Core Insights - Haidilao has received over 150,000 reservations for the Qixi Festival, which is more than five times the normal Friday reservation volume [1] Group 1 - The data indicates that Haidilao's popularity is significantly increasing, with some popular locations being fully booked a week in advance [1]

Core Insights - As of August 29, the company has received over 150,000 dining reservations for the Qixi Festival, which is more than five times the normal Friday reservation volume [1] - The first "super dessert station" has opened at the Shanghai Zhonggeng Manyou City store, offering over 30 products, including beverages and desserts, with over 90% priced under 15 yuan [1] - The company is enhancing customer experience through innovative themes and unique products, aiming to create a "thousand stores with a thousand faces" strategy [1]

Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The company's main business shows stabilization in customer spending, and the effectiveness of the "Red Pomegranate" initiative is notable [1] - Revenue and net profit forecasts for 2025-2027 have been adjusted to reflect uncertainties in the dining environment, with expected net profits of 4.228 billion, 4.712 billion, and 5.113 billion respectively [1] - The company has experienced a decline in same-store sales, but growth in takeaway and other restaurant operations has been significant [1] Financial Performance Summary - Total revenue for 2023 is projected at 41.622 billion, with a year-on-year growth of 33.66% [1] - The diluted EPS for 2025 is estimated at 0.76, with a corresponding P/E ratio of 17.55 [1] - The company reported a total of 1,322 restaurants as of the first half of 2025, with a net decrease of 33 restaurants during that period [1][7] Revenue Breakdown - Revenue from restaurant operations, takeaway, and other segments for the first half of 2025 was 185.80 million, 9.28 million, and 5.97 million respectively, with significant year-on-year growth in takeaway and other operations [1] - The average customer spending in the first half of 2025 was 97.9 yuan, reflecting a slight increase of 0.51% year-on-year [1] Cost Structure - The cost structure for the first half of 2025 shows that raw material costs accounted for 39.82% of total expenses, with employee costs at 33.75% [1]

Core Viewpoint - Haidilao's strategic decision to expand its franchise model is a calculated move aimed at enhancing operational efficiency and market penetration, rather than a reaction to financial pressures [9]. Group 1: Franchise Expansion - As of June 30, 2025, Haidilao operates 1,363 self-operated restaurants and 41 franchise restaurants, with 25 new self-operated and 3 franchise restaurants opened in the first half of the year [1]. - The franchise business generated revenue of 90.849 million yuan in the first half of 2025, a significant increase from 1.899 million yuan in the same period of 2024 [3]. - Haidilao has received over 20,000 franchise applications since opening its franchise model in 2024, indicating strong interest in the brand [1][9]. Group 2: Franchise Model Characteristics - Haidilao employs a "strong management" franchise system, ensuring uniformity in operations, training, performance evaluation, and brand building across franchise and self-operated restaurants [4]. - Franchisees are required to first acquire an existing restaurant before opening new ones, which helps them quickly understand the brand's management and culture [5]. - The initial investment to open a Haidilao franchise is considered to be around 10 million yuan, with actual costs potentially higher due to various operational expenses [8]. Group 3: Strategic Rationale - The franchise model is seen as a way to leverage local resources and insights, particularly in lower-tier cities where direct management may not be as effective [9]. - Haidilao's management emphasizes that the franchise expansion is not a desperate measure for cash flow, as the company has the capability to continue opening restaurants independently [9]. - The combination of old and new store franchises is designed to enhance franchisee understanding of the brand and reduce the time needed for training [3][5].

Investment Rating - The report assigns an "Outperform" rating to several companies including China Feihe, Huazhu, and others, while Budweiser APAC is rated as "Neutral" [1]. Core Insights - The report indicates a slight rebound in spot costs for essential consumer goods, with most indices showing an increase, while futures indices generally declined [35]. - The overall trend in the consumer goods sector reflects a mixed performance, with some categories experiencing cost increases while others face declines [8][35]. Summary by Category Beer - The spot cost index for beer increased by 0.39% month-on-month, while the futures index decreased by 6.06%. Year-to-date changes show a decline of 4.17% for spot and 6.16% for futures [36][13]. - Glass prices initially rose but later fell, with month-on-month changes of +0.3% for spot and -13.9% for futures [12]. Seasonings - The spot cost index for seasonings decreased by 0.16% month-on-month, while the futures index fell by 5.93%. Year-to-date changes are -1.76% for spot and -6.01% for futures [37]. - Domestic soybean prices have increased due to supply contraction, while imported soybeans remain weak [16]. Dairy - The spot cost index for dairy products increased by 0.7% month-on-month, while the futures index decreased by 1.44%. Year-to-date changes are -3.2% for spot and -2.11% for futures [38]. - Fresh milk prices have declined to 3.02 yuan/kg, with various factors contributing to price pressures [19]. Instant Noodles - The spot cost index for instant noodles increased by 1.3% month-on-month, while the futures index decreased by 2%. Year-to-date changes are -3.01% for spot and -4.21% for futures [39]. - Palm oil prices have risen, impacting overall costs [23]. Frozen Foods - The spot cost index for frozen foods increased by 1.15% month-on-month, while the futures index rose by 0.97%. Year-to-date changes are -1.83% for spot and -2.74% for futures [40]. - Vegetable prices have shown significant fluctuations due to seasonal demand [27]. Soft Drinks - The spot cost index for soft drinks increased by 0.78% month-on-month, while the futures index decreased by 5.63%. Year-to-date changes are -4.99% for spot and -8.6% for futures [41]. - PET prices are stable to weak, reflecting changes in demand and inventory levels [31].

