The average target price of CHA is 38 and suggests 34% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 38.1. This translates into 34% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 38.1. This suggests 34% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Chagee Holdings Limited, through its subsidiaries, owns, operates, and franchises teahouses under the CHAGEE brand name in the People's Republic of China and internationally. The company engages in sale of tea drinks and related raw materials, packaging, teahouse equipment and other supplies. It operates through online platforms. The company was founded in 2017 and is based in Shanghai, the People's Republic of China.

China

Chagee Holdings Limited American Depositary Shares

Consumer Defensive

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 4ppts and its growth decelerated by 13ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 22.7% in the last 12 months, a decline from 23.4% in FY23. 

Historically, CHA has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 19.6%, a growth from 17.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 78.8%, above the peers. 

Chagee Holdings Limited American Depositary Shares reported a return on equity (RoE) of 111.4% in the last 12 months, down from 1579.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 51.0% in the last 12 months, an increase from 48.0% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 38.7 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

CHA has average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, solid return on capital, strong debt servicing capacity, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, CHA is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, CHA is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. In particular, the stock is underpriced on P/E, of fair value on EV/EBITDA, undervalued on P/FCF. 

Chagee Holdings Limited American Depositary Shares

$ 28.1

3

Chagee Holdings Limited American Depositary Shares

$ 28.1

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 28.1

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