Investment Rating - The investment rating for the company is "Outperform" [2] Core Viewpoints - The report highlights that Haidilao has successfully navigated through operational challenges and has returned to profitability, achieving record revenue and profit in 2023, thus reaffirming its position as a leader in the Chinese dining sector [5][7][9] - The report discusses the ongoing growth potential of Haidilao's hot pot business and the strategic introduction of new brands under the "Red Pomegranate Plan" to enhance growth avenues [5][8][9] Summary by Sections 01 Hot Pot Market: The Largest Segment in Chinese Cuisine - The hot pot market is projected to exceed 590 billion yuan in 2024, with a CAGR of approximately 7.2% from 2024 to 2028 [6][14] - Sichuan and Chongqing hot pot dominate the market, accounting for over 66% of the segment's revenue in 2023 [6][14] 02 Haidilao: Organizational Evolution and Resurgence - From 2015 to 2023, Haidilao's revenue grew at a CAGR of 28%, and net profit grew at a CAGR of 42%, with 2023 revenue reaching 41.5 billion yuan and net profit at 4.5 billion yuan [7][9] - The company underwent significant organizational restructuring through the "Woodpecker Plan" and "Hard Bone Plan," which helped it recover from previous operational setbacks [7][9] 03 Growth Outlook: Improvement in Same-store Sales and Expansion of New Brands - The report anticipates improvements in same-store sales, with projected table turnover rates increasing from 4.1 to 4.3 times per day from 2024 to 2026 [8] - Haidilao plans to expand its store count to between 1,902 and 1,998 locations over the next five years, with an expected annual net increase of about 65 stores [8] - The new brand "Yanjing Barbecue" is expected to accelerate its development, with projections of adding 50 to 80 new locations annually from 2025 to 2027 [8] 04 Investment Recommendations: A Turning Point in Operations and Valuation - The report forecasts net profits of 45.1 billion yuan, 50.5 billion yuan, and 55.6 billion yuan for 2024 to 2026, reflecting growth rates of 0.4%, 11.8%, and 10.2% respectively [9] - The target price for Haidilao is set at a PE ratio of 16-18x for 2025, corresponding to a market value of 87.8 to 98.7 billion yuan, indicating a potential upside of 12.4% to 26.4% from the latest closing price [9]

Core Insights - The company, Haidilao, increased the number of operating stores during the Chinese New Year period in 2025 due to heightened consumer dining demand [1] - Over the seven days from New Year's Eve to the sixth day of the Lunar New Year, Haidilao served over 10 million customers nationwide [1] - The influx of tourists from heritage tours, inbound travel, and returning home trips contributed to a surge in customer traffic at various Haidilao locations [1] - Local stores in lower-tier markets experienced significant increases in holiday customer traffic due to returning visitors [1]

Investment Rating - The investment rating for the company is "Outperform" [2] Core Insights - The report highlights that Haidilao has successfully navigated through operational challenges and has returned to profitability, achieving record revenue and profit in 2023, reaffirming its position as a leader in the Chinese dining sector [5][7][9] - The report discusses the ongoing growth potential of Haidilao's hot pot business and the strategic introduction of new brands under the "Red Pomegranate Plan" to enhance revenue streams [5][8][9] Summary by Sections 01 Hot Pot Market: The Largest Segment in Chinese Cuisine - The hot pot market is projected to exceed 590 billion yuan in 2024, with a CAGR of approximately 7.2% from 2024 to 2028 [6][14] - Sichuan and Chongqing hot pot dominate the market, accounting for over 66% of the segment's revenue in 2023 [6][14] - The competitive landscape has seen a significant reshuffle, with a stabilization in store openings and closures expected in 2024 [15][17] 02 Haidilao: Organizational Evolution and Resurgence - From 2015 to 2023, Haidilao's revenue grew at a CAGR of 28%, with net profit growing at 42%, reaching 41.5 billion yuan in 2023 [7][36] - The company has implemented significant organizational changes through the "Woodpecker Plan" and "Hard Bone Plan" to enhance operational