Scepticism greets CRA's break-even target as it unveils plans for 500 stores
Convenience Retail Asia (CRA), the operator of the Circle K chain, plans to open nearly 500 stores in south China over the next three years, making it the largest player in the region.
CRA expressed confidence yesterday that the company could break even within three years, but analysts remain sceptical.
Deutsche Bank said in a report that the expansion would push back the break-even point for the firm's China operations to 2008.
The brokerage projected losses of $30 million this year and $40 million next year for CRA, and lowered its earnings forecasts for this year by 16 per cent to $78 million due to the 'higher re-operation costs and initial losses' related to its mainland operations.
Growth Enterprise Market-listed CRA now operates 205 stores in Hong Kong and 20 outlets in the mainland.
CRA chief executive Richard Yeung Lap-bun said the company's mainland operations would open franchises to foreign participants as soon as it had secured government approval.