- Remained Steady in Revenue Growth amid Worsening Economy and COVID-19 Shadow
Tam Jai International Co. Limited (TJI or the Company, and together with its subsidiaries, the Group; HKG: 2217), a leading and renowned mixian-specialised fast-casual restaurant chain, today announced its interim results for the six months ended 30 September 2022 (1H2023 or the Period). Revenue of the Group recorded a stable growth of 6.8% to HK$1,261.7 million despite the strong headwinds brought about by COVID-19-related restrictions and a weaker global economy.
Highlights
Assuring results in 1H2023
- Revenue of the Group recorded a stable growth of 6.8% to HK$1,261.7 million despite the strong headwinds brought about by COVID-19-related restrictions and a weaker global economy.
- Operating profit of restaurant operations recorded HK$215.5 million, with the operating profit margin at 17.1%.
- Profit for the Period was HK$82.8 million. Hong Kong business maintained a steady profit margin, while revenue of Mainland China and overseas markets were increasing. Operating profit margin is expected to stabilise in 2H2023 with the gradual recovery quarter from quarter by maintaining high operational efficiency.
Development remained on-track
- As at 30 September 2022, there were 208 self-owned restaurants in operation across Hong Kong, Mainland China, Singapore, and Japan, a net increase of 51 restaurants as compared to 30 September 2021.
- The restaurant network expansion has been on track, and the Group is well-equipped with the infrastructure and talents to execute the development plan in accordance with the listing mandate.
- In 2H2023, the growth momentum is expected to continue. The Group keeps long-term growth in mind while remaining prudent to keep its business profitable and winning through stability.
The increase in revenue was mainly driven by the Group’s restaurant network expansion, with Hong Kong being the main revenue contributor. Profit for the Period was HK$82.8 million (1H2022: HK$137.9 million). Basic earnings per share were HK6.2 cents in 1H2023 (1H2022: HK13.8 cents).
Steady Hong Kong Business in Challenging Times
The 5th wave of the COVID-19 pandemic had a lingering effect in Hong Kong during the Period. Together with the adverse market sentiment due to the global and local economic downturn, the overall consumption sentiment had deteriorated, which had hindered the recovery pace of the overall retail consumption and food and beverage (F&B) industry in Hong Kong. This softened the Group’s same-store revenue. However, with the gradual recovery quarter from quarter, the Group maintained a steady pace of growth in opening new restaurants, and its revenue target has been met. Hong Kong business continued to deliver a stable profit despite the pressure of global inflation.
Bumpy Overseas and Mainland China Markets Development
Despite the solid growth of the Group’s Singapore business, negative growth was recorded in the Mainland China and overseas markets. The business in Mainland China, in respect of which high growth potential was expected, was heavily restrained by COVID-19 related policies, such as cities or district lockdowns and the policies of daily mandatory PCR tests that had affected the Group’s performance. In Japan, the Group incurred extra market entry expenses due to the delay of the opening of 2 restaurants, and the business was hit by the surge of COVID-19 cases during the second quarter. The Group has adjusted down its pace of development in Mainland China and Japan while maintaining the momentum of growth for long term. The Group has high hopes on potential in Mainland China and overseas markets, with the infrastructure and foundation established, including branding and marketing, talent recruitment, and staff training, the Group is well equipped for the growth in future.
Cautious and Strategic Development
The Group has been expanding its restaurant network with caution and clearly defined strategic goals, aiming to achieve long-term growth while keeping its business profitable.
During 1H2023, the Group opened 19 new restaurants in Hong Kong, 9 in Mainland China, 5 in Singapore, and 2 in Japan, respectively, bringing the total number of restaurants to 208 as at 30 September 2022, meeting the restaurant network expansion targets in Hong Kong.
Maintaining High Cost-efficiency and Productivity
The Group was able to largely mitigate the impact of the recent wave of inflation with flexibility and innovation by implementing various measures, including direct sourcing and ingredients adaptations, partnering with selected original equipment manufacturer (“OEM”) suppliers, and sourcing ingredients substitution of same or better quality and at a lower cost. These measures helped minimise logistics hiccups and costs and mitigated the risk of supply chain disruption.
Meanwhile, the Group managed to maintain a stable staff cost percentage while maintaining restaurant number growth and a higher number of sick days with employees contracted COVID-19. The pressure was lightened through the Group’s smart rostering system, which improves cost efficiency in staff management.
Prospects
Ever since the start of the pandemic, TJI has been dedicating itself to the optimisation of its business processes, cost controls, and supply chain management while pushing forward its commitment to restaurant network expansion. Despite all the challenges arising from the pandemic and global economic downturn, the Group is well-positioned for steady growth and recovery through agile management, prudent restaurant network expansion, and impactful brand-building.
In Hong Kong, the Group’s profit margin is expected to stabilise with the implementation of various cost-control measures and the improvement of restaurant-level operation. Sales has picked up quarter-on-quarter during the Period, and the growth momentum is expected to continue well into 2H2023, along with the gradual easing of social distancing policies.
The Group’s encouraging performance in Singapore during the Period has demonstrated the viability of its operation model in the overseas markets. With the infrastructure and foundation that the Group has established, including branding and marketing, talent recruitment, and staff training, it is highly optimistic about the potential in Mainland China and overseas markets and anticipates resilient growth in the future when the markets recover.
Mr. Daren Lau, Chairman and Chief Executive Officer of TJI, said, “We have persisted through the severe test on the resilience of our business, and yet grasped the opportunities that can maximise our potential for success. Looking forward, we believe that all the adversities shall pass, and the solid foundations we have laid shall elevate us to new height.”
About Tam Jai International Co. Limited (HKG: 2217)
TJI has been listed on The Stock Exchange of Hong Kong Limited (stock code: 02217.HK) since October 2021. It is one of the largest and most popular fast casual resturant chains and the No.1 Asian noodle specialty restaurant operator in Hong Kong.* It primarily operates the TamJai Yunnan Mixian and TamJai SamGor Mixian
brands, with operations in Hong Kong, Mainland China, Singapore and Japan. As at 30 September 2022, the Group operated a total of 208 restaurants. With the first TamJai Yunnan Mixian restaurant and the first TamJai SamGor Mixian restaurant opened in 1996 and 2008 in Hong Kong respectively, it has pioneered and popularised the new mixian trend in Hong Kong.
*In terms of both revenue and number of restaurants in 2020, according to Euromonitor