In "Major Banks," China International Capital Corporation predicts that CHABAIDAO's profitability is expected to improve next year, with the dividend payout ratio likely to reach 60% to 80% over the next three years

CICC's research report indicates that recently participating in the investor day event of CHABAIDAO (02555.HK) and engaging in discussions with the company's management, it is believed that the company is in a deep adjustment period from 2024 to 2025, which has already shown initial results, and further improvements are expected in 2026. At the same time, the company anticipates a strong push in the coffee category next year, using fresh milk and fresh fruit to boost morning sales and increase the scale effect of its stores.

CICC stated that by 2025, the company will recover franchisee subsidies through product standardization, intelligent tea brewing machines, supervisory function reforms, and semi-industrial raw material processing to enhance store profitability. It is expected that the profitability of stores and the company will improve in 2026. The company is expected to achieve a dividend payout ratio of 60% to 80% over the next three years, corresponding to a current dividend yield of 5.4% to 7.2%, highlighting its investment value.

CICC maintains that CHABAIDAO's net profit will be RMB 870 million and RMB 1.06 billion for 2025 and 2026, respectively, with current trading at price-to-earnings ratios of 11 times and 9 times for 2025 and 2026. Considering the downward adjustment of sector valuations, the target price is lowered by 23% to HKD 9.3, corresponding to price-to-earnings ratios of 14 times and 12 times for 2025 and 2026, respectively, with an upside potential of 31%, maintaining an "outperform industry" rating