Cafe de Coral 341

Re: Cafe de Coral 341

Postby winston » Mon Mar 09, 2009 3:15 pm

DJ MARKET TALK: BNP Downgrades Cafe de Coral To Hold From Buy

1357 [Dow Jones] STOCK CALL: BNP downgrades Cafe de Coral (0341.HK) to Hold from Buy, keeps target at HK$17.60. Notes stock has risen almost 7% since house raised target 10 days ago. Says, with recent strong share price rally, Cafe de Coral's safe business model, stable earnings growth fully reflected in price.

But BNP stays positive on Cafe de Coral's operations. Says while many restaurants closing down amid downturn, company sees expansion opportunities. Notes stronger bargaining power, as Cafe de Coral has used less aggressive promotions than peers such as McDonald's, Fairwood (0052.HK). Cafe de Coral down 3.2% at HK$16.52; HSI down 1.8%
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Re: Cafe de Coral 341

Postby winston » Sun Apr 19, 2009 3:22 pm

Recently, I was at the Cafe de Coral at Zheng Da ( Superbrands Mall ), Pudong, Shanghai.

It was 11.15am on a weekday and my instinct told me to get a place first before the lunch crowd. As expected, by 11.45 am, the place was already packed.

I was very surprised with big crowd as there were many eating shops in that Mall. In addition, I thought that the local Shanghainese disd not really like Cantonese Dishes...

Anyway, this one is on my Watchlist but I'm still worried about their "Manchu Wok" operation in North America...
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Re: Cafe de Coral 341

Postby winston » Fri Apr 24, 2009 7:26 am

Not vested anymore. From Dr Check, The Standard HK:-

Investors may want to look at Cafe de Coral (0341), whose share price has dropped 11 percent from its 52-week high. It is one stock that could regain its year high of HK$17.18, which it hit in early March.

Actually, it has not fallen much from its historical high of HK$19.34 reached in January 2008.

Compared with the Hang Seng Index, the restaurant chain's share performance has been good.

Cafe de Coral's safe business model and steady net income growth can allow for expansion despite adverse conditions. It plans to open 10 to 20 more outlets in Hong Kong and the mainland and employ 1,000 new staff. Six hundred of them could be in Hong Kong.

The stock yesterday closed 0.5 percent lower at HK$15.20. Buying it at HK$14.50 should be a safe bet.
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Re: Cafe de Coral 341

Postby winston » Thu May 21, 2009 2:36 pm

DJ MARKET TALK: Deutsche Bank Raises Cafe de Coral To Buy Vs Hold

1221 [Dow Jones] STOCK CALL: Deutsche Bank upgrades Cafe de Coral (0341.HK) to Buy from Hold, raises target to HK$17.60 from HK$12.90. Raises earning forecasts for 2009-11 by 2%-12%, given better-than-expected performance in store openings, cost savings from central kitchens.

Expects special dividend in final results as 2008-09 fiscal year marks CDC's 40th anniversary. Stock +1.4% at HK$15.76; HSI down 0.9%.
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Re: Cafe de Coral 341

Postby winston » Thu May 21, 2009 2:39 pm

Not vested. On May 13:-

DJ MARKET TALK: DBS Upgrades Cafe De Coral To Buy From Hold

1613 [Dow Jones] STOCK CALL: DBS upgrades Cafe de Coral (0341.HK) to Buy from Hold, raises target price to HK$16.40 from HK$14.40 after rolling over valuation to FY10, also revises up earnings forecast by 3%-10% for FY10-FY11, while tipping FY08-FY11 earnings CAGR at 17% to factor in faster store expansion, better margin.

"CDC remains a resilient play offering investors decent earnings visibility ahead," says DBS. Stock ends +2.4% at HK$15.32
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Re: Cafe de Coral 341

Postby winston » Wed Jul 08, 2009 2:16 pm

Not vested. Still concerned about their manchu Wok acquisition. Diworsesification ...

HIGHLIGHTS

â—† Group profit again reached historical high of HK$442 million amidst the market adversity.
â—† Annual dividend increases for the 11th consecutive year, reaching a total annual payout ratio of 85% with another final dividend increase of 9%.
â—† Operating profit before prudent write-off of North American business goodwill grew significantly by 12% against last year.
â—† Effective corporate strategies led us through the financial tsunami, with a business turnaround in our overseas platforms.
â—† Two purpose-built central food processing facilities expected to commence production by end 2009 and beginning 2011 in Guangzhou and Hong Kong.
â—† Record expansion pace of 60 new operating units on our three business platforms around the world.
â—† Marching towards the 1,000 operating units target by 2014 under our 5 Years Plan.
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Re: Cafe de Coral 341

Postby winston » Thu Jul 09, 2009 8:50 am

Fat profit for fast food firm Derek Yiu, The Standard HK

Hongkongers may pay less for fast food as Cafe de Coral (0341) has room to reduce prices amid declining food costs after posting an all-time-high net income in the past financial year.

