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Investing.com - Citi has raised its price target on Green Tea Group Ltd (HK:6831) to HK$11.10 from HK$9.40 while maintaining a Buy rating on the casual Chinese restaurant operator.
The firm views Green Tea as a high-growth company that differentiates itself from listed Chinese hotpot operators and western quick-service restaurants through innovative Chinese fusion cuisine, accessible pricing, and a warm brand image.
Citi notes that Green Tea’s restaurant décor, which highlights Chinese traditional art and natural landscapes, has helped the company secure quick new-store breakeven, with substantially all new restaurants achieving initial breakeven within 1-4 months.
The quick breakeven period is expected to fuel accelerated net profit growth in 2025, with minimal negative impact from new openings on operating profit margin, according to the research firm.
Citi’s new price target is based on a 15.0x 2025 estimated price-to-earnings ratio, increased from 12.8x previously, representing approximately a 15% discount to the trading average of China restaurant peers.
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