TH International (THCH) AI Stock Analysis

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TH International

(NASDAQ:THCH)

Rating:38Underperform

Price Target:―

TH International faces significant financial hurdles, impacting its overall stock score. However, strong operational improvements and strategic growth initiatives provide some optimism. The negative valuation metrics and bearish technical indicators further weigh down the score.

TH International (THCH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$91.28M

Dividend YieldN/A

Average Volume (3M)6.38K

Price to Earnings (P/E)―

Beta (1Y)0.36

Revenue Growth-2.48%

EPS Growth24.95%

CountryUS

Employees2,367

SectorConsumer Cyclical

Sector Strength63

IndustryRestaurants

Share Statistics

EPS (TTM)N/A

Shares Outstanding33,193,190

10 Day Avg. Volume9,598

30 Day Avg. Volume6,381

Financial Highlights & Ratios

PEG Ratio-0.21

Price to Book (P/B)-4.15

Price to Sales (P/S)0.00

P/FCF Ratio-1.89

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

TH International Business Overview & Revenue Model

Company DescriptionTH International Limited operates Tim Hortons coffee shops in mainland China, Hong Kong, and Macau. As of September 28, 2022, it had approximately 460 coffee shops across the People's Republic of China. The company was incorporated in 2018 and is based in Shanghai, the People's Republic of China. TH International Limited is a subsidiary of Tim Hortons Inc.

How the Company Makes MoneyTH International makes money through its franchise operations by managing and expanding Tim Hortons outlets across China. The company's revenue streams include sales of beverages and food items directly from its stores. Additionally, TH International may generate income from franchise fees and royalties paid by franchisees, as well as partnerships with local suppliers and marketing collaborations that enhance brand visibility and drive customer traffic to its locations. The company's earnings are significantly influenced by its ability to scale its operations, optimize supply chain efficiencies, and adapt to consumer preferences in the Chinese market.

TH International Earnings Call Summary

Earnings Call Date:May 28, 2025

(Q4-2024)

% Change Since: 2.23%|

Next Earnings Date:Aug 28, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant milestones in store expansion, profitability improvements, and loyalty program growth. However, there were notable declines in total revenue and same-store sales growth, which contributed to a decrease in the company's cash position.

Q4-2024 Updates

Positive Updates

Store Expansion Milestone

Reached the grand opening of the 1,000th store in Shanghai, marking a significant moment in national expansion.

Improved Profitability

Company-owned and operated store contribution margin improved by 5.3 percentage points and adjusted corporate EBITDA margin improved by 9.9 percentage points year-over-year.

Loyalty Program Growth

Registered loyalty club members exceeded 24 million, reflecting a 29.7% year-over-year growth.

Successful Franchise Model

Received over 6,200 subfranchisee applications and successfully opened around 100 stores by the end of 2024.

Product Innovation Impact

Launched 92 new products in 2024, contributing approximately 25% of top line sales.

Negative Updates

Decline in Total Revenues

Total revenues and system sales dropped by 10.8% and 6.2% year-over-year, respectively.

Same-Store Sales Decrease

Same-store sales growth for system-wide stores decreased by 15.8%.

Cash Position Decline

Total cash and cash equivalents decreased from RMB 219.5 million to RMB 184.2 million by the end of 2024.

Company Guidance

In the recent Tims China Fourth Quarter 2024 Earnings Conference Call, the company provided a comprehensive overview of its strategic and financial performance. The company highlighted significant milestones, including the grand opening of its 1,000th store and the expansion into 82 cities. Tims China reported enhancements in operational efficiencies, with a 5.3 percentage point improvement in company-owned and operated store contribution margin and a 9.9 percentage point increase in adjusted corporate EBITDA margin year-over-year. Product innovation was emphasized, with 92 new products launched in 2024, contributing approximately 25% to top-line sales. The company's loyalty program saw membership grow by 29.7% to over 24 million registered members. Despite a 10.8% drop in total revenues, Tims China maintained focus on improving financial performance and driving efficiencies, aiming for corporate EBITDA breakeven in 2025. The sub-franchisee business showed robust growth, with revenues increasing by 105.3% as the number of franchised stores rose to 446 by year-end. The company also highlighted the successful introduction of new healthy food options and all-day solutions to boost sales across different meal periods.

TH International Financial Statement Overview

Summary

TH International exhibits significant financial challenges, including declining revenue, negative margins, and a precarious balance sheet with negative equity. Cash flow issues further exacerbate the risk, necessitating strategic improvements.

