Little Sheep 968

[winston]

Still have not eaten there. Now that it's summer, I will probably wait until the weather is cooler. Wonder who eats there during summer ? Maybe they should serve ice noodles during summer..

DJ MARKET TALK: Nomura Ups Little Sheep Target 37.3% To HK$3.90

1413 [Dow Jones] STOCK CALL: Nomura raises Little Sheep (0968.HK) target to HK$3.90 from HK$2.84 after increasing mid-term earnings growth forecasts as "we expect the company to accelerate the store openings from 2010 with improving brand competitiveness and operating efficiency." Adds, earnings growth sustainable due to scalable, vertically integrated business model, improving brand competitiveness, operating efficiency. Keeps at Buy. Notes, Yum (YUM) agreed to acquire 20% Little Sheep stake; says deal could create potential synergy for raw materials procurement, location negotiations, customer information sharing. Stock +2.5% at HK$3.14.

[winston]

Not vested. From Dr. Check, The Standard HK

Look for shares whose prices continue to scale fresh highs. Little Sheep fits the bill.

Hot-pot restaurant chain Little Sheep (0968) saw its stock also revisit an all-time high of HK$3.58 last Monday. It closed at HK$3.34 yesterday. Nomura targets HK$3.90, expecting the chain to open more outlets and improve operating efficiency.

[winston]

Not vested. Dr. Check of The Standard HK, seems to be pushing this stock regularly. The following is his latest comments:-

Keep an eye for firms whose business outlook is promising for the advance of their shares

Little Sheep (0968) falls into this category. It runs a chain of hot-pot restaurants in the mainland famous for its Mongolian-style mutton.

The company raised HK$779 millKion through its initial public offering in Hong Kong a year ago at HK$3.18 a share.

The proceeds were used to expand and boost plant capacity.

Little Sheep owns 103 restaurants in the mainland and overseas, plus 247 franchised outlets.

The economic slowdown has made expansion cheaper and the chain aims to open at least 40 more outlets this year.

Merrill Lynch expects Little Sheep's earnings to have compound annual growth of 19.7 percent in the next two years.

This means the stock is trading at 14 times next year's expected price- earnings ratio.

The stock reached an all-time high of HK$3.75 in early June and closed at HK$3.09 yesterday. If it falls below HK$3 it is very likely to whet investors' appetite.

[winston]

Small position to follow their story..

The board of directors (the ‘‘Board’’) of Little Sheep Group Limited (the ‘‘Company’’) is pleased to announce that the Company recently completed the acquisitions of eight franchise restaurants from various individual franchisees. The total consideration for the acquisitions amounted to RMB59,040,000 (equivalent to approximately HK$66,977,000).

Six of the newly acquired restaurants are located in Henan province and the other two in Fujian province. The acquisitions will further
strengthen the Company’s presence and market position in the regions.

Acquisition of quality franchise restaurants from franchisees has been one of the Company’s growth strategies throughout its development. The Company will continue to acquire franchise restaurants in future when good acquisition opportunities arise.

On top of the acquisitions, the Company has opened nine company-owned restaurants since the beginning of this year. The new openings and acquisitions together had brought the total number of company-owned restaurants to 143 as of the date of this announcement. With such pace of expansion, the management is confident of achieving the expansion plan of appending not less than 40 company owned restaurants in 2009 as set out in the Company’s 2008 annual report.

By order of the Board
Little Sheep Group Limited
Zhang Gang
Chairman

[winston]

Coincidentally, this counter ran up yesterday afternoon. Did smebody knew that this article will be coming out today in the Standard HK ? Anyway, I sold everything yesterday. Must sell into strength not wait for Stop Loss ..

====================================================

By Dr. Check, The Standard HK

Little Sheep (0968) is one I have recommended a few times. It operates a hot pot restaurant chain in the mainland and is famous for its Mongolian-style mutton.

The company runs 247 franchised outlets. Merrill Lynch expects Little Sheep's earnings to have compound annual growth of 19.7 percent in the next two years. In other words, the stock is trading at 15 times next year's earnings.

