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The Markets
by Proactive
Proactive UK has moved.
Coverage of London’s small caps continues on proactiveinvestors.com
Go to Proactive UK
The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK
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The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK

Food & drink

Hotel Chocolat looks sweet, suggests FinnCap, but wait to invest

Disciplined store rollout offers a decade of internally funded estate growth, says the broker

Broker FinnCap has decided it's sweet on luxury British chocolatier Hotel Chocolat Group PLC (LON:HOTC) and has started covering the share but advises people to wait for a better time to invest.

The retailer, which also owns its own cocoa plantation in the Caribbean, was one of the big success stories of last year since floating in May.

FinnCap analyst Roger Tejwani says the firm has a strong brand and "breadth of innovative, exclusive product suited to multiple buying occasions, and a price architecture wide enough to make luxury treats accessible to most".

Disciplined store rollout offers a decade of internally funded estate growth, he adds, while a new website should drive gifting.

The firm also benefits from customer stickiness, while there are opportunities to drive wholesale business through B2B corporate gifting, he suggests.

Good cash flow management should allow the firm to fund growth internally, further de-gear the balance sheet and pay a maiden, progressive dividend in 2017, he estimates.

The analyst also notes shares have risen 90% since listing and any "slippage" in the timing of related capital projects or resulting production disruption could weigh on the stock.

He suggests investors await a "more favourable entry point".

The broker starts with a 'hold' rating and 270p price target. Shares are currently changing hands at 276p.

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