Yummy Town Holdings Corp (雅茗天地集團), which operates the Happy Lemon (快樂檸檬) bubble tea brand, on Thursday last week reported that profit last year increased 28.52 percent to a record high, as it continued a store expansion plan while developing high-end tea brands for next-stage growth.
Net income last year increased 28.5 percent to NT$155.88 million (US$5.34 million), with earnings per share (EPS) rising from NT$4.03 to NT$5.12, the Cayman Islands-registered company said in a filing with the Taiwan Stock Exchange.
The results were lower than Capital Investment Management Corp’s (群益投顧) estimates of NT$161 million net income and EPS of NT$4.81, and Jih Sun Securities Investment Consulting Co’s (日盛投顧) estimates of NT$162 million net income and EPS of NT$5.08.
Yummy Town, which operates several casual dining and bubble tea brands worldwide, saw revenue last year rise 13.54 percent to NT$1.99 billion from NT$1.76 billion the previous year.
Gross margin increased 1.5 percentage points to 54.59 percent, while operating margin rose 0.35 percentage points to 9.65 percent, company data showed.
The company attributed last year’s robust growth to its aggressive store expansion.
As of the end of last year, the total number of its outlets under various brands — including Happy Lemon, Real Brew Tea (仙蹤林), The Spiceland (游香食樂), TeaOpal (茶閣里的貓眼石), Fresh Tea (彩茶房) and Alma — had reached 865, an increase of 167 from the end of 2016.
However, the rising number of its directly managed stores and the expansion of its management organization raises the risk of rapid increases in expenses and might limit the company’s store expansion this year, likely affecting revenue growth, Capital Investment analyst Ivy Liu (劉炘) said in a note on March 7.
This year’s revenue and earnings would hinge on the performance of TeaOpal, the high-end tea brand that Yummy Town aims to develop as the “Starbucks of tea,” Liu said.
“This is a focus of the company’s next-stage growth,” Liu said.
Capital Investment forecast that revenue for this year would increase 18.31 percent to NT$2.36 billion, with net profit likely to rise 27.11 percent to NT$204 million, or NT$6.11 per share.
However, Jih Sun said expense control would be a great overhang for the company and estimated that revenue would grow 11.39 percent to NT$2.22 billion and net profit would expand 8.29 percent to NT$176 million, or NT$5.5 per share.
The company on Thursday last week said its board had proposed to distribute a cash dividend of NT$4 per common share, representing a payout ratio of 78.13 percent.
The proposal is subject to shareholders’ approval at the company’s annual general meeting scheduled for June 15, it said.
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