Ada Lau presented her in-depth investment thesis on Ajisen China (HKG: 0538) at Asian Investing Summit 2017.
Ajisen China operates a fast-casual Japanese ramen restaurant chain under the Ajisen brand in China and Hong Kong. The business is concentrated in affluent cities, with 650 restaurants across 100+ cities in China.
Same-store-sales growth has been negative, and cost pressures have hit margins, driving down the share price. There are signs of restaurant competition easing in first-tier cities. The company has embraced the growing takeout culture, as Ajisen’s takeout business grew 168% in 2016 and accounted for 6.4% of restaurant sales.
In late 2015, Ajisen China invested US$70 million in Baidu Takeout Delivery. The shares trade at P/B of 0.9x and P/E of 14x. However, after adjusting for net cash of HKD 1.06 per share and the estimate value of Baidu Takeout Delivery of HKD 1.02 per share, Ajisen China shares trade at a P/E of 4.3x.
About the instructor:
Ada Lau has over 16 years of experience in the asset management industry. Prior to establishing Pickers, Ms. Lau was a Senior Fund Manager at Value Partners, where she was involved in portfolio management, investment research and leading a team of investment professionals from 2006 to 2013. She was ranked #3 in the Thomson Reuters 2010 Extel Asia Pacific Survey – All Buyside Individuals, General Equities/Strategy. Ms. Lau started her career at Credit Agricole Asset Management, where she was an investment manager focusing on Hong Kong, China and India equities. She holds a Bachelors degree in Commerce (Finance) from the University of British Columbia and is also a Chartered Financial Analyst (CFA) charterholder.
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