The chain said it may ease prices on items by 50 HK cents to HK$1, which accounts for 1.7 percent to 3.3 percent of the average spending of HK$30 per customer, as material costs like pork prices are down 30 percent this year.

While direct price cuts are not being considered, it intends to launch cheaper dishes, provide more meal combos and improve subsidiary services.

"We have indirect price reductions, such as an extra dish in the hotpot for HK$1," chairman Michael Chan Yue- kwong said yesterday.

Competitor Fairwood Holdings (0052) releases its annual results today.

Net profit of CDC climbed 5 percent to record HK$442 million amid market adversity as consumers opted for cheaper meals, Chan said.

Its revenue also saw a 9 percent growth to reach HK$4.67 billion. Proposing a final dividend of 38 HK cents, the group would pay a total dividend of 68 HK cents, representing a 36 percent growth and a payout ratio of 85 percent.

The company plans to invest HK$100 million to open 60 new restaurants this year - 30 in Hong Kong, 20 in China and 10 in the United States.

"Our food-processing plant in Guangzhou will be in operation by the end of this year. It will be bringing an extra income equivalent to 1 percent of our revenue, which is a very large contribution," Chan said.

The firm also intends to employ extra workers for a new food-processing plant in the SAR which will operate by 2011.

"A total of 14,000 people worked for us last year, which is an increase of 1,000 in just one year,"Chan said.

Although the company froze wages this year, Chan said it is willing to shoulder some social responsibility under the impending minimum wage law.
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Re: Cafe de Coral 341

Postby winston » Mon Jul 27, 2009 7:51 am

Fast-food slowdown

Benjamin Scent, The Standard HK
Monday, July 13, 2009

Cafe de coral holdings (0341) has a number of advantages over its fast-food rival Fairwood Holdings (0052) that have allowed it to perform better in the poor economic environment, analysts said.

But they warned, both companies should have posted better results, and each will face challenges in the coming year.

Cafe de Coral, the world's biggest publicly listed operator of Chinese fast- food restaurants, said on Wednesday its full-year net profit rose 5.1 percent to hit an all-time high of HK$441.87 million as Hongkongers opted for cheaper grub.

Smaller rival Fairwood announced on Thursday its net profit had plunged 20.8 percent over the same period on higher rental charges, surging food costs and a bungled coupon campaign.

"The business model is more or less the same," 3V Capital analyst Stanley Chan said. "[But] the scale is totally different."

Cafe de Coral operates 580 restaurants in Hong Kong, the mainland and North America, including 148 fast- food restaurants in the SAR, and it targets to run 1,000 restaurants within five years.

Fairwood operates 111 restaurants, including 94 fast-food outlets in Hong Kong.

Chan added that Fairwood's turnover would have actually been higher had it not introduced a coupon campaign after the financial crisis hit.

"I think Fairwood made a mistake on aggressive promotions at that time," he said. "They overreacted to the market conditions at that moment."

Average spending per person at Fairwood restaurants inched down 0.7 percent to HK$27, from HK$27.20 the year before.

At Cafe de Coral, average ticket value rose 3 percent to HK$30. ICBC International analyst Carrie Chan said Cafe de Coral has been able to grab more of the customers who are trading down from higher-priced meals.

"In terms of the brand equity, I think Cafe de Coral's brand is more well- recognized," Chan said, adding: "The difference in average selling price is reflected in the brand."

Fairwood has actually been hurt by the trading-down phenomenon, as some of its customers have been deciding to cook at home instead of eating out at Fairwood, she said.

After the results announcement, ICBC International downgraded Fairwood to "hold," from "buy," and reduced its target price on the stock to HK$8.10, from HK$9.10. Chan said Fairwood missed her earnings forecast by 11 percent.

ICBC International lowered its earnings forecasts for Fairwood for the next two years by 10 to 11 percent.

It forecast Fairwood will be able to grow its profits at a compound annual growth rate of 17 percent over the next two years.

3V Capital's Chan said he hopes Fairwood's margins will improve this year after it introduces operating efficiencies already in use by Cafe de Coral. Fairwood will launch operations of a central kitchen in Tai Po in September.

Cafe de Coral's net profit margins are now around 9.4 percent, compared to just 5.5 percent for Fairwood.

Chan said he thinks Fairwood will try to do a lot this year to lower its operating costs.

Fairwood will try to lower rental and food sourcing costs to better compete with Cafe de Coral, although it is unlikely to cut staff or reduce salaries, Chan said. Although Cafe de Coral's results were better than Fairwood, analysts said it should be doing better.

CLSA analyst Paul Quah said Cafe de Coral's earnings were about 10 percent lower than expectations.

"It appears the disappointment relates to much slower net new stores and higher-than-expected expenses," Quah said. "It suggests management has not been able to take advantage of a weak property market to aggressively open more stores, as it had hoped."

Cafe de Coral's net profit margin fell to 9.4 percent, from 9.6 percent the year before.

"Cafe de Coral did not manage to reap the benefits of lower food prices, a freeze in wages and the opportunity to negotiate for lower rents," Quah said.