( Current PE is around 22. You think a hot pot chain can grow profits at 20% a year? No more upfront investments? People eating hotpot when the weather is now 40 degrees C ? )

New York-listed Yum! Brands bought 20 percent of the firm at HK$2.40 per share.

( The Price is now HK$3.30 which means that Yum! is sitting on some nice profit. Will they realized their profit since they dont have operational control of the company ? )

Little Sheep reached an all-time high of HK$3.75 in June, but has slipped since then. It closed at HK$3.34 yesterday and may test its high very soon.

( The range low was around HK$3. Why would you wanna buy at HK$3.34 and not HK$3 ? )

[winston]

Not vested anymore ( luckily )

CHAIRMAN’S STATEMENT

Dear Shareholders,

The unfavorable environment in the first half of 2009 brought significant challenges to the catering service industry. Consumers have cut back spending due to slowing income growth and uncertain economic outlook. Little Sheep Group Limited (‘‘the Company’’ , ‘‘Little Sheep’’ or, together with its subsidiaries, ‘‘the Group’’), one of the key players in the industry, was inevitably affected, and our business faced pressure.

To cope with the situation, additional efforts and initiatives were put in place to attract and retain customers. We have introduced a host of measures to minimize adverse impact and have stayed focused on our strategy to grow through network expansion and product innovations.

Thanks to our prominent market position, brand equity and collective efforts, we were able to maintain business growth amid harsh external conditions.

For the six months ended 30 June 2009, revenue grew by 18.5% to RMB626.3 million. Profit attributable to the shareholders of the Company decreased by 7.2% to RMB39.2 million.

To navigate through the economic downturn, we have adjusted menu prices and have introduced new menu items. We have launched national marketing campaigns and carried out renovation works at numerous restaurants. We have advanced our ‘‘Project Leader Sheep’’ to improve store-level efficiency.

We remain committed to expanding our restaurant network in a prudent manner. During the period under review, we had launched 11 new company-owned restaurants and acquired nine franchise restaurants, bringing the total number of company-owned restaurants to 146 as of 30 June 2009.

In March 2009, Little Sheep became the sole official sponsor of meat products for the esteemed China Mountaineering Team; and Mr. Wang Yong Feng, the team captain, has become the spokesperson of Little Sheep food products. We believe that the strategic alliance with the China Mountaineering Team will further strengthen Little Sheep’s brand equity and recognition in China.

In June 2009 Yum! Brands Inc. (‘‘Yum’’), the world’s largest restaurant company, purchased approximately 20% stakes in the Company and became a strategic investor. Mr. Su, Jing Shyh Samuel and Mr. Koo, Benjamin Henry Ho Chung were subsequently nominated by Yum to join the board of directors of the Company (the ‘‘Board’’). The investment by Yum is a strong validation of our business model and growth potential. I look forward to a close working relationship with Mr. Su and Mr. Koo and to taking the business to new heights together.

Although the prospect of a full economic recovery remains uncertain in the near term, we observe that consumer sentiments have begun to improve as a result of government stimulus plans. We believe we have the strategy and proven capabilities to lead the business through difficult times and to take advantage of the opportunities ahead to grow and prosper.

The year of 2009 marks the 10th anniversary of Little Sheep. The success of Little Sheep is attributable to the unwavering support of our shareholders, business partners, management and staff. On behalf of the Board, I would like to take this opportunity to express my sincere gratitude. After 10 years of development, we are now moving to another chapter in our corporate history.

With our proven business model, quality products, devoted management team and staff, I am confident that Little Sheep will continue its success story in the next decade and create value for shareholders.

ZHANG Gang
Chairman

[winston]

DJ MARKET TALK: Little Sheep Off 3.4%; Food Costs To Weigh -UOB

1205 [Dow Jones] Little Sheep (0968.HK) down 3.4% at HK$3.70, on profit-taking (stock +7.6% over past 3 sessions, vs HSI's 5.7%) after reporting relatively weak 1H results, with net profit down 7.2% on-year at CNY39.2 million, marking only 25.2% of FY09 net profit forecast based on Thomson Reuters.

