Shares of Fairwood (0052) slumped by over 11 percent after the local fast-food chain posted a 15 percent drop in interim net profit and a 39 percent decline in dividends.
The net profit for the six months ended September stood at HK$36.3 million, compared to HK$42.8 million for the same period last year.
An interim dividend of 11 HK cents was declared.
Profit for the period before government subsidies surged nearly 17 times to HK$35.3 million.
Fairwood received HK$1 million worth of government subsidies for the six months through September, compared to HK$40.8 million for the corresponding period last year.
Revenue during the period increased by 4.2 percent to HK$1.56 billion. The gross margin edged up by 0.2 percentage points to 9.4 percent. Revenue from its Hong Kong restaurants rose 3 percent to HK$1.46 billion while income from mainland ones jumped 24 percent.
The group was operating 144 Fairwood fast food restaurants in Hong Kong as of September, while the number of its specialty stores in the city remained stable at 10 across the period.
In the mainland, it added two new stores during the period to bring the number of Fairwood fast food restaurants to 24 in the Greater Bay Area.
Fairwood said it maintained a healthy financial position with bank deposits, cash and cash equivalents of HK$686.6 million and no bank borrowings by the end of September.
In the short term, the group said its Hong Kong focus will be on smaller-scale initiatives designed to bring incremental enhancements, such as improving its margins and improving supply chain efficiencies.
In the GBA, by contrast, Fairwood is expecting to continue expanding rapidly with additional stores in the region in the months ahead.
