[ET Net News Agency, 6 August 2020] Daiwa Research initiated coverage of Zhou Hei Ya
(ZHY)(01458) with a "buy" rating and a target price of HK$7.1.
The research house expects 2H 2020-2021 to be a period of rapid recovery for ZHY's
operating margin due to (1) recovery of revenue in the aftermath of COVID-19, (2) adoption
of the franchisee business model from 4Q 2019 to speed up store expansion, and (3)
ramping-up of new plants in western and southern China to support new franchisees and
self-owned stores.
Daiwa believes the opening of franchisee stores will lower the company's capex needs
(99% of existing stores are self-owned stores) and hence boost ROE (return on equity).
With a new management incentive scheme adopted in 2019, Daiwa forecast per staff revenue
and net profit to improve by a 40% CAGR each over 2020-22. (KL)
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01458 ZHOU HEI YA
Nominal 
1.690 -0.010 (-0.588%) Research Report
06/08/2020 09:37
{I-bank focus}Daiwa starts Zhou Hei Ya (01458) at HK$7.1
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