efficiency and adapt to market conditions [40][45] 03 Growth Outlook: Improvement in Same-Store Sales and Expansion of New Brands - Same-store sales are expected to improve, with projected table turnover rates increasing from 4.0 times per day to 4.3 times by 2026 [8] - The company plans to expand its hot pot outlets to a target of 1,902 to 1,998 stores over the next five years, with an annual net increase of approximately 65 stores [8] - The new brand "Yanjing Barbecue" is set to accelerate its development, with expectations of opening 50 to 80 new locations annually from 2025 to 2027 [8] 04 Investment Recommendations: A Turning Point for Profitability and Valuation - The report forecasts net profits of 45.1 billion yuan, 50.5 billion yuan, and 55.6 billion yuan for 2024, 2025, and 2026, respectively, indicating a stable growth trajectory [9] - The target price for Haidilao is set at a PE ratio of 16-18x for 2025, translating to a market value of 878 to 987 billion yuan, representing a potential upside of 12.4% to 26.4% from the latest closing price [9]

Strategic Partnership - Yili Group and Haidilao Group signed a strategic cooperation agreement on January 6 at the Yili Shanghai Innovation Center [1] - The partnership aims to establish a multi-level and comprehensive communication mechanism [1] - Both companies will leverage their respective resource advantages to deepen cooperation in areas such as brand promotion, market development, business integration, brand co-building, organizational development, and R&D innovation [1]

Investment Rating - The report maintains an "Outperform" rating for Haidilao (06862 HK) [3] Core Views - Haidilao's main brand is expected to see improvements in both same-store operations and store expansion in 2025, while its barbecue brand is set to accelerate development [3] - The company has demonstrated strong operational adjustment capabilities in a weak market environment, with same-store sales expected to return to growth in 2025 [3][32] - The "Pomegranate Plan" is expected to drive the rapid expansion of new brands, particularly the barbecue brand, with synergies in supply chain and labor ensuring profitability [3][32] Business Review - Haidilao, founded in 1994, is a leading player in the hotpot and Chinese dining sectors, with a revenue CAGR of 28 0% and a net profit CAGR of 42 0% from 2015 to 2023 [7] - In 2021, the company faced operational challenges due to rapid expansion and the pandemic, leading to a net loss of RMB 4 16 billion, including over RMB 3 65 billion in impairment losses [8] - The "Woodpecker Plan" implemented in November 2021 helped the company turn around, with a net profit of RMB 1 638 billion in 2022 [9] - In 2023, Haidilao achieved record-high revenue of RMB 41 45 billion and net profit of RMB 4 499 billion, with 1,343 stores by mid-2024 [7][15] Growth Outlook Same-Store Operations - Haidilao's same-store operations are expected to improve, with a stable turnover rate and a recovery in average spending per customer [3][22] - The average spending per customer rebounded to around RMB 100 in December 2024, showing a continuous recovery trend [3] - The overall turnover rate reached 4 2 times in mid-2024, close to the 4 8 times in 2019, despite the number of stores doubling to nearly 1,400 [3] Store Expansion - Haidilao is expected to achieve a mid-single-digit percentage increase in net store openings in 2025, with the franchise model contributing additional growth [3][22] - The company has become more aggressive in store expansion, with plans to open 40-50 new stores in the second half of 2024 [3] New Brand Development - The "Pomegranate Plan" focuses on incubating new brands, with the barbecue brand "Yanqing Barbecue" leading the way [3][23] - Yanqing Barbecue, which opened its first store at the end of 2023, had 12 stores nationwide by November 2024, with plans to expand to 100/200 stores by 2025/2026 [3][23] - The single-store model for Yanqing Barbecue is estimated to generate annual revenue of RMB 10 million, with a net profit margin of 12-14% [3][27] Financial Projections - The report forecasts Haidilao's net profit for 2024-2026 to be RMB 4 62/5 12/5 62 billion, with growth rates of 3%/11%/10%, and a dynamic PE of 19/17/15x [3][32] - Under optimistic assumptions, the net profit for 2025-2026 could reach RMB 5 83/7 16 billion, with growth rates of 3%/26%/23%, and a dynamic PE of 15/12x [32]

