Walter Woo, an analyst from CMB International Securities, maintained the Buy rating on Haidilao International Holding (HDALF – Research Report). The associated price target is HK$21.52.
Walter Woo has given his Buy rating due to a combination of factors including Haidilao International Holding’s well-protected downside and potential for expansion. The company’s attractive dividend yield of 5.6% for FY24E and a commitment to maintaining a high payout ratio offer investors a steady income stream. Moreover, the anticipated acceleration in store expansion, once the franchising model is fully established, presents significant upside potential for the stock. With a target price of HK$21.52 based on a 20x FY24E P/E ratio, Woo acknowledges the long-term concerns over growth drivers but remains optimistic about the company’s near-term prospects.
Haidilao’s operational momentum, particularly the impressive increase in table turnover rates, supports Woo’s positive outlook. Even as the industry faces challenges, Haidilao has managed to further improve its efficiency, which is expected to contribute to margin improvement and a higher recovery rate in same-store sales (SSS). Management’s strategic adjustments, such as optimizing staff costs and a lower breakeven point for table turnover, enhance the company’s profitability outlook. Additionally, a prudent approach to store expansion, with a focus on self-operated and franchised stores in tier 2 cities and below, coupled with improvements in sourcing and procurement costs, underpin the raised net profit forecasts for FY24E/25E, justifying the Buy recommendation.
According to TipRanks, Woo is an analyst with an average return of -8.3% and a 38.10% success rate. Woo covers the Consumer Cyclical sector, focusing on stocks such as Xtep International Holdings, Li Ning Company, and Yum China Holdings.
In another report released on April 2, DBS also maintained a Buy rating on the stock with a HK$23.00 price target.
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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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