Lower spending hits Jiumaojiu hard

June Chen

Jiumaojiu (9922) saw consumer average spending drop to a seven-year low of 69 yuan (HK$74.05) and will close all unprofitable restaurants, as share price plunged 4.5 percent to HK$2.92 yesterday.

Focused on the development and operations of Chinese-style chain restaurants, the catering group, which owns brands like Tai Er and Song Hot-pot Factory, saw decreases in table turnover rate, store sales and customer transactions in the second quarter.

Its net profit in the six months ended June 30 may decrease 69.8 percent to no less than 67 million yuan compared to 222.2 million yuan for the corresponding period in 2023, according to a company announcement.

Jiumaojiu plans to step back from promotions in the second half of the year and will take a more cautious approach to expansion.

After communicating with Jiumaojiu's management, Goldman Sachs has lowered its earnings forecast for the group in the next three years to 55 percent. Although the bank maintains a "buy" rating, it still cut the company's target price from HK$6.2 to HK$3.8.

Meanwhile, Nayuki (2150) is reportedly closing its store at Peak Galleria, leaving the bubble tea chain with only one store in Hong Kong.

The Peak Galleria store was its first branch in the city, opening in 2019 with an area of about 2,000 square feet.

Last week, Nayuki said demand did not significantly recover in the second quarter. It expects to open fewer stores in 2024 than in previous years due to weak demand and plans to close more underperforming stores.

Nayuki's shares, which closed at HK$1.88 yesterday, have plunged nearly 40 percent this year.