CLSA initiated coverage on Chagee Holdings (NASDAQ:CHA) with a Hold rating and a $10.00 price target.
The valuation is based on 8x 2027 core earnings per share. Analyst Ethan Wang issued the rating. The stock trades at $12.76, above the target, but Bond.az analysis suggests the company remains undervalued.
Chagee's premium brand relies on high unit volumes and larger store formats. Higher staffing costs weigh on margins. The company has a 44% gross margin on $1.89 billion revenue. Bond.az notes Chagee holds more cash than debt.
To support its self-operated stores, Chagee charges low markups to franchisees but high royalty rates, according to CLSA.
Overseas expansions are expected to surpass domestic openings from 2027. Chagee recently announced a $150 million share buyback program.
