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Hotel Chocolat sets its sights overseas

The chocolatier has signed new agreements in Japan and the US
September 25, 2018

These numbers from Hotel Chocolat (HOTC) were decidedly sweet, with net earnings 4.5 per cent ahead of broker Liberum’s expectations. But double-digit hikes in the top line and reported profits, although welcome, might not attract as much investor interest as the potential afforded by three new international ventures, all launched post period-end.

IC TIP: Buy at 344p

They include the already-known Scandinavian franchise, a new joint venture (JV) in Japan and a new store in the US. The last of the three, located on Lexington Avenue in New York City, is anticipated to open this winter. In Japan, Hotel Chocolat owns a 20 per cent stake in the new JV, with local management owning the remaining 80 per cent. It’s said Hotel Chocolat will provide product via a wholesale partnership with a royalty paid on the sales. An initial store is slated to open in Tokyo this winter ahead of peak Japanese gift-giving seasons in February and March. (Chocolate demand in Japan continues to grow due to perceived health benefits among consumers.)

Analysts at Liberum expect pre-tax profit of £13.9m for the year ending July 2019, giving EPS of 9.6p, compared with £13m and 9p in FY2018.

HOTEL CHOCOLAT (HOTC)  
ORD PRICE:344pMARKET VALUE:£387m
TOUCH:340-347p12-MONTH HIGH:405pLOW: 256p
DIVIDEND YIELD:0.5%PE RATIO:39
NET ASSET VALUE:35pNET CASH:£0.2m
Year to 1 JulyTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201475.2-4.8nana
201581.12.9nanil
201691.15.63.9nil
201710511.27.81.6
201811612.78.81.7
% change+11+13+13+6
Ex-div:22 Nov   
Payment:21 Dec