Cafe De Coral Holdings Limited (0341)
Source: CDCHL website
Ah... just seeing this sign means that I'm in HK and in for a few days of eating and shopping! When ACCICB told me that we've to look at Japan, Hong Kong, Singapore and European stocks for the next few months due to the time zone factor. I told him why not look at Cafe de Coral Holdings Limited (CDCHL) which we patronised every single time we visit HK which is at least once a year.
I am in love with consumer stocks (B2C)... maybe because I am so not a technical person and consumer stocks allow me to judge and see with my eyes whether a company is doing well. B2B stocks are good I'm sure, just that it's more subtle and I think works really well if you are in the know /& am from that industry. That's my take after being a SME banker in Singapore and you do hear a lot from customers on their competitors/suppliers/customers within their industry. First hand news reached my ears that my ex client was going to do their IPO. One of their current suppliers was offered the chance to partake in the exercise and ask me whether they should!
Anyway back to CDCHL which I compared to its listed peers on HKEX and the other only one that I was interested was Xiao Nan Guo Restaurants Holdings Ltd (3666). Xiao Nan Guo Restaurants is made up of a few brands such as Shanghai Min, The Dining Room and Maison De L'Hui. We first discovered Shanghai Min at Langham Place where I visit every time to buy my make up supplies from Makeup Forever.
However after looking at the profile of Xiao Nan Guo Restaurants which I feel still caters more to the business crowd as opposed to Cafe de Coral which to me is like Chinese food version of MacDonalds! With the clamp down in China in all things that appear as bribery, business and top end restaurants have suffered. It seems that Xiao Nan Guo knows that the fast and affordable casual dining scene has mass appeal and took a shot at it by launching The Dining Room.
It took over Shanghai Min at Langham Place when I visited this year with ACCICB. The food is slightly different from Shanghai Min and the preppy cool look and feel certainly targets youths and young adults. The food was not too bad but I prefer Shanghai Min! But The Dining Room is so popular and the fact that it started generating operating profit in its 1st month is a testimony that there's money to be made in this sector!
CDCHL on the other hand is so much more attractive to me. It has many business units from restaurants to catering to bakery to food manufacturing and distribution! It is more all encompassing than its peers and well its long history means that its already well established and more well known. Even with the Hong Kong protests aka Occupy Central which did impact its stock price, I believed that this was just market reacting, a knee jerk which is perfectly normal and acceptable to me. I told ACCICB that no doubt CDCHL will be affected as some of its outlets could be near the protest sites etc but at the end of the day, people still need to eat and not all of CDCHL's outlets are impacted negatively.
Majority of its income (80%) comes from Hong Kong, followed by China (18%) which was highlighted to me by ACCICB. I had a simple answer which is CDCHL appeals to everybody, from the locals to the domestic maids to the tourists because its cheap, yummy and everywhere! Plus it even weathered the Taiwan gutter oil scandal which came as a shock to me! I just spoke to ACCICB and he happily reported that we are breaking even on CDCHL which I'm sure with the passing of time and hopefully the protests will help the stock price soar to the sky!