Walter Woo, an analyst from CMB International Securities, has initiated a new Buy rating on Green Tea Group Limited (6831).
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Walter Woo has given his Buy rating due to a combination of factors that highlight Green Tea Group Limited’s strong market position and growth potential. The company is a prominent player in the casual Chinese cuisine sector, ranking as the fourth largest brand with a significant market share. Despite the challenges posed by the pandemic, Green Tea Group has demonstrated impressive sales growth, driven by its appealing price-quality ratio and unique restaurant ambiance, which have contributed to a faster recovery in sales per store compared to its competitors.
Furthermore, Walter Woo sees substantial growth opportunities in Green Tea’s delivery business, which is currently under-penetrated but poised for expansion. The strategic focus on competitively priced delivery options and exclusive menu items is expected to attract a broader customer base. Additionally, the company’s projected sales and profit growth, supported by menu adjustments, supply chain improvements, and economies of scale, reinforce the positive outlook. The stock is attractively valued with a target price that reflects a discount to its peers, making it an appealing investment opportunity.