High-End Chinese Tea Chain with Growth, but Caution on Sustainability

about 1 month ago

SPEAKER_03

"Chaji Holdings ... is a growing chain of high-end tea houses in China. They\'ve expanded aggressively via a franchise model, with store count up over 80% last year. However, there are concerns over cannibalization and a slowdown in same-store sales growth as the business right-sizes its expansion."

Chaji Holdings (ticker C-H-A) is presented as an intriguing play due to its rapid expansion, strong store economics, and robust profitability relative to its earnings multiple. Nonetheless, risks such as potential cannibalization and slowing same-store sales growth due to an over-expansion strategy, along with geopolitical and demographic challenges inherent to China, suggest a cautious stance.

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