(2) This is a non-HKFRS measure, defined as revenue less restaurant and central kitchen costs and excluding costs attributable to headquarters and office.
HONG KONG SAR - Media OutReach - 14 November 2023 - Tam Jai International Co. Limited ("TJI" or the "Company", and together with its subsidiaries, the "Group"; HKEX stock code: 2217), one of the leading and renowned restaurant groups in Hong Kong, today announced its interim results for the six months ended 30 September 2023 ("1H2024" or the "Period"). With new opportunities arising from the end of the pandemic, the Group has emerged stronger and delivered solid year-on-year ("YoY") revenue growth of 10.0% to HK$1,387.4 million in 1H2024, driven by the net additions of 14 restaurants into its network and moderate comparable restaurant revenue growth in Hong Kong.
During the Period, the Group reported a narrowed operating loss(2) at the restaurant level for the combined markets outside of Hong Kong, down by 68.3% YoY to HK$5.3 million, mainly driven by the improved business performance in Mainland China and Japan.
Despite global cost inflation, the Group effectively maintained stable cost-to-revenue ratios for its food, staff and rental expenses, thanks to its streamlined workflows, agility in supply chain management, stringent cost control, as well as dedicated efforts in stabilising frontline workforce. The operating profit margin(2) of the Group's restaurant operations increased to 18.5% in 1H2024. Profit for the period excluding government subsidies(1) increased significantly by 153.1% YoY to HK$81.4 million. Profit for the period was HK$81.6 million in 1H2024, similar to that for the six months ended 30 September 2022 ("1H2023").
To share success with the Company's shareholders, the Board has resolved to declare an interim dividend of HK3.0 cents per share for 1H2024 (1H2023: Nil), representing a payout ratio of approximately 49.2%.
Hong Kong Market Keeps Growing
The Group demonstrated agile, resilient, and innovative management, allowing it to maintain its prominent market position and achieve steady growth before, during, and even after the pandemic. In the past five financial years ended 31 March 2023 ("FY2023"), the Group reported a compounded annual revenue growth (CAGR) of 12.0% in Hong Kong. In 1H2024, the Group's revenue in Hong Kong recorded a further growth of 8.2% YoY to HK$1,296.1 million, driven by the improved comparable restaurant revenue performance since the fourth quarter of FY2023, where a YoY increase of 2.9% has been recorded for 1H2024. Notable improvement was observed in commercial areas as a result of the growing number of commuters returning to their physical offices after the pandemic.
To drive further growth on the enlarged revenue base, the Group strategically expanded its product offerings with the introduction of the afternoon tea set "Me More Tea Set" in July 2023, capitalising on traditionally less busy periods and expanding its target customers to a wider base of demographics. Besides, the Group extended the business hours of its restaurants, launched attractive promotions, and engaged a new aggregator, KeeTa, to grow its comparable restaurant revenue. There were two net openings in 1H2024, with the total number of restaurants reaching 184 as of 30 September 2023.
During 1H2024, the operating profit margin(2) of the Group's Hong Kong business improved to 20.2% (1H2023: 19.4%). This achievement further solidifies TJI's position as one of the leading players in the food and beverages ("F&B") sector in Hong Kong.
Narrowed Losses outside Hong Kong
In view of challenging conditions in Shenzhen due to economic slowdown, the Group made a strategic move to redirect its expansion focus to Guangzhou and other second-tier cities in the Greater Bay Area ("GBA") in Mainland China in 1H2024. During the Period, it opened seven new restaurants in Mainland China, primarily located in Guangzhou, Dongguan, Zhongshan, and Zhuhai, while closed three underperforming stores in Shenzhen. The new restaurants, with lower operating costs, demonstrated satisfactory financial performance, contributing to 58.6% YoY increase in the Group's revenue from the Mainland China market during 1H2024. Improved business performance also enabled the Group to narrow its operating loss in this market in 1H2024.
The Group's business in Japan saw a YoY revenue growth of 22.2% in 1H2024, with similar growth in comparable restaurant revenue, driven by the addition of delivery channels and enhanced operational standards and efficiencies. In Singapore, the Group achieved a YoY increase of 38.8% in total revenue with one new opening in 1H2024.
Outlook: Scaling New Heights with New Business Models
Looking ahead, the Group will continue to expand its business footprint in existing and overseas markets. The Group has introduced a franchising model as it enters its inaugural Western market, Australia, and the Philippines. The potential franchises through its joint venture ("JV") with ST Group Food Industries Holdings Limited in Australia and partnership with Suyen Corporation in the Philippines will enable TJI to reduce capital input, lowers risks, and foster a scalable business model for rapid expansion and market penetration, by leveraging the partners' strong local know-how, experience and business network.
In Hong Kong, apart from continuously growing its two hero brands, TamJai Yunnan Mixian (譚仔雲南米線) and TamJai SamGor Mixian (譚仔三哥米線), the Group is embarking on a new venture with a multi-branding strategy. Building on the Group's success in providing store management services for the Japanese udon brand "Marugame Seimen", TJI has entered into a master franchise agreement with a subsidiary of Toridoll Holdings Corporation, a controlling shareholder of the Company, regarding operating restaurants under the Japanese udon brand name of "Marugame Seimen" through franchise arrangement in Hong Kong. This pilot programme is expected to pave the way for further exploration of brand portfolio diversification and driving overall business growth for the Group.
Outside of Hong Kong, the Group will continue to adjust the pace of store expansion in Mainland China and remain focused on organic growth in Singapore and Japan in the second half of this financial year. The Group is taking this opportunity to enhance localisation and branding elements to strengthen overall competitiveness, aiming to deepening market penetration and preparing for the upcoming phase of rapid expansion.
Mr. Daren Lau, Chairman, Executive Director and Chief Executive Officer of TJI, said, "We are glad to have emerged bigger, stronger and more resilient from the challenging times of the past few years. Ahead of us lies a new chapter brimming with exciting possibilities, as we enter our inaugural Western market, Australia, and the Philippines with a franchise model, while pursuing a multi-brand strategy in Hong Kong. Building on our strengthened foundation of infrastructure, management team and international operating systems, we look forward to scaling to new heights in our mission to expand our footprints across the globe."
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The issuer is solely responsible for the content of this announcement.
About Tam Jai International Co. Limited (HKEX: 2217)
As one of the leading restaurant groups in Hong Kong, TJI has rapidly expanded its network to over 200 stores across various markets, including Mainland China, Singapore and Japan, with plans to enter the Australian and the Philippine markets through joint venture and/or franchising arrangements. The Group's portfolio of distinguished brands includes TamJai Yunnan Mixian (譚仔雲南米線), TamJai SamGor Mixian (譚仔三哥米線), and the addition of the Japanese udon brand, Marugame Seimen, through franchise in Hong Kong.
With highly standardised operations, an innovative spirit and an efficient management model, TJI is committed to providing customers with a quality yet affordable dining experience while ambitiously expanding its footprints across the globe. The Group has been listed on The Stock Exchange of Hong Kong Limited (stock code: 02217.HK) since October 2021.
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