Share price plummeted 77%, 200 loss-making stores will be closed, Xiabuxiabu CEO: Broken arm to stop bleeding
As the “first chain of hot pot”, Xiabuxiabu small hot pot is not fragrant anymore? It is understood that due to serious site selection errors in some stores, Xiabuxiabu will close 200 loss-making stores and stop bleeding.
Due to serious site selection errors
Xiabuxiabu will close 200 loss-making stores
On August 19, the topic “Xiabuxiabu decided to close 200 stores” hit hot searches.
Xiabuxiabu Chief Executive Officer He Guangqi revealed in an interview with the media that Xiabuxiabu will close 200 loss-making stores and stop bleeding with his arm severed. He pointed out, “After more than two months of market visits, we found that some stores had serious site selection errors, resulting in losses. This is also a decision made by the company after careful inventory, in order to maintain long-term operations.”
Statistics show that as of the end of 2020, Xiabuxiabu has operated 1061 Xiabuxiabu restaurants and 140 Coucuo restaurants. Closing nearly one-fifth of the stores in one breath is not an easy decision, but He Guangqi believes that this is the only option for Xiabuxiabu to stop bleeding with the arm, and it is also effective for re-expanding new stores and stimulating profit growth from next year. Measures.
Image source: Xiabuxiabu’s 2020 financial report
At the same time, with regard to the problem of rising customer unit prices, He Guangqi said that in the future, Xiabuxiabu will restart its positioning of mass consumption, and continue to expand into the second and third-tier sinking markets. The customer unit price will remain within 60 yuan, and the new generation of stores will also continue to sell. “Single pot” and “bar” are the main ones.
In 2016, Xiabuxiabu created a mid-to-high-end party restaurant brand-Coucou “Hot Pot + Tea Rest”, which became popular in Beijing and expanded to Shanghai, Shenzhen and other places. As of July 2021, the number of Coucou stores has exceeded 150 . He Guangqi pointed out that in the next three years, Xiabuxiabu’s high-end brand Coucou Hotpot will maintain the rate of opening 80 to 100 new stores every year, and plans to enter the Southwest, Hong Kong and overseas markets.
However, due to continued losses in the “inxiabuxiabu” brand store launched in 2019, the brand and stores will gradually withdraw from the market in the future.
Xiabuxiabu will still face losses in the first half of the year
Big bank cuts target price
On July 29, Xiabuxiabu issued an announcement stating that Xiabuxiabu is expected to still face losses in the first half of this year due to the provision of asset impairment losses and the inability to fully operate stores in some areas affected by the epidemic.
Xiabuxiabu’s revenue is expected to increase by about 59% year-on-year in the first half of this year; its net loss is between 40 million yuan and 60 million yuan, which is a significant narrower than the net loss of 255 million yuan in the same period last year.
For the main reasons for the loss, first, the provision of asset impairment losses is about 120 million yuan. The company expects to close about 200 loss-making stores under the Xiabuxiabu brand throughout the year; second, the store operations in some areas in the first half of 2021 are still Affected by the epidemic, it is unable to operate fully.
Recently, UBS released a research report stating that it maintains Xiabuxiabu’s “Buy” rating and lowers its target price to HK$9.91. It is expected that investors will react negatively due to the company’s poor earnings. The recovery is slower than expected, so the net profit forecast for the next three years is revised down by 15%-31%.
According to the report, due to the provision costs caused by store closures, it is expected that there will be a net loss in the first half of the year. At the same time, due to the weakening of the recovery trend, partly due to the loss of 22 million yuan due to the recovery of the epidemic and more stores will be closed. The bank estimates that the 120 million yuan provision cost included in the closure of stores in the first half of the year accounted for most of the overall closure of 200 stores. As the profitability of Xiabu brand stores in southern China has fallen sharply, it believes that the closure of stores is a necessary step. The stores that will be closed are mainly located in southern China and have dragged down the company’s profitability for many years.
Yamato’s research report also stated that Xiabuxiabu’s losses were mainly due to the fact that some of the company’s stores were still affected by the epidemic in the first half of the year, mainly in Southern China, Shanghai, Hubei, Hunan and North China. These closed stores accounted for Xiabuxiabu. The annual turnover ratio is 19%. Therefore, this year’s earnings per share forecast is lowered by 72%, and the forecast for 2022 to 2023 is lowered by 15%. The target price is lowered to 9.7 Hong Kong dollars, and the “buy” rating is reiterated. The stock is now quoted at 7.06 Hong Kong dollars, the latest market value of 7.6 billion Hong Kong dollars.
Xiabuxiabu executive director was removed
Send a personal statement “appeal”
It is understood that Xiabu Xiabu is a chain restaurant established in 1998. Its characteristic is the perfect combination of novel bar table dining style and traditional hot pot, creating a new format of stylish bar hot pot. However, the management of Xiabuxiabu has undergone many adjustments and changes this year, which can be called a “gong fighting drama”, and the market has raised many questions about this.
It is reported that on May 20, Xiabuxiabu announced the dismissal of Zhao Yi as the chief executive officer because the performance of some of the company’s sub-brands did not meet the expectations of the board of directors. At the same time, He Guangqi was appointed as the Chief Executive Officer.
