Tsui Wah rivals Fairwood and Café de Coral are better options, analyst says

Café chain Tsui Wah may be a better performer than its rivals in terms of profitability, but an analyst said that when the price-earnings ratios of Fairwood and Café de Coral are taken into account, they may be better options for investors.

In the six months to September, Tsui Wah's net profit jumped 32 per cent to HK$85.49 million, while its gross profit margin stood at 69.8 per cent, compared to a 4.9 per cent increase in net profit for fast-food chain Fairwood, whose gross profit margin edged down to 14 per cent during the same period.

While Fairwood saw business stagnate on the mainland, Tsui Wah, which added five stores there earlier this year, said it would add five more before the end of March next year, bringing its number of stores in the region to 44.

According to its filing to the Hong Kong stock exchange yesterday, mainland consumers' average spending amounted to HK$200 per head, nearly tripling that of HK$77 for local consumers. The group's chief executive Anthony Lock Kwok-on said a lack of breakfast menus - which cost less than lunch and dinner on the mainland - was the main reason behind the difference.

By comparison, Fairwood will close several underperforming stores on the mainland in light of a double-digit fall in same-store sales during the March-September period, although it will open two to three more in Guangzhou and Shenzhen.