CAFE DE CORAL

Updated Nov 6, 2002
 
Years 2002
Mar		 2001
Mar		 2000
Mar		 1999
Mar		 1998
Mar		 1997
Mar		 1996
Mar		 1995
Mar		 5-yr Annual
Compound 
98-02		 3-yr Annual
Compound
00-02
Sales (Millions HK$) 2,614 2,540 2,408 2,351 2,182 2,037 2,016 1,919
Sales Growth % 3% 5% 3% 8% 7% 1% 5% 19% 5% 4%
Net Profit (Millions HK$) 280 252 221 176 143 141 121 102
Earning Growth % 11% 15% 25% 22% 1% 17% 14% -29% 16% 17%
Net Profit Margin % 10% 10% 9% 7% 7% 7% 6% 6%
Gross Margin % 15% 15% 15% 15%
Return on Equity % 17 18 20 19 18
Debt / Equity 0.54 0.66 0.76 0.95 1.18
Operating Profit (Millions HK$) 336 314 295
Operating Profit Margin % 13% 12% 12% 8% 8% 8% 7% 6%
Operating Profit Growth 8% 6% 33% 36% 32% 12% 49% -45%
EPS (HK$) 0.505 0.4627 0.3986 0.3346
Price:      $5.05           (Jul 9, 2001)
P/E:        10                 Based on 2002 EPS 0.505
 

Does it have a big growing market?

If it is only within HK, the growth will be limited.  When it could succeed in China market, that will be huge.  However, its branches in Guang Dong are not so successful yet.  For a good quality restaurant, it is unrealistic to expect a very rapid growth.  Based on its steady growth in recent years, it should be a good investment for long term.
In the past 5 years, the sales is in a slow annual growth of 5%, despite some horizontal expansion in catering, specialty restaurants and acquisition of Mun Chow Wok in North America.  The local market has already reached a saturated level.  In the years 1994 and 1995, the sales growth was in 2 degits.
In the annual report of 2000, the Chairman indicated that the company is following a strategy of entering Asian Pacific region.  Because of difference in culture, managing a restaurant abroad is very different from a domestic one.  If the restaurants abroad are run in franchise, it should be more practical.

What are its competitive advantages?  Is it a monopoly type business?

1.  It is the market leader in Chinese fast food restaurant.  Its leadership and size help obtaining lower rents and cheaper supplies.
2.  It has a very good image of quality food at reasonable prices.  It has built up some kind of royalty among consumers.
 

What is its business model for success?

1.  It could maintain a reliable quality of food at competitve prices.
 

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