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1. Company Snapshot

1.a. Company Description

TH 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.

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1.b. Last Insights on THCH

The recent 3-month performance of TH International Limited was negatively impacted by a lack of significant earnings growth, despite the company's efforts to expand its menu offerings. The absence of a Q1 earnings release suggests that the company may have experienced a slow start to the year. Furthermore, the company's participation in conferences, such as the BofA Securities 2025 Consumer & Retail Conference, may have been overshadowed by the lack of substantial news or announcements. The recent launch of new menu items, including the Loaded Power Bowls, may have been a positive development, but its impact on the company's overall performance is unclear.

1.c. Company Highlights

2. TH International's Q2 2025 Earnings: A Step Closer to Profitability

TH International Limited reported a significant improvement in its financial performance during Q2 2025, with adjusted corporate EBITDA turning positive. The company's food revenue increased by 8.6% year-over-year, reaching a record high of 35.2% of total sales, driven by the successful launch of the "Live Lunch Box" platform, new combo products, and a focus on the growing lunch daypart. The actual EPS came out at '-0.17', slightly better than estimates at '-0.17165'. Revenue growth was accompanied by a reduction in adjusted net losses by 16.2% year-over-year. The company's total sales were bolstered by a 1.4% year-over-year increase in system sales, driven by the expansion of their sub-franchisee and retail businesses.

Publication Date: Aug -31

📋 Highlights
  • Positive Adjusted EBITDA and Reduced Losses: Achieved positive adjusted corporate EBITDA in Q2 2025, with adjusted net losses down 16.2% YoY.
  • Food Revenue Growth: Food revenue rose 8.6% YoY, contributing 35.2% of total sales, driven by the "Live Lunch Box" launch and new combo products.
  • Store Expansion: Opened 179 new stores (totaling 1,000+), with a 1.4% YoY system sales increase from sub-franchisee and retail expansion.
  • Operational Efficiency: Reduced costs via food/packaging savings, labor cuts, and closures of 41 underperforming non-MTO Express stores.
  • Future Growth Plans: Aims for 100+ net openings in 2025 and 200-300 annually, with refinancing progress and 26M loyalty members for monetization.

Store Expansion and Same-Store Sales Performance

The company opened 179 new stores in Q2, bringing the total to over 1,000 stores across 98 cities. Although company-owned and operated store revenues decreased by 12.5% year-over-year due to planned store closures and a 3.6% decrease in same-store sales growth, same-store transactions have been positive since April. This trend is expected to continue, with the company anticipating positive same-store sales in Q3 and for the second half of the year.

Operational Efficiency and Cost Reduction

TH International Limited focused on operational efficiency improvements, reducing food and packaging costs, labor costs, and other operating expenses. The company closed 41 underperforming non-MTO Express stores in Q2, aiming to improve profitability. According to the management, "We are approaching operating cash flow self-sufficiency and do not expect to burn cash," indicating a significant improvement in operational efficiency.

Valuation and Outlook

With a P/S Ratio of 0.44 and an EV/EBITDA of -9.58, the market seems to be pricing in a challenging near-term outlook for the company. However, the company's efforts to improve operational efficiency and expand its store network are expected to drive growth. Analysts estimate next year's revenue growth at 8.3%. The company's ROE stands at 42.83%, indicating a potentially strong return on equity, despite the current losses.

Loyalty Program and Future Plans

The company has 26 million loyalty members, presenting a significant opportunity for monetization. TH International is actively designing products and campaigns to encourage these members to spend more. The company is also pursuing new capital sources and is confident in its current liquidity position, with the refinancing of the convertible debt progressing well.

3. NewsRoom

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Tims China and Tencent’s CarbonXmade Launch Innovative Eco-friendly Straw Made with Captured CO₂

Dec -03

Source:

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TH International (NASDAQ:THCH) Stock Price Down 0.6% – Time to Sell?

Dec -02

Source: defenseworld.net

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Tims China to Announce Third Quarter 2025 Financial Results on December 9, 2025

Nov -12

Source:

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Tims China Announces Issuance of Senior Secured Convertible Notes and Amendment to Existing Convertible Notes

Nov -01

Source: globenewswire.com

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TH International Limited (THCH) Q2 2025 Earnings Call Transcript

Aug -26

Source: seekingalpha.com

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Tims China Announces Second Quarter 2025 Financial Results

Aug -26

Source: globenewswire.com

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Tims China to Announce Second Quarter 2025 Financial Results on August 26, 2025

Aug -18

Source:

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TH International Limited (THCH) Q1 2025 Earnings Conference Transcript

Jun -24

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.73%)

6. Segments

Tim Hortons

Expected Growth: 4.73%

Tim Hortons' 4.73% growth is driven by strategic expansion in Asia, particularly in China, and increased same-store sales in Canada. Effective marketing campaigns, menu innovation, and digital transformation initiatives have also contributed to the growth. Additionally, the company's focus on coffee and breakfast items, which are high-margin products, has helped to boost revenue.

Popeyes

Expected Growth: 4.77%

Popeyes' 4.77% growth driven by strategic expansion in Asia, particularly in China, and the Middle East, coupled with menu innovation, digital transformation, and effective marketing campaigns, resulting in increased brand awareness and customer loyalty.

7. Detailed Products

Automotive Components

TH International Limited provides a wide range of automotive components, including engine parts, transmission components, and suspension systems, designed to meet the specific needs of automotive manufacturers.

Industrial Equipment

The company offers a variety of industrial equipment, including pumps, valves, and gearboxes, designed to optimize industrial processes and improve productivity.

Aerospace Components

TH International Limited supplies aerospace components, including aircraft fasteners, bearings, and seals, designed to meet the stringent requirements of the aerospace industry.

Electronics Components

The company provides a range of electronics components, including semiconductors, capacitors, and connectors, designed to meet the specific needs of electronics manufacturers.

Medical Devices

TH International Limited offers a variety of medical devices, including surgical instruments, implantable devices, and diagnostic equipment, designed to improve patient outcomes.

8. TH International Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for TH International Limited is moderate due to the presence of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of alternative products and services, and the ability of customers to switch to competitors.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's strong relationships with suppliers and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry, such as high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several competitors in the market, and the need to differentiate products and services to gain a competitive advantage.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 129.55%
Debt Cost 3.95%
Equity Weight -29.55%
Equity Cost 5.64%
WACC 3.45%
Leverage -438.38%

11. Quality Control: TH International Limited passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Nathan's Famous

A-Score: 6.4/10

Value: 4.9

Growth: 6.6

Quality: 7.0

Yield: 4.0

Momentum: 9.0

Volatility: 7.0

1-Year Total Return ->

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Dine Brands

A-Score: 5.6/10

Value: 8.8

Growth: 3.3

Quality: 5.1

Yield: 9.0

Momentum: 3.0

Volatility: 4.3

1-Year Total Return ->

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Domino's Pizza

A-Score: 5.4/10

Value: 7.8

Growth: 6.4

Quality: 6.4

Yield: 6.2

Momentum: 1.0

Volatility: 4.7

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TH International

A-Score: 5.1/10

Value: 9.6

Growth: 6.2

Quality: 5.8

Yield: 0.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

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El Pollo Loco

A-Score: 4.3/10

Value: 7.0

Growth: 4.7

Quality: 4.0

Yield: 3.0

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

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Chanson

A-Score: 3.5/10

Value: 6.4

Growth: 5.9

Quality: 4.2

Yield: 0.0

Momentum: 4.0

Volatility: 0.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.68$

Current Price

2.68$

Potential

-0.00%

Expected Cash-Flows