand is expected to open up opportunities for franchising and nationwide expansion The company aims to develop 50-100 franchised stores in the next 3-5 years [117][118] Financial Performance - Tongqinglou's revenue has been growing steadily reaching 2 4 billion RMB in 2023 a 44% year-on-year increase However the company's net profit has been affected by the ramp-up period of new stores and increased financial expenses [121][128] - The company's banquet business requires advance bookings and the growth in deposits and contract liabilities indicates strong future revenue potential [124] - Despite short-term profitability pressures due to new store openings the company's operating cash flow remains stable and future performance elasticity is expected as new stores mature [128]