On recovery path

Investment Thesis

Normalisation to continue. While Café de Coral’s (CdC) sales are still lagging behind the pre-COVID level, gradual normalisation in business environment should drive continued improvement in same-store sales. With a more efficient cost base, this should translate into better margins ahead. China, despite near-term
hiccups from pandemic resurgence, remains a solid growth driverwith store expansion projected to continue.

Well-positioned to gain market share. Market competition is expected to return as the economy improves, but CdC’s leading market position and strong financials should place it in a strong footing to gain further market share.

China expansion to continue. While the pandemic resurgence had hurt CdC’s China business in June, and slowed down the pace of new store openings, the impact is expected to be only temporary. Store expansion should pick up with 27 new stores in the pipeline, vs eight being opened in 1H21.