Summary of Conference Call on Haidilao Company Overview - The conference call focused on Haidilao, a prominent player in the hot pot restaurant industry, highlighting its recent performance and future strategies [2][3]. Key Points and Arguments Industry Context - Haidilao is positioned to benefit from the recovery of consumer spending as government policies stimulate economic activity [2]. - The hot pot sector is expected to see increased demand as consumer confidence returns [2]. Financial Performance - In Q3, Haidilao experienced a decline in table turnover rates in September and October compared to the previous year, indicating a challenging environment [3]. - Despite the decline in turnover rates, the company reported an improvement in profit margins due to effective cost management strategies [4]. - The average selling price (ASP) has seen a decrease, prompting the company to implement targeted marketing strategies to stabilize it [7][8]. Store Expansion Strategy - Haidilao opened over 20 new stores in the second half of the year, with plans for additional openings in November and December [4]. - The company is cautious about closing stores, with fewer closures in the second half compared to the first half of the year [4]. - Future store openings will be strategically located in areas with strong consumer demand, leveraging existing successful locations [20]. Cost Management - The company has negotiated favorable terms with suppliers for key ingredients, ensuring cost advantages through the first half of the next year [21]. - Haidilao is focusing on controlling labor costs and optimizing operational efficiency to maintain profitability [21][22]. Brand Development - The new brand, Yanjin, is seen as a significant growth opportunity, with initial performance exceeding expectations compared to Haidilao's average store performance [14]. - Yanjin aims to replicate Haidilao's successful supply chain and operational model, enhancing overall profitability [14]. Market Positioning - Haidilao is committed to avoiding price wars and maintaining its brand value through quality service and customer experience [9][10]. - The company is exploring innovative marketing strategies, including more precise coupon distribution to enhance customer engagement without compromising service quality [11]. Regional Performance - The company noted that the Central China market is performing particularly well, with varying performance across different regions [24][25]. Future Outlook - Haidilao's management remains optimistic about future growth, with flexible store opening plans and a focus on enhancing customer experience [19][20]. - The company is committed to maintaining a high dividend payout ratio, reflecting confidence in its financial stability and growth prospects [36][37]. Additional Important Information - The conference emphasized the importance of adapting to market conditions and consumer preferences, with a focus on maintaining operational excellence and brand integrity [10][19]. - Haidilao is actively exploring ways to enhance shareholder returns, including potential share buybacks, although challenges exist due to high insider ownership [38]. This summary encapsulates the key insights from the conference call, providing a comprehensive overview of Haidilao's current status and strategic direction in the competitive hot pot industry.

Financial Data and Key Metrics Changes - The company achieved revenue of $199 million, a year-on-year increase of 14.6% [1] - Operating profit for the company was $14.9 million, up from $9.8 million year-on-year, representing a growth of 52% [6] - The operating profit margin improved to 7.5%, an increase of 1.8 percentage points compared to the previous year [6][7] - The average customer spending increased to $25.8, up by $2.1 year-on-year [7] Business Line Data and Key Metrics Changes - The main revenue contributor accounted for 96% of total revenue, with a year-on-year growth of 14.5% [5] - Takeout revenue was $2.6 million, an increase of 8.3% year-on-year [5] - Other business revenue reached $5.1 million, up 21.4% year-on-year, driven