A Xiabuxiabu chain store located on Yan’an West Road, Shanghai (Image source: Public Domain)
[Look at China August 22, 2021](Look at the comprehensive report of Chinese reporter Ding Xiaoyu) Another catering giant has a “chainHot potThe first shareXiabuxiabuCollapsed.Not onlyStock priceIt plunged 77%, and its market value evaporated over 22 billion Hong Kong dollars. Xiabuxiabu’s profit warning announcement shows that the loss in the first half of this year is expected to be between 40 million yuan and 60 million yuan.
Recently, the “first chain of hot pot” Xiabuxiabu small hot pot reportedly closed 200 loss-making stores and stopped bleeding due to serious location errors in some stores.
Statistics show that as of the end of 2020, Xiabuxiabu has operated 1061 Xiabuxiabu restaurants and 140 Coucuo restaurants. In other words, Xiabuxiabu will close nearly one-fifth of its stores in one breath. He Guangqi, the founder and chairman of Xiabuxiabu, said that it was not an easy decision, but it is the only option for “broken arms to stop bleeding”, and it is also an effective measure to re-expand new stores and stimulate profits from next year.
According to its financial report, Xiabuxiabu’s revenue in 2020 is 5.455 billion yuan (RMB, the same below), and its net profit attributable to the parent is only 1.83 million yuan. And as of now, Xiabuxiabu has not officially disclosed the first quarter financial report and semi-annual report of 2021.
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.
The announcement shows that in the first half of this year, Xiabuxiabu’s revenue is expected to increase by about 59% year-on-year; its net loss is between 40 million yuan and 60 million yuan, which is significantly 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.
According to the “China Fund News” report, UBS recently released a research report stating that it maintains Xiabuxiabu’s “buy” rating and lowered its target price to HK$9.91. Investors are expected to react negatively because of the company’s poor earnings.
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.
Due to factors such as the company’s operating performance loss and market sentiment, 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.
According to the report, the collapse of Xiabuxiabu was also due to a “gong fight drama” that just ended. On July 28, the company’s special general meeting of shareholders voted to remove Zhao Yi, the former chief executive officer and executive director, with 100% affirmative votes. Xiabuxiabu founder and chairman He Guangqi re-appointed as CEO.
Editor in charge: Jingxin Source: Look at China
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