On June 11, Xiabuxiabu announced again that the board of directors decided to convene an extraordinary general meeting to remove Zhao Yi as an executive director. The board of directors believes that Zhao Yi’s management methods and concepts are significantly different from those of other members of the board of directors. If Zhao Yi continues to participate in the management of the company, it will not be in the overall best interests of the company and its shareholders.
On June 17, Zhao Yi issued a personal statement in the Moments of Friends, which introduced Zhao Yi’s work performance and performance during her tenure. Regarding the problem of substandard performance, she especially introduced that once the inxiabuxiabu was launched, the sales volume jumped in March. It is in the forefront of the company’s thousands of stores, and the so-called judgment that the development is not up to expectations comes from nowhere. She also mentioned that during her 9-year tenure at Xiabu, she was basically “open all year round”. During her tenure as the chief executive officer, the stock price rose sharply. At the same time, it is also one of the main contributors to the achievement of Xiabu Holdings becoming the first hot pot stock in the securities market.
Because on July 28, Xiabu listed company will hold a special shareholders meeting to consider the proposal to remove its executive director. On July 26, Zhao Yi issued an open letter to investors of listed companies in Xiabuxiabu. She also shouted that because Xiabu listed company has not fully disclosed the facts of the recall two days before the special shareholders meeting, she has the responsibility to inform investors of the relevant situation and request, and request the postponement of the shareholders meeting.
In response, Xiabu’s announcement stated that the resolutions to dismiss Zhao Yi as chief executive officer and executive director were made after thorough discussion and careful consideration by the board of directors. The entire process complies with the company’s articles of association and all relevant legal requirements.
Xiabuxiabu’s “Gong Dou Drama”
Just ended
Subsequently, the company still convened an extraordinary general meeting of shareholders on time on July 28, with 100% affirmative votes to remove the former chief executive officer and executive director Zhao Yi.
So far, Xiabu’s “gong fight” drama has temporarily come to an end. Xiabuxiabu founder and chairman He Guangqi re-appointed as CEO.
Image source: Xiabuxiabu’s 2020 financial report
In response to the frequent changes of Xiabuxiabu executives, He Guangqi responded that the proper flow of talents is also a normal phenomenon. Only by supplementing different blood can different ideas be brought about and the soul of continuous innovation and development can be injected into the enterprise.
Xiabuxiabu’s stock price fell by more than 77% during the year
Haidilao’s market value evaporated by HK$320 billion
Affected by the company’s operating performance loss and market sentiment and other factors, Xiabuxiabu has been on a downward trend since February this year. Since February 16th, the stock has fallen by more than 77%, and the market value has also evaporated 22.9 billion Hong Kong dollars.
Coincidentally, as the leader of the catering industry in Hong Kong stocks, Haidilao has fallen by more than 67% since February 16. In 6 months, the market value of Haidilao evaporated by HK$320 billion. As of press time, the stock reported 27.1 Hong Kong dollars, with a total market value of 147.9 billion Hong Kong dollars.
At the same time, the current share price of Jiu Mao Jiu has fallen by nearly 36% compared with its high on February 16. Up to now, the stock reported 23.9 Hong Kong dollars, with a total market value of 34.736 billion yuan.
Looking back at the performance of the consumer industry in 2021H1, Guosen Securities pointed out that the share price of the catering service sector in Hong Kong stocks has generally fallen, and the decline in stock prices has partially digested the valuation pressure. It is still optimistic about the recovery prospects of the leading restaurant Haidilao. In the second half of 2021, we are optimistic about the recovery of the catering service industry, and industry leaders are worthy of attention.
Guosen Securities believes that the epidemic situation in the Mainland is well under control, and the pace of recovery of various catering brands varies. Affected by the epidemic in 2020, the performance of listed companies in the catering industry has generally fallen, but their share prices have performed outstandingly; the performance outlook for 2021 is highly certain to recover, but stock prices have generally fallen. In summary, there are two reasons. One is that the valuation is too high and the recovery is not as expected; the second is that the Indian variant virus is raging overseas in 2021, and there is a small-scale rebound of the epidemic in some parts of the mainland, making consumers still cautious about gathering activities. However, the decline in stock prices partially digested the high valuations, and coupled with the fact that the epidemic situation in the Mainland is currently well under control, they are optimistic about the recovery of the catering industry.
In addition, Futu Securities believes that the catering sector of the Hong Kong stock market is picking up one after another. In the future, it will focus on companies that can deliver stable data and capable of stable long-term growth.
According to the analysis, the three leading Chinese restaurants in the Hong Kong stock market have different concerns:
1) Haidilao has made some mistakes in the management’s judgment on the end of the epidemic. The rapid expansion last year led to a certain negative impact on its performance. However, Haidilao has the industry’s most powerful supply chain, leading service level and brand effect, and it is also constantly Explore a new growth curve. If the performance can maintain stable growth, it will still have strong competitiveness in the future;
2) Jiumaojiu has a clear business strategy. The main brand Taier Pickled Cabbage Fish still maintains a strong growth momentum, but still needs the second growth curve as support under high valuation, and can continue to pay attention to the performance of the new brand’s hot pot;
3) The second growth curve of Xiabuxiabu Cocoa Hotpot has taken shape, but there are some problems in the management and corporate management, and it needs to continue to pay attention to the improvement process of the new model and whether the interest mechanism can be straightened out.