by increased popularity of seasoning products and food from the company and its sub-brands [5] Market Data and Key Metrics Changes - The company served 7.4 million customers in the third quarter, a 4.2% increase year-on-year [7] - The average table turnover rate was 3.8 times, an increase of 0.1 times year-on-year [7] - The most notable performance was in the East Asia region, where the turnover rate reached 4.3 times, up by 0.4 times year-on-year [7][8] Company Strategy and Development Direction - The company aims to become a leading global integrated dining group, focusing on enhancing customer experience, restaurant network management, and new business development [4] - The company is exploring opportunities in existing markets and entering new countries, with plans to open a double-digit number of new stores in 2024 [4][12] - The company is implementing a dual management policy to enhance the motivation of key employees and streamline store management [2][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the competitive pricing pressures in the market, particularly from emerging Chinese hot pot brands in Southeast Asia [13][20] - The company expects stable pricing in the future, with adjustments based on exchange rates and seasonal promotions [13][21] - Management expressed confidence in the operational improvements and the potential for future growth despite challenges [34] Other Important Information - The company has identified opportunities for market penetration and expansion into new countries, with a focus on enhancing operational efficiency through centralized kitchen operations [25][26] - The company is actively working on optimizing its supply chain to reduce raw material costs [24][25] Q&A Session Summary Question: Can you share insights on the single-store model and operational metrics? - Management discussed ongoing improvements in store management and the use of management tools to enhance operational clarity and accuracy [10][17] Question: What is the outlook for table turnover and customer spending in the upcoming quarters? - Management indicated that while they expect continued year-on-year growth, the rate of increase may slow compared to earlier quarters due to higher baseline figures [20][21] Question: How does the company plan to address competitive pricing pressures? - Management noted that they are continuously monitoring pricing strategies to maintain competitiveness while considering operational costs [13][20] Question: What are the plans for overseas supply chain development? - Management outlined plans to enhance overseas supply chain capabilities, including establishing centralized kitchens in key markets [24][25] Question: What is the expected return on investment for new stores opened this year? - Management reported that most new stores are meeting performance expectations, with several achieving profitability shortly after opening [16]

Investment Rating - Upgraded to "Buy" rating for Haidilao (6862 HK) with a target price of HKD 19 5 based on 19x 2025 P/E or 10x 2025 EV/EBITDA [2] Core Views - Haidilao's multi-brand strategy visibility has improved with the new brand "Yanqing" expected to accelerate store openings in the next two years [2] - The company plans to open 40-50 new stores in 2H24 and expects net store growth for the full year with annual store openings reaching mid-to-high single-digit percentages of existing stores in 2025-2026 [2] - The new brand "Yanqing" is expected to leverage synergies with Haidilao in procurement labor and rental costs with plans to open 50 stores in 2024 and 150 stores in 2025 [2] - Haidilao's main brand is expected to see stable performance with a slight improvement in operating profit margin in 2H24 due to optimized employee incentives and stable or slightly increased average customer spending [2] Financial Performance and Forecast - Revenue is expected to grow by 7 5% in 2024E reaching RMB 44 571 million with a slight increase to RMB 46 505 million in 2025E [6] - Net profit attributable to shareholders is forecasted to remain flat in 2024E at RMB 4 498 million but grow by 12 2% in 2025E to RMB 5 047 million [6] - Operating profit margin is projected to improve from 12 3% in 2024E to 12 8% in 2025E [6] - Gross