Higher set-up costs for Cafe de Coral's new processing plant in Guangzhou may be another reason for the margin drop, he said. Quah warned that Cafe de Coral's defensive investment thesis is under threat.

"The company's 'value food proposition' is not economically as resilient as expected," he said.

BOC International analyst Ashley Cheung, who has a "buy" call on Cafe de Coral shares, lowered his target price by 4 percent to HK$17.30, from HK$18.10. He lowered his 2010-11 earnings forecasts by 8 percent.

Cafe de Coral's sales growth did not accelerate because the effects of the financial crisis prevented its newly- opened stores from quickly ramping up business, Cheung said.

Sales at the newly-opened outlets may not reach sufficient scale until the economy stabilizes in 2010, Cheung warned.

He forecast same-store sales growth of 3 percent year-on-year for each of the next three years. Earnings per share should grow at a compound annual growth rate of 15 percent for 2010-2012, he said.

DBS Vickers downgraded Cafe de Coral to "hold," from "buy," and kept its target price of HK$16.40.

Analyst Alice Hui cut her earnings forecasts for Cafe de Coral by 8 to 10 percent after lowering her margin expectations.

The coming year will "remain challenging" for both Fairwood and Cafe de Coral, ICBC International's Chan said.

"If the economic slowdown continues, then we will continue to see customers trading down [and] there may be some pressure on the pricing strategy," she said. "Maybe the average spending per head will continue to decrease."

Although Cafe de Coral's execution is better, Chan said she does not see much upside for the stock. It is already trading at 16 to 17 times earnings, compared with its historical average of 18 times, she said.

"There is limited upside," she said.
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Re: Cafe de Coral 341

Postby millionairemind » Wed Aug 12, 2009 3:10 pm

Aug 12, 2009
Fast food boom in downturn

HONG KONG - WHEN restaurants in Hong Kong closed down one after another at the peak of the financial crisis, Michael Chan noticed the queues in his Cafe de Coral fast food outlets grew longer by the day.

REINVENTING TO STAY AFLOAT
Despite such competition, Cafe de Coral has thrived, using each downward cycle to push a new round of innovation.


As a result, Cafe de Coral attracted a new group of customers - the 'OLs", short for office ladies. Then came the deadly outbreak of SARS in 2003, when lots of caterers collapsed as Hong Kongers preferred to stay at home to avoid catching the respiratory disease.
... more
And the clientele was changing. No longer was the 40-year-old chain serving only middle-to-low-income customers. Among the new diners were bankers and fund managers, more used to power lunches at five-star hotels and private clubs.

The company, the largest publicly-listed Chinese fast-food business in the world, operates many well-known chains in Hong Kong, mainland China, the US and Canada, including Oliver's Super Sandwiches and The Spaghetti House.

But it was the low-end Cafe de Coral which proved to be the most resilient.

'We are more defensive than our competitors at recession times. There are some double-digit corrections in our specialty restaurants, but these are offset by the healthy growth in Cafe de Coral,' said Mr Chan, 56, chairman of Cafe de Coral Holdings.

The resilience of cheap eateries matched low-cost businesses such as cinemas, DVD stores and supermarkets, which did well in the global downturn as people looked for inexpensive ways to kill time.

Last month, the Hong Kong-listed firm reported its net annual profits rose 5.2 per cent in the 2008/09 financial year to a record high of HK$441.87 million (S$82.1 million), on the back of its market-beating prices.

Mr Chan, who joined the company in 1984 and is the 35th richest person in the city according to wealth-watchers at Forbes magazine, said he aimed to increase the number of his outlets in Hong Kong and overseas from 580 to 1,000 by 2014.

He said the slowdown has allowed him to acquire prime properties at bargain rates. The company is also spending US$400 million (S$580 million) to build new central food processing plants in Hong Kong and the Chinese city of Guangzhou, which should cut prices even further when they open in 2010.

The chain's success has come despite operating in Hong Kong's fiercely competitive restaurant sector. International competitors have also tucked in. McDonald's now has more than 200 outlets in the city, with a menu specially designed for the Chinese taste - more chicken, less beef.

As a result, food prices have been pushed downwards and Hong Kong, which has some of the most expensive property in the world, has often been at the bottom of the Economist magazine's 'Big Mac index' - which compares the cost of the burger to gauge price differences between countries. -- AFP
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Re: Cafe de Coral 341

Postby winston » Mon Aug 17, 2009 7:50 am

Not vested. From Dr. check, The Standard HK:-

But come what may, fast-food firms are faring well. McDonald's reported a strong 4.3 percent rise in same-store sales in the second quarter.

In Hong Kong, Cafe de Coral (0341) closed at HK$16.46 on Friday, compared with its historical high of HK$19.34 in January 20:-08. Its safe business model and steady net income growth allow for expansion under hard conditions. It operates 580 outlets and plans to open 1,000 by 2014.

The market expects Cafe de Coral to retain a compound annual growth rate of 15 percent in coming years.

In the long run, it is a company that offers steady capital gain and a dividend yield of around 4 percent.
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