[ET Net News Agency, 29 June 2017] Deutsche Bank trimmed its target price for Cafe de
Coral (00341) to HK$25.4 from HK$27.3, and maintained its "hold" rating.
Post the FY17 results of Cafe de Coral, the research house lowered its FY18/19 net
profit forecasts by 11.9/14.5%. Deutsche Bank maintained a "hold" rating as it believes
that, while the company is facing a staff cost hike, it should be able to offset part of
this with a price increase and a scale impact.
Deutsche Bank believes Cafe de Coral remains strong in quick service restaurant in HK,
and it shares management's view that driving sales growth through sssg and network
expansion is important in order to lower the cost ratio (especially staff costs). Cafe de
Coral targets to open 30-40 stores (gross) in FY18. The research house budgets a net
opening of 16/13/13 stores for FY18/19/20 on sssg of ~4% each year. (HL)