margin is expected to increase from 60 8% in 2024E to 60 9% in 2025E [6] Store Expansion and Operational Metrics - Haidilao opened 11 new stores in 1H24 but closed 43 stores resulting in a net decrease of 32 stores to a total of 1 343 stores [2] - The company plans to accelerate store openings in 2H24 with 40-50 new stores and reduce store closures to single digits [2] - The overall table turnover rate remained stable in July-August 2024 with a slight decline in September but exceeded 5 times per day during the National Day holiday [2] New Brand "Yanqing" - The new brand "Yanqing" is expected to benefit from synergies with Haidilao in procurement labor and rental costs [2] - Management plans to open "Yanqing" stores near existing Haidilao locations and utilize Haidilao store managers for multi-brand management [2] - The company aims to open 50 "Yanqing" stores in 2024 and expand to 150 stores in 2025 with a long-term goal of 300-400 stores in 3-5 years [2] Market Expectations and Valuation - The market expectation for Haidilao's stock price ranges from HKD 12 4 to HKD 26 2 with SPDBI's target price set at HKD 19 5 [4] - The stock's current price is HKD 16 6 with a total market capitalization of HKD 92 640 million [3]

Financial Performance - Revenue for the first half of 2024 reached RMB 21,490.9 million, a 13.8% increase compared to the same period in 2023[15] - Core operating profit (non-IFRS measure) for the first half of 2024 was RMB 2,798.9 million, a 13.0% increase compared to the same period in 2023[15] - Profit for the first half of 2024 was RMB 2,033.1 million, a 10.0% decrease compared to the same period in 2023, primarily due to changes in net foreign exchange gain and loss and the termination of the additional VAT deduction preferential policy in mainland China[15] - Revenue for the first half of 2024 reached RMB 21,490.9 million, a 13.8% year-on-year increase[16] - Core operating profit (non-IFRS) for the first half of 2024 was RMB 2,798.9 million, up 13.0% year-on-year[16] - Revenue increased by 13.8% from RMB18,885.9 million in H1 2023 to RMB21,490.9 million in H1 2024[27][28] - Haidilao restaurant operation revenue grew by 13.8% to RMB20,414.0 million, accounting for 95.0% of total revenue[29][31] - Delivery business revenue rose by 23.3% to RMB581.2 million, driven by single-serving high-quality fast food offerings[31] - Sales of condiment products and food ingredients decreased by 19.2% to RMB299.2 million in H1 2024[29] - Other restaurant operation revenue increased by 74.3% to RMB182.4 million in H1 2024[29] - Revenue for the six months ended June 30, 2024, increased to RMB 21,490,903 thousand, up from RMB 18,885,854 thousand in the same period in 2023, representing a growth of approximately 13.8%[158] - Profit for the period decreased to RMB 2,033,103 thousand in 2024 from RMB 2,258,886 thousand in 2023, a decline of approximately 10%[158] - Total comprehensive income for the period was RMB 2,083,229 thousand in 2024, compared to RMB 2,381,598 thousand in 2023, a decrease of approximately 12.5%[158] - Basic earnings per share (EPS) for the period were RMB 0.38 in 2024, down from RMB 0.42 in 2023[160] - Profit for the period was RMB 2,038,125 thousand for the six months ended June 30, 2024[168] - Other comprehensive income for the period was RMB 50,126 thousand for the six months ended June 30, 2024[168] - Dividends recognized as distribution amounted to RMB 4,061,454 thousand for the six months ended June 30, 2024[168] - Retained profits increased to RMB 7,250,439 thousand as of June 30, 2024, from RMB 5,433,184 thousand as of January 1, 2024[168] - Non-controlling interests decreased to RMB (14,264) thousand as of June 30, 2024, from RMB (9,690) thousand as of January 1, 2024[168] - Statutory reserve increased to RMB 1,362,905 thousand as of June 30, 2024, from RMB 1,142,035 thousand as of January 1, 2024[168] - Share premium decreased to RMB 1,045,420 thousand as of June 30, 2024, from RMB 5,106,874 thousand as of January 1, 2024[168] - Operating cash flows before movements in working capital increased to RMB 4,169,242 thousand in 2024, compared to RMB 4,148,245 thousand in 2023[170] - Net cash from operating activities decreased to RMB 3,671,759 thousand in 2024 from RMB 