Xiabuxiabu reported 2022 revenue of Rmb4.7bn （-23% YoY）， and loss for the year attributable to owners of the company of Rmb353m, in line with our expectation. We maintain 23E EPS forecast of Rmb0.28 （+190% YoY）， 24E forecast of Rmb0.38 （+34% YoY）， and introduce 25E forecast of Rmb0.49 （+30% YoY）。 We maintain target price of HK$8, and with 28% upside potential, maintain Buy rating.
　　Coucou brand’s revenue contribution was close to that of Xiabuxiabu brand. In 2022, the company opened 41 new Xiabuxiabu stores, 44 Coucou stores, and 1 Shaohot store, and closed 81 Xiabuxiabu stores and 3 Coucou stores. By the end of 2022, the company has owned and operated 801 Xiabuxiabu stores , 224 Coucou stores , and 1 Shaohot store. In 2022, Xiabuxiabu brand, Coucou brand, condiment business, and other businesses accounted for 48%, 47%, 3%, and 2% of total revenue, respectively.
　　Coucou: “affordable luxury gathering” concept. Since 2022, Coucou started to implement “expansion into the East and entering the South” strategy and will continue to implement this year, further enhancing its business presence in Eastern China and Southern China. Coucou will further open stores in Northern China, the Northwestern and Northeastern part of China. In 2023E, the company plans to open 74 new stores in mainland China, and close 13 stores. The single store area has been reduced from 610sqm in 2021 to 450sqm.
　　Xiabuxiabu: “value for money” concept. After the deep adjustment of the model, Xiabuxiabu brand will start a new round of store openings. In 2023E, Xiabuxiabu brand plans to open 120 restaurants, with a maximum of 29 closing stores. In the past, stores were concentrated in the Beijing-Tianjin-Hebei region, and in the future, the company will focus on the store layout of the Yangtze River Delta, Pearl River Delta and central provinces. The single store area has been reduced from 210sqm in 2021 to 150sqm.
　　Shaohot: new brand. In September 2022, the company launched a new brand “Shaohot” which focuses on offering delicious roasted meat products. Focusing on the middle and high-end consumer groups, Shaohot upholds the concept of “roasted meat + beverage and tea + joy”。 In 2023E, Shaohot plans to open 20 new stores in Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou.
　　International Business Department. Aside from expansion into Hong Kong in 2019, Coucou has showcased its international expansion footprint by opening its first restaurant in Singapore at the beginning of 2022. Xiabuxiabu brand has opened its first overseas restaurant in Singapore in January 2023. The company has established the International Business Department on 1 January 2023 and plans to open 26 new stores in 2023E, mainly Coucou brand.
　　Maintain BUY. We like the growth potential of Coucou, and the catalysts from the new store opening of Xiabuxiabu brand and the new barbecue brand. We maintain target price of HK$8, and with 28% upside potential, maintain Buy rating.
　　Risks: Slower-than-expected store openings; slower-than-expected same-store growth.