We value the Anjoy stock at Rmb98.8 based on a DCF approach. In our DCF valuation we use 2% long-term growth and 8.5% WACC assumptions (risk-free rate 2.0%, equity premium 9.3%, beta 0.7, and 100% equity ratio). At our TP the stock would trade at 18x 2025E P/E, with 12-month forward P/E 30% below the stock’s 3-year average of 25.8x. To align with our valuation methodologies for our condiment coverage, we use DCF to value Anjoy. 

Key downside risks that could impede the Anjoy stock from reaching our TP include: 1) a rise of raw material costs; 2) price competition; 3) warmer weather conditions; 4) barbell-shaped consumption in a weak economy; 5) shifts in consumer tastes and product lifecycles; 6) negative publicity on ready-to-cook dish products; and 7) food safety risks.