4,934,371 thousand in 2023[170] - Net cash used in investing activities decreased to RMB 769,676 thousand in 2024 from RMB 1,482,728 thousand in 2023[172] - Net cash used in financing activities decreased to RMB 920,439 thousand in 2024 from RMB 2,002,462 thousand in 2023[173] - Cash and cash equivalents at the end of the period increased to RMB 8,424,923 thousand in 2024 from RMB 7,908,774 thousand in 2023[173] - Profit before tax increased to RMB 2,888,060 thousand in 2024 from RMB 2,813,816 thousand in 2023[170] - Finance costs decreased to RMB 140,504 thousand in 2024 from RMB 183,021 thousand in 2023[170] - Interest income increased to RMB 244,761 thousand in 2024 from RMB 133,122 thousand in 2023[170] - Depreciation of property, plant and equipment decreased to RMB 961,723 thousand in 2024 from RMB 1,125,318 thousand in 2023[170] - Depreciation of right-of-use assets increased slightly to RMB 364,492 thousand in 2024 from RMB 362,147 thousand in 2023[170] - Revenue for the six months ended June 30, 2024, reached RMB 21,490,903 thousand, compared to RMB 18,885,854 thousand in the same period in 2023, representing a 13.8% year-over-year increase[185] - Restaurant operation revenue increased to RMB 20,596,386 thousand in H1 2024, up 14.2% from RMB 18,040,008 thousand in H1 2023[185] - Delivery business revenue grew to RMB 581,228 thousand in H1 2024, a 23.3% increase from RMB 471,351 thousand in H1 2023[185] - Sales of condiment products and food ingredients decreased to RMB 299,208 thousand in H1 2024, down 19.2% from RMB 370,229 thousand in H1 2023[185] - Revenue from Mainland China operations accounted for RMB 20,760,551 thousand in H1 2024, representing 96.6% of total revenue[190] - Interest income from bank deposits increased to RMB 217.96 million in 2024, up from RMB 125.21 million in 2023, representing a 74.1% increase[193] - Government grants decreased to RMB 22.96 million in 2024 from RMB 33.58 million in 2023, a decline of 31.6%[193] - Business development expenses surged to RMB 196.01 million in 2024, more than doubling from RMB 83.84 million in 2023, a 133.8% increase[197] - Net foreign exchange loss amounted to RMB 25.85 million in 2024, compared to a gain of RMB 192.55 million in 2023[200] - Total other expenses rose to RMB 881.09 million in 2024, up 28.9% from RMB 683.64 million in 2023[197] - Compensation claim income increased to RMB 23.31 million in 2024, up 175.8% from RMB 8.45 million in 2023[193] - Net impairment loss reversed for property, plant and equipment was RMB 14.34 million in 2024, compared to a gain of RMB 6.80 million in 2023[200] - Gain from redemption of long-term bonds was RMB 4.41 million in 2024, up 459.0% from RMB 0.79 million in 2023[200] - Total other income decreased to RMB 370.13 million in 2024, down 6.8% from RMB 396.98 million in 2023[193] - Additional tax deduction, which was RMB 158.66 million in 2023, was terminated as of December 31, 2023[194] Restaurant Operations - The overall table turnover rate of Haidilao restaurants was 4.2 times per day in the first half of 2024[15] - Total number of customers served across all restaurants exceeded 209.9 million in the first half of 2024[15] - The company operated a total of 1,343 Haidilao restaurants as of June 30, 2024, with 1,320 in mainland China and 23 in Hong Kong, Macau, and Taiwan[17] - The company opened 11 new restaurants and closed 43 underperforming restaurants in the first half of 2024[17] - The company plans to significantly increase the number of new restaurant openings in the second half of 2024 compared to the first half[17] - The company implemented a multi-restaurant management model, allowing managers to oversee multiple outlets, including Haidilao and other group brands[20] - The company launched a franchise model to attract business partners and expand into lower-tier markets[21] - The company initiated the "Pomegranate Plan" to incubate new catering brands and promote innovation in catering services[23] - The company developed new dining consumption patterns, including camping hot pot, campus hot pot, and corporate hot pot restaurants[24] - The company's single-serving delivery business continued to generate additional revenue and profit[24] - Average table turnover rate for Haidilao