Equity: Hop Hing (HKG:0047)
Business: Quick Service Restaurants (QSR)
Markets exposed: North-east China
Stock exchange: HKex
Purchase price: HKD 0.198 (including transaction costs, excluding FX costs)
Purchase month: March
10% per annum thesis:
Hop Hing is a well-managed, high-quality F&B business. I see it as a steady slow grower that is currently undervalued by the market.
Hop Hing was started as a business selling edible oils. In 2013, the founders bought out its edible oils business and left the company listed as a Quick Service Restaurant pure-play.
Hop Hing currently operates 2 main brands in North-east China – Dairy Queen for the upper-middle segment, and Yoshinoya for the lower-middle segment. Additionally, they have been expanding their network of Uncle Fong, a Hong Kong snacks shop, since 2016.
1) Management-Shareholder Alignment
Hop Hing is majority-owned by the Hung Family. Current CEO, Marvin Hung, is the nephew …