Nomura initiated coverage on Cafe De Coral (CDC)(00341) with a "buy" rating and a target price of HK$29.1.
The research house likes CDC's defensiveness amid current macro uncertainties with attractive dividend on the back of a strong cash position. It estimated a 6.7% FY2020-22 net profit CAGR on accelerated store openings, healthy SSSG, and good cost control.
Nomura noted that CDC pays a special dividend every 2-3 years on its listing anniversary, with a very handsome payout of over 90% on an average over the past 10 fiscal years. Nomura expects a regular payout of 80% for FY2020-22 and a special payout of 40% in FY2021 for its 35th listing anniversary, or a yield of 3.5-5.6%.
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