restaurants increased to 4.2 times per day in H1 2024[31] - Average spending per guest decreased from RMB102.9 in H1 2023 to RMB97.4 in H1 2024 due to changes in dish consumption structure and increased discounts[31] - The company launched the "Pomegranate Plan" to incubate and develop new catering brands, with 5 innovation projects in operation in H1 2024[25][26] - New brands like "YEAH QING BBQ" and "XIAOHAI HUOGUO" were introduced, targeting different price segments and consumer groups[26] - The company expanded into new dining formats such as camping hot pot, campus hot pot, and corporate hot pot to diversify customer experiences[25] - Average spending per guest decreased in all regions: Tier 1 cities from RMB 110.3 to RMB 104.1, Tier 2 cities from RMB 101.8 to RMB 96.8, and Tier 3 cities and below from RMB 96.1 to RMB 91.4[33] - Overall table turnover rate increased from 3.3 times/day in 2023 to 4.2 times/day in 2024, with Tier 2 cities showing the highest increase from 3.5 to 4.3 times/day[33] - Same store sales increased overall from RMB 17,007,646 thousand in 2023 to RMB 19,605,740 thousand in 2024, with Tier 3 cities and below showing the highest growth from RMB 6,533,187 thousand to RMB 7,836,184 thousand[36] - Average same store sales per day increased from RMB 75.2 thousand in 2023 to RMB 86.1 thousand in 2024, with Hong Kong, Macau, and Taiwan regions maintaining the highest daily sales at RMB 167.5 thousand[36] - Gross revenue from restaurant operations in mainland China increased from RMB 17,298,795 thousand in 2023 to RMB 19,746,580 thousand in 2024, with Tier 3 cities and below contributing the largest share at 39.9%[41] Costs and Expenses - Raw materials and consumables costs increased by 9.1% from RMB 7,685.0 million in 2023 to RMB 8,387.2 million in 2024, but decreased as a percentage of revenue from 40.7% to 39.0%[42] - Staff costs increased by 24.0% from RMB 5,769.3 million in 2023 to RMB 7,155.7 million in 2024, rising as a percentage of revenue from 30.5% to 33.3% due to increased salary and benefit levels[44] - Rentals and related expenses increased by 5.3% from RMB200.4 million in H1 2023 to RMB210.9 million in H1 2024, maintaining a stable percentage of revenue at 1.1% and 1.0% respectively[45][49] - Utilities expenses rose by 19.2% from RMB605.4 million in H1 2023 to RMB721.7 million in H1 2024, with revenue percentage stable at 3.2% and 3.4% respectively[46][50] - Travelling and communication expenses increased by 20.5% from RMB78.7 million in H1 2023 to RMB94.8 million in H1 2024, maintaining a stable revenue percentage of 0.4%[47][51] - Employee costs surged by 24.0% from RMB5,769.3 million in H1 2023 to RMB7,155.7 million in H1 2024, with revenue percentage rising from 30.5% to 33.3%[48] - Depreciation and amortization decreased by 11.1% from RMB1,506.4 million in H1 2023 to RMB1,339.1 million in H1 2024, with revenue percentage dropping from 8.0% to 6.2%[52][56] - Other expenses increased by 28.9% from RMB683.6 million in H1 2023 to RMB881.1 million in H1 2024, with revenue percentage rising from 3.6% to 4.1%[53][57] - Share of results of associates and a joint venture increased from RMB15.6 million in H1 2023 to RMB24.7 million in H1 2024[54][58] - Other gains and losses shifted from a gain of RMB227.2 million in H1 2023 to a loss of RMB66.7 million in H1 2024, primarily due to foreign exchange rate changes[55][59] - Finance costs decreased by 23.2% from RMB183.0 million in H1 2023 to RMB140.5 million in H1 2024[60][61] - Income tax expense increased by 54.1% from RMB554.9 million in H1 2023 to RMB855.0 million in H1 2024[62] - Core operating profit (non-IFRS measure) increased to RMB2,798,866,000 in H1 2024, up from RMB2,476,446,000 in H1 2023[68] - Net foreign exchange loss of RMB25,854,000 in H1 2024, compared to a gain of RMB192,546,000 in H1 2023[68] - Interest income increased to RMB244,761,000 in H1 2024 from RMB133,122,000 in H1 2023[68] - Profit for the period decreased to RMB2,033,103,000 in H1 2024 from RMB2,258,886,000 in H1 2023[68] - Finance costs decreased to RMB140,504,000 in H1 2024 from RMB183,021,000 in H1 2023[68] - Trade payables decreased from RMB1,859.4 million as of December 31, 2023 to RMB1,470.7 million as of June 30, 2024, with turnover days