Anne Ling, an analyst from Jefferies, maintained the Hold rating on Haidilao International Holding (HDALF – Research Report). The associated price target is HK$14.60.
Geoff Meacham has given his Hold rating due to a combination of factors surrounding Haidilao International Holding’s current market position and future projections. The analyst notes a positive business turnaround for Haidilao, with an anticipated profit margin improvement in the second half of 2023. Despite this, the report expresses concern over the company’s ability to accelerate new store openings, particularly in lower-tier cities where the pricing strategy may not be as effective. With the stock trading at an estimated 16/14 times its 2024/2025 earnings and offering a modest dividend yield, Haidilao is considered to be fairly valued at the moment, which supports the Hold rating.
The analysis also includes projections of a 20% year-over-year increase in net profit and a 28% rise in sales for the second half of 2023. However, there are caveats, such as the exclusion of potential impairment write-backs and foreign exchange gains. The report indicates that Haidilao’s operational store count has slightly decreased and that while the company’s gross store openings and “Hard Bone” plan reopenings contribute positively, some store closures have occurred. A detailed breakdown of expected sales by city tier and cost ratios, including an anticipated increase in staff cost due to increased traffic, further substantiates the Hold rating. Looking ahead, the forecast for 2024 and 2025 suggests a conservative estimate of store openings and sales growth, taking into account the current market sentiment and the need for a stronger macroeconomic environment for more aggressive expansion.
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Haidilao International Holding (HDALF) Company Description:
Haidilao International Holding Ltd is an investment holding company. The company through its subsidiaries is engaged in restaurants operation, delivery business and sales of condiment products and food ingredients located in the PRC and overseas. The operating business segments are Restaurant operation, Delivery business, and Sales of condiment products and food ingredients. The restaurant operation segment derives maximum revenue for the company. The company conduct its business in Mainland China and overseas.
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