FAST NEWS: TH International continues expansion despite fourth-quarter Covid hit

The Latest: TH International Ltd. (THCH.US), operator of the Tim Hortons restaurant chain in China, reported its revenue rose 34.6% year-on-year in last year’s fourth quarter to 301.5 million yuan ($43.9 million). Its net loss for the period widened to 222.9 million yuan from 137 million yuan a year earlier.

Looking Up: The company opened 227 new stores last year, raising its total to 617 stores by the end of the year, as it expanded aggressively in pursuit of a goal of 2,750 stores by 2026.

Take Note: The company was “severely affected” by China’s strict Covid-control measures in the fourth quarter. It said it experienced an average of 48 daily temporary store closures during the quarter, as many people also avoided dining at restaurants over concerns about infection.

Digging Deeper: TH International is a joint venture that operates the Tim Hortons restaurant chain in China, and also recently acquired China rights to the Popeyes fast food chain. Both Tim Hortons and Popeyes are owned by Restaurant Brands International (QSR.US), which is a partner in the China joint venture. The company opened its first Tim Hortons in China in 2019 and has quadrupled its store count over the last two years. It listed in the U.S. using a special purpose acquisition company (SPAC) last year, and began trading on Aug. 22. The company said its business has largely returned to normal since China abandoned its “zero Covid” policy last December, and same-store sales rose 17.1% in February.

Market Reaction: TH International shares rose nearly 20% last Thursday after the results were announced to close at $4.51. But even after the rally, the stock has lost more than half of its value since it completed its SPAC merger last August.

To subscribe to Bamboo Works weekly free newsletter, click here

Reporting by Doug Young