Steven Leung at UOB KayHian says stock may see further profit-taking ahead amid absence of catalysts. Adds, inflationary pressure in food costs likely to dampen its earnings outlook in 2H, despite company indicating it expects to post double-digit growth in its revenue, profit for FY09, according to Infocast News, citing CEO Lu Wenbing. Support eyed at psychological HK$3.50 vs intraday low of HK$3.60

[winston]

DJ MARKET TALK: Little Sheep Down 4.4% Pre-Mkt; Valuation Pricey


0959 [Dow Jones] Little Sheep (0968.HK) down 4.4% at HK$3.66 at pre-market after posting weak 1H results; net profit down 7.2% on-year at CNY39.2 million, marking only 25.2% of FY09 net profit forecast based on Thomson Reuters; proportion also lower vs year earlier as 1H08 earnings made up 32.8% of FY08 profit.

Profit-taking pressure also eyed following stock's 7.6% gain over past 3 sessions, vs HSI's 5.7% gain during same period. Valuation appears pricey with yesterday's close at around 22.5X FY09 P/E based on Thomson Reuters, vs rival Ajisen's (0538.HK) 20.1X.

Immediate support eyed at psychological HK$3.50. (SUT)

Source: Dow Jones Newswire

[winston]

DJ Little Sheep: Yum Brands To Raise Stake To 27.3% For $38.7M

HONG KONG (Dow Jones)--Chinese hot pot restaurant chain operator Little Sheep Group Ltd. (0968.HK) said Wednesday Yum Brands Inc. (YUM) plans to raise its stake in the company to 27.3% from 20.0% for HK$300.2 million (US$38.7 million).

Little Sheep said in a statement Yum plans to buy 75.04 million existing shares at HK$4 a share from executive directors and some senior managers of the Chinese company.

Yum, which is based in Louisville, Kentucky and operates about 3,000 KFC and Pizza Hut restaurants in China, agreed in March to buy 20.0% of Little Sheep for US$63 million to expand its presence in China.

Source: Dow Jones Newswire

[winston]

Little Sheep Climbs in Hong Kong as Yum Boosts Stake (Update1) By Frank Longid

Oct. 22 (Bloomberg) -- Little Sheep Group Ltd. rose the most in more than two months in Hong Kong trading after the operator of a Chinese hot-pot restaurant chain said shareholder Yum! Brands Inc. will boost its stake.

Little Sheep climbed as much as 8.3 percent to HK$4.69 on Hong Kong’s stock exchange, the biggest intraday advance since Aug. 4. The stock traded at HK$4.40 at the 12:30 p.m. break and has more than doubled this year, outperforming the Hang Seng Index’s 53 percent advance.

Yum, which makes 38 percent of sales in China and boosted its earnings forecast on a stronger-than-expected performance in the world’s most populous nation, has agreed to pay HK$300 million ($39 million) for an additional 7.3 percent stake in Little Sheep. China’s restaurant industry grew 27 percent last year to $259 billion, according to Euromonitor.

“Yum’s purchase shows China is increasingly becoming important” to the operator of KFC and Pizza Hut restaurants, Nomura Holdings Inc. analyst Christine Peng said in a phone interview today. “Little Sheep is very well known in China, we like their franchise value. There’s room for them to grow because restaurant chains account for only about 5 percent of the industry’s total value.”

Third-quarter profit for Yum, which also owns the Taco Bell chain, grew 18 percent to $334 million, more than analysts estimated. Restaurant openings in China helped boost earnings, the Louisville, Kentucky-based company said Oct. 7.

The company increased its forecast for 2009 earnings per share to $2.14 from $2.10 as operating profit in China surged 32 percent to $217 million in the third quarter.

Yum agreed to buy 75 million shares of Little Sheep at HK$4 each, increasing its holding to 27.3 percent from 20 percent, according to a statement to Hong Kong’s stock exchange late yesterday.

http://www.bloomberg.com/apps/news?pid= ... N84VcrB4gs