increasing from 34.3 days to 35.9 days[79][84] - Bank borrowings as of June 30, 2024, amounted to RMB294.4 million, with new loans of RMB50.0 million obtained and RMB379.7 million repaid during the six months ended June 30, 2024[80][85] - Trade receivables decreased from RMB412.0 million as of December 31, 2023 to RMB278.6 million as of June 30, 2024, with turnover days decreasing from 3.2 days to 2.9 days[83] - The Group's debt-to-equity ratio as of June 30, 2024, was 24.6%[88][93] - The Group had a total of 143,034 employees as of June 30, 2024, with total staff costs of RMB7,155.7 million for the six months ended June 30, 2024[90][95] - The Group has no specific plans for material investments or acquisition of capital assets as of June 30, 2024, but will continue to explore strategic investment opportunities[98][99] - The Group's pledged/restricted bank deposits amounted to RMB8.2 million as of June 30, 2024, with no fixed assets charged[87][93] - The Group has not hedged its foreign currency exchange risks but will monitor and manage exposure as necessary[89][94] - The Group had no material acquisitions or disposals during the reporting period[91][96] - The Group's future development initiatives include refining restaurant management, exploring diversified business strategies, and pursuing strategic acquisitions[99][100] Shareholder Information - Mr. Li Peng holds 397,500 ordinary shares, representing 0.01% of the total issued share capital[105] - Ms. Song Qing holds 795,000 ordinary shares, representing 0.01% of the total issued share capital[105] - Ms. Gao Jie holds 1,987,500 ordinary shares, representing 0.04% of the total issued share capital[105] - Mr. Zhou Zhaocheng holds 2,087,500 ordinary shares, representing 0.04% of the total issued share capital[105] - NP United Holding Ltd. is owned 51.778% by ZY NP Ltd. and 16.074% each by SP NP Ltd., SYH NP Ltd., and LHY NP Ltd.[107] - The total number of issued shares as of June 30, 2024, is 5,574,000,000[107] - Fuhai is held 40% by Shanghai Xinpai and 60% by Yihai (Shanghai) Food Co., Ltd., making it an associated corporation of the company[110] - Yihai is held approximately 31.39% by ZYSP YIHAI Ltd. and SP YIHAI Ltd.[110] - Mr. Zhang Yong is deemed to be interested in the shares of Fuhai (

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][6] Core Views - The company has achieved record high revenue and core operating profit in H1 2024, with revenue reaching 21.49 billion and core operating profit at 2.80 billion, marking a year-on-year increase of 13.8% and 13.0% respectively [2][4] - The company plans to accelerate store openings in H2 2024, with expectations of significant growth in the number of new stores [3][6] - The introduction of a multi-store management model and franchise system is expected to enhance operational efficiency and service quality [4][6] Financial Performance - In H1 2024, the company reported a net profit of 2.04 billion, a decrease of 9.7% year-on-year, primarily due to foreign exchange losses and changes in tax policies [4][6] - The company’s gross margin improved to 61.0%, an increase of 1.7 percentage points year-on-year, attributed to lower procurement costs [4][6] - Revenue projections for 2024-2026 are 46.68 billion, 48.80 billion, and 51.92 billion respectively, with net profits expected to be 4.57 billion, 4.94 billion, and 5.24 billion [6][7] Store Operations - The company opened 11 new stores and closed 43 in H1 2024, resulting in a total of 1,343 stores, a decrease of 39 stores year-on-year [3][4] - The average customer spending decreased to 97.4 yuan, down by 5.5 yuan year-on-year, while the table turnover rate increased to 4.2 times per day [3][4] - Same-store sales grew by 15.3% year-on-year, with significant growth in lower-tier cities [3][4] Strategic Initiatives - The company is implementing management optimization through a structured approach involving operational, management, and foundational aspects [4][6] - The "Pomegranate Plan" has been launched to encourage the incubation and development of new restaurant brands, promoting innovation in dining services [4][6] - A mid-term dividend of 0.358 yuan per share has been declared, marking the first mid-term dividend since the company’s listing [4][6]