Income Statement

Negative

TH International has experienced a decline in revenue from the previous year based on TTM data, accompanied by negative margins including a net profit margin of -40.47% and a gross profit margin of 26.75%. The company is struggling to convert revenue into profit, as evidenced by negative EBIT and EBITDA margins. Revenue growth has not been consistent, indicating challenges in market traction.

Balance Sheet

Very Negative

The company exhibits financial instability with a negative stockholders' equity of -691.35 million, indicating potential solvency issues. The debt-to-equity ratio cannot be calculated as equity is negative, highlighting financial risk. Total liabilities exceed total assets, further stressing the company's balance sheet. These factors suggest significant financial vulnerability.

Cash Flow

Very Negative

Negative free cash flow of -381.01 million and operating cash flow of -88.60 million suggest challenges in generating cash from operations. The free cash flow to net income ratio is below optimal, indicating inefficiencies. Despite some improvement from prior years, cash flow remains a critical concern for sustainability.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
1.46B	1.58B	1.01B	643.37M	212.08M	57.26M
	Gross Profit
391.59M	417.16M	33.05M	13.81M	6.62M	-17.15M
	EBIT
-472.19M	-701.18M	-565.13M	-371.92M	-141.17M	-91.26M
	EBITDA
-316.10M	-686.50M	-431.72M	-302.90M	-115.22M	-79.13M
	Net Income Common Stockholders
-592.61M	-876.25M	-910.17M	-378.05M	-142.00M	-87.65M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
263.12M	227.00M	611.45M	390.84M	174.87M	263.12M
	Total Assets
145.09M	2.22B	2.64B	1.28B	580.36M	444.00M
	Total Debt
0.00	1.87B	1.77B	522.42M	0.00	0.00
	Net Debt
263.12M	1.67B	1.53B	131.59M	-174.87M	-260.44M
	Total Liabilities
36.83M	2.64B	2.53B	945.80M	147.31M	65.52M
	Stockholders Equity
372.59M	-427.21M	108.85M	335.54M	428.29M	366.77M
Cash Flow		Free Cash Flow
-381.01M	-488.53M	-621.86M	-580.28M	-290.52M	-133.22M
	Operating Cash Flow
-88.60M	-196.13M	-286.93M	-244.97M	-145.77M	-77.12M
	Investing Cash Flow
-89.20M	60.00M	-705.17M	-335.28M	-144.75M	-56.09M
	Financing Cash Flow
-103.40M	80.83M	827.16M	798.00M	221.12M	212.80M

TH International Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.75

Price Trends

50DMA

2.71

Positive

100DMA

2.90

Negative

200DMA

3.27

Negative

Market Momentum

MACD

0.02

Negative

RSI

49.55

Neutral

STOCH

52.45

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For THCH, the sentiment is Negative. The current price of 2.75 is above the 20-day moving average (MA) of 2.74, above the 50-day MA of 2.71, and below the 200-day MA of 3.27, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 49.55 is Neutral, neither overbought nor oversold. The STOCH value of 52.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for THCH.

TH International Risk Analysis

TH International disclosed 88 risk factors in its most recent earnings report. TH International reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

TH International Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BDL	74 Outperform	$61.71M	15.24	6.48%	1.51%	9.38%	14.76%
Sector *	62 Neutral	$6.88B	11.32	2.95%	3.87%	2.70%	-24.57%
STKS	50 Neutral	$109.70M	―	-9.31%	―	138.50%	-60576.19%
FAT	44 Neutral	$42.19M	―	38.50%	22.76%	10.63%	-93.67%
RRGB	43 Neutral	$117.41M	―	92.02%	―	-1.68%	-140.83%
NDLS	43 Neutral	$36.80M	―	-978.37%	―	-0.61%	-200.32%
THCH	38 Underperform	$91.28M	―		―	-2.48%	24.95%

* Consumer Cyclical Sector Average

Performance Comparison

THCH

TH International

2.75

-1.70

-38.20%

BDL

Flanigan's Enterprises

33.20

5.93

21.75%

RRGB

Red Robin Gourmet

6.62

-1.58

-19.27%

NDLS

Noodles & Co

0.80

-1.09

-57.67%

STKS

The ONE Group Hospitality

3.55

-1.40

-28.28%

FAT

Fat Brands

2.46

-0.32

-11.51%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.