[ET Net News Agency, 14 September 2020] Morgan Stanley lifted its target price for Zhou
Hei Ya International Holdings (01458) to HK$7.1 from HK$3.6 and upgraded its rating to
"equal-weight" from "underweight".
The research house said ZHY's management has raised its franchised store opening target
from 300 to 400 for 2020. It launched a single-store franchise model in June to help it
increase penetration in existing markets, as well as leveraging a multi-store franchise
model to expand into new markets.
Morgan thinks ZHY's strong brand equity and higher-than-industry-average store
productivity are the main reason behind the high level of franchise applications. It sees
ample room for further store expansion as it operates <1,500 stores in China.
Morgan cut its 2020 EPS forecast by 54% to reflect weak self-operated retail store sales
but raised its revenue forecasts by 2% for 2021 and 7% for 2022 to factor in the faster
expansion of franchised stores. (KL)