At just HK$1 billion market cap, Tai Hing Group (SEHK: 6811) is Hong Kong’s largest multi-brand casual dining operator, running more than 200 restaurants across 15+ brands.
After shares collapsed to a record low in 2024, its shares have sharply rebounded – up 60% from its bottom.
In fact, its recent 1H2025 financial results saw net profits surged three to four times, driven by better cost and operational efficiency.
What’s more, Tai Hing shares trade at a 5.3% dividend yield.
Is this worth buying? Let’s find out.
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What’s Tai Hing Group?
A quick background – Tai Hing went public in 2019, at an offer price of HK$3.00 per share.
However, its honeymoon period didn’t last long because of bad luck: COVID-19 pandemic destroyed Hong Kong’s restaurant sector, which forced lockdowns, social distancing rules and travel restrictions.
There’s no surprise that Tai Hing heavily relies on dine-in customers.
Even after the pandemic-related restrictions were lifted in 2023, Hong Kong’s domestic consumption continues to disappoint, as Hong Kongers prefer to shop in Shenzhen and travel overseas.
Is the worst over for Tai Hing?
At one point, shares of Tai Hing collapsed to HK$0.62 per share in 2024. This was down a brutal 76% from its IPO price. Here’s where it gets interesting. I believe shares have reflected the worst of Hong Kong’s restaurant industry.
Since its 2024 share price low, Tai Hing stock has staged a remarkable recovery. In fact, the restaurant giant has jumped 60% to the current price of HK$0.99 per share.
Look, Tai Hing Group is Hong Kong’s biggest multi-brand casual dining restaurant operator. Its strength lies in its diversification strategy, which allows it to serve different customer segments and reduce any reliance on any single concept – similar to Taste Gourmet (SEHK: 8371).
In my opinion, this is Tai Hing’s competitive advantage.
Today, Tai Hing operates over 211 restaurants across Greater China.
Its business model is simple: operational efficiency. This means Tai Hing uses centralized food processing and a “5S management system”. This allows many of its new outlets to break even within just two to four months.
What’s more, Tai Hing targets the budget conscious mass market, which provides affordable pricing and quick service. The restaurant operator has an average spending per customer of ~HK$50-80.
This makes food affordable to everyday Hong Kong families. And gives Tai Hing an edge in a highly competitive restaurant market.
What’s truly driving Tai Hing shares?
At this point, Tai Hing is no longer a rapid-growth story. I’d say it has covered a huge business footprint in Hong Kong. And its revenues have grown 2-3% annually in recent years. That’s typical for mature restaurant chains.
However, what’s interesting is that it has been improving its profitability.
For instance, it continued to optimize restaurant networks, leverage on central kitchens and automated cooking processes to cut training costs and ensure consistent food quality. Over the last nine years, it has gushed positive free cash flow.
Furthermore, the company has also revealed a big improvement in net profits.
This shows Tai Hing’s steady recovery, despite many local Hong Kong businesses still struggling. This profit improvement also showed Tai Hing’s management in adapting to a tough market environment.
Does Tai Hing Pay a Dividend?
At current prices, Tai Hing pays a 5.3% dividend yield. In fact, it also paid special dividends in its recent financial year.
Even in 2022, when the company reported a loss, it still paid dividends of HK$0.05 per share. Not too bad. If I’d exclude its special dividends, Tai Hing’s dividend policy has been somewhat stable.
What I’m concerned about Tai Hing Group
I admit, Hong Kong’s economy has been facing weak consumer sentiment for the last two years. Many locals are spending less on dining in Hong Kong.
Many locals prefer to save their budgets for trips to Shenzhen or overseas to stretch their Hong Kong dollar.
Historically, mainland Chinese tourists used to spend heavily on food and luxury products.
However, with the rise of “extreme tourism” – emphasizing on cheap, fast travel where visitors move from one place to another quickly and cheaply, this reduces dining out.
As a household name representing “Hong Kong style” cuisine, Tai Hing risks losing relevance among these cost-conscious travelers; overall mainland tourists in Hong Kong have dropped by ~30% versus 2018 levels.
My final thoughts
Despite these headwinds, Tai Hing has shown adaptability by launching popular “bang for your buck” menu items and leveraging digital marketing.
Tai Hing’s dividend yield looks to be attractive. Even though its dividends might look jumpy for now, at current prices this gives sufficient yield for the enterprising dividend investor who might just like to diversify into the restaurant sector.
It’s in the momentum of recovery. And could potentially achieve a net profit of HK$100 million in 2H2025. Now, Tai Hing trades at 11x PE ratio. That’s still cheaper than its peers – Fairwood Holdings at 20x, Jiumaojiu International Holdings at 69x, Cafe De Coral at 17x PE ratio.
