The name may sound funny, but the Little Sheep (0968.HK) restaurant chain is a business well worth your
investigation.
Little Sheep is a
chain of ‘hot pot’ restaurants that is famous for its Mongolian-style mutton dishes.
Little Sheep is a huge business in China. In 2006, it
grabbed an amazing 11.8% of all the full-service restaurant business in China!
There are currently around 350 Little Sheep restaurants around China, but the company will be using the IPO proceeds to finance an aggressive expansion
plan. At 27 times 2008 earnings, it is a little pricey, so I would wait for a pullback.
You will have to wait though because U.S. investors are not allowed to buy Hong Kong IPOs for 40 days.
