TH International Limited

THCH

$1.37

-1.09%

N/A-$0.02

Consumer Cyclical

Restaurants

NASDAQ

Active Trading

TH International Limited manages Tim Hortons coffee establishments across mainland China, Hong Kong, and Macau. By September 28, 2022, the company had ...

Fundamental Analysis of THCH

Key Strengths

Brand-led growth engine: Tim Hortons is a globally recognized QSR brand, supporting customer awareness and franchise/store demand in China and adjacent regions

Asset-light potential via franchising: the mixed operating/franchise model can help scale store count with lower capital intensity than fully owned operations

Risk Factors

Sustained negative profitability: net margin (~-42.4%) and operating margin (~-22.0%) indicate significant earnings pressure

Weak liquidity/coverage: current ratio (~0.279) and quick ratio (~0.247) suggest limited near-term financial flexibility

Profitability

Net Margin-42.38%

Operating Margin-22.02%

Valuation

P/E Ratio-0.59x

Current Ratio0.28

Efficiency

ROE40.16%

ROA-49.06%

Fundamental Analysis of THCH

TH International Limited (NASDAQ: THCH) operates and franchises Tim Hortons coffee shops across Mainland China, Hong Kong, and Macau. The business model is a brand-led quick-service restaurant (QSR) strategy, with growth driven primarily by store expansion, same-store sales, and franchise economics. However, the most recent trailing-twelve-month (TTM) fundamental snapshot provided shows the company is currently experiencing weak profitability and cash generation, which materially limits valuation support from earnings/FCF. On profitability, margins are negative: net profit margin is approximately -42.4% and operating margin is about -22.0%, with EBIT margin near -37.7% and EBITDA margin near -29.8%. These losses indicate either elevated costs (e.g., labor, rent, commodity inputs), transition/expansion costs, brand investment, or store-level underperformance. Return metrics reinforce this picture: return on assets is about -49.1%, and operating return on assets is about -25.2% (both negative). While return on equity is reported positive (0.402) due to balance-sheet structure/negative equity artifacts in the provided dataset, the underlying operating performance remains loss-making. Balance-sheet liquidity appears strained based on TTM ratios: current ratio ~0.279 and quick ratio ~0.247, implying limited near-term liquidity without reliance on operating cash flow or financing. Working capital is strongly negative in the dataset. Cash-flow metrics are also pressured: free cash flow yield is negative and EV-to-free-cash-flow is deeply negative, consistent with negative free cash flow. Valuation multiples are not reliable in the typical sense because earnings are negative (P/E is negative). Nonetheless, the low price-to-sales ratio (~0.215) may suggest the market prices in continuing losses and execution risk, not necessarily a fundamentally undervalued steady-state business. Overall, THCH’s near-term fundamentals look weak with liquidity and profitability challenges. The key question for long-term investors is whether the company can stabilize store-level unit economics and move from expansion-driven losses to sustainable positive operating cash flows. Until margins and cash generation improve, the risk profile remains elevated relative to more mature QSR franchises.

Key Strengths of THCH

Brand-led growth engine: Tim Hortons is a globally recognized QSR brand, supporting customer awareness and franchise/store demand in China and adjacent regions
Asset-light potential via franchising: the mixed operating/franchise model can help scale store count with lower capital intensity than fully owned operations
Geographic focus with operating capability: established footprint across Mainland China, Hong Kong, and Macau (reported ~460 stores by 9/28/2022) indicates operational experience
Operational cost management initiatives suggested by prior investor communication themes (e.g., efforts to reduce variable costs such as food and paper)
Moderate market beta (~0.50) implies somewhat less volatility than the broader market (though fundamentals are still the primary concern)

Risk Factors of THCH

Sustained negative profitability: net margin (~-42.4%) and operating margin (~-22.0%) indicate significant earnings pressure
Weak liquidity/coverage: current ratio (~0.279) and quick ratio (~0.247) suggest limited near-term financial flexibility
Negative cash generation: enterprise value to operating cash flow and free cash flow are deeply negative, consistent with ongoing free cash flow burn
Valuation and leverage metrics are distorted by losses/negative equity artifacts: several debt and equity ratios appear inconsistent, increasing analytical uncertainty
Execution risk in China QSR: same-store sales dynamics, rent/lease terms, labor costs, and commodity inflation can quickly impair margins
Competitive and promotional intensity: QSR markets can experience aggressive pricing and marketing cycles that compress unit economics
Potential franchise/expansion risks: limited operating history in China (as commonly highlighted) can make forecasting and scaling outcomes uncertain
Macro/regulatory risk: consumer spending softness, FX/commodity inputs, and local regulatory changes can impact store profitability

Market Cap vs Revenue & Earnings

Earnings

n/a

Revenue

n/a

Market cap

$43.73M

-0.6x

P/E Ratio

0.2x

P/S Ratio

Earnings & Revenue

Last Reportedn/a

Earnings per share (EPS)n/a

Gross Margin7.82%

Net Profit Margin-42.38%

Debt/Equity Ratio-1.40

Profitability Bridge (Current vs YoY)

How gross, operating and net margins shifted versus last year.

Revenue / Net Income / FCF History (USD B)

Growth Signals of THCH

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
Revenue	—	—	—	—	Flat
Diluted EPS	—	—	—	—	Flat
Free Cash Flow	—	—	—	—	Flat

Profitability of THCH

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
Net Margin	—	-35.65%	—	—	Flat
Operating Margin	—	-20.13%	—	—	Flat
ROE	—	—	—	—	Flat

Financial Health of THCH

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
Current Ratio	—	0.279	—	—	Flat
Quick Ratio	—	0.247	—	—	Flat
Debt / Equity	—	-1.398	—	—	Flat

Valuation of THCH

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
P/E	—	-1.08x	—	—	Flat
P/B	—	-0.30x	—	—	Flat

Supply Chain of THCH

RELATIONS

Upstream

Coffee Bean Suppliers (Global - Brazil, Colombia, Ethiopia, Yunnan China)Local Chinese Bakery & Food Ingredient SuppliersLocal Chinese Dairy & Cream SuppliersTea & Specialty Beverage Ingredient SuppliersCommercial Coffee Machine & Equipment Suppliers (China-based)Packaging & Consumables SuppliersPOS & Digital Infrastructure ProvidersSuzhou Kunshen Biodegradable New Material Co., Ltd.Yunnan Province Coffee Farmers / Cooperatives

Downstream

End Consumers (Retail - 35M+ loyalty members)Tencent Holdings LimitedHKEx:0700 Sinopec (China Petroleum & Chemical Corporation) - Easy JoyNYSE:SNP Alibaba Group - Freshippo (Hema)NYSE:BABA MeituanHKEx:3690 Ele.me (Alibaba Group subsidiary, now Taobao Shangou)NYSE:BABADiDi ChuxingUnconfirmedRestaurant Brands International Inc. (RBI)NYSE:QSRFranchisees (Individual Store Operators)

Proxies

Restaurant Brands International Inc.NYSE:QSR Luckin Coffee Inc.NASDAQ:LKNCY Starbucks CorporationNASDAQ:SBUX Tencent Holdings LimitedHKEx:0700

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Plutux is not an investment adviser. Market data and AI-generated analysis are for information and education only, not investment advice. Disclaimer