Jefferies released a research report stating it has lowered its net profit forecasts for Cafe de Coral (00341) for the fiscal years 2026 to 2028 by 52%, 51%, and 44% respectively. This revision is based on a downward adjustment of 3%, 4%, and 5% in sales forecasts, attributed to a slower-than-expected improvement in profit margins. The target price has been reduced by 24% from HK$6.81 to HK$5.15, while maintaining a "Hold" rating, as the firm believes the transformation of the company's Hong Kong fast-food chain business will require time, offering limited upside potential. Cafe de Coral announced its results for the first half of the 2026 fiscal year ending last September in late November, which fell short of the bank's and management's expectations. During the period, net profit plummeted 68% year-on-year to HK$47 million, while sales dropped 5% to HK$4 billion; adjusted EBITDA (excluding investment property fair value losses and impairments) also declined by 29%. The weak performance was primarily due to the impact of market competition and consumers traveling north to mainland China or abroad on its Hong Kong fast-food chain operations. The company declared an interim dividend of HK$0.10 per share, with a payout ratio of 122%, supported by its strong cash position. The bank views this move as reflecting management's confidence in improving operational performance in the second half of the 2026 fiscal year ending this March and beyond.