Core Insights - Haidilao is exploring a differentiated approach to its business model, focusing on both customer and employee engagement while navigating market challenges [1][10] - The company reported a revenue of 20.703 billion yuan and a net profit of 1.755 billion yuan for the first half of 2025, indicating a strong financial performance [1][10] Financial Performance - In the first half of 2025, Haidilao achieved an operating income of 20.703 billion yuan and a net profit of 1.755 billion yuan, with core operating profit reaching 2.408 billion yuan [1][10] - The operating cash flow for the same period was 3.25 billion yuan, providing a solid financial foundation for the company's initiatives [10] Multi-Brand Strategy - Haidilao's "Pomegranate Plan" has led to the establishment of a matrix of 14 second brands, with "other restaurant income" surging by 227% year-on-year [3][4] - The company has successfully launched multiple restaurant brands, including "Yanjing Barbecue" and "Xiangqian Yinxing," with a total of 126 restaurants operating under these new brands [4][5] - The strategy emphasizes rapid brand incubation through an "internal entrepreneurship + external empowerment" model, significantly reducing the time required to develop new brands [4][5] Innovation and Operational Efficiency - Haidilao is leveraging a comprehensive service system that integrates supply chain management, digital platforms, and talent development to lower the costs associated with multi-brand experimentation [8][9] - The company has implemented a "fast trial and iteration" approach to innovation, allowing for quick adjustments and learning from failures [11][12] - The digital platform enhances operational efficiency by streamlining management processes and improving decision-making capabilities [8][11] Market Position and Future Outlook - Despite challenges in the restaurant industry, Haidilao's multi-brand strategy is viewed positively by the capital market, with expectations for potential growth from successful new brands [10][11] - The company is focusing on optimizing single-store models and nurturing promising brands to enhance overall brand synergy [7][11] - Analysts suggest that Haidilao's ability to adapt to changing consumer preferences and its systematic approach to brand development position it well for future growth [12]

Core Viewpoint - The overall decline in the restaurant industry has impacted Haidilao, with a notable decrease in sales and revenue in the first half of 2025 compared to the previous year [1][2]. Financial Performance - In the first half of 2025, Haidilao's restaurant system sales decreased by 6.5% year-on-year, with total revenue recorded at 20.703 billion RMB, down 3.7% [1]. - The core restaurant operations generated 18.58 billion RMB, a 9% decrease, marking the first year-on-year decline in revenue since 2022 [1]. - The average table turnover rate fell from 4.2 times per day to 3.8 times, leading to a 10% decrease in same-store sales [4][7]. - Core operating profit declined by 14% to 2.4 billion RMB, a reduction of nearly 400 million RMB compared to the previous year [6]. Market Environment - The external market environment has changed, with national restaurant revenue growth slowing down, and in June 2025, revenue from large-scale catering enterprises fell by 0.4% year-on-year [3]. - Despite the market downturn, Haidilao maintained a slight increase in average consumer spending, rising from 97.4 RMB to 97.9 RMB [3]. Strategic Adjustments - Haidilao is shifting from a standardized model to a more personalized growth path, expanding its product offerings and store types [2]. - The company is diversifying its menu and store themes, including high-end "selected stores" and budget lunch buffets, as well as themed stores for night snacks and family interactions [2]. - The "Red Pomegranate Plan" has been launched to extend into various food categories, including barbecue and fried chicken, covering nearly all mainstream restaurant formats [2]. Cost Management - Fixed costs remain high, with labor costs increasing by 0.5 percentage points to 33.8% of total costs [5]. - Although prices were not directly lowered, increased portion sizes and material investments led to a rise in raw material costs by 0.8 percentage points to 39.8% [5]. New Business Initiatives - Haidilao has accelerated its franchise system and the "Red Pomegranate Plan," which now includes 14 restaurant brands and 126 locations, up from 11 brands and 74 locations last year [13]. - The new franchise stores generated 91 million RMB in revenue, significantly lower than the average revenue of direct-operated stores [15]. - The "other restaurant operations" segment, which includes various brands under the "Red Pomegranate Plan," achieved a revenue of 597 million RMB, a substantial increase of 227% year-on-year [15]. Shareholder Returns - Haidilao has significantly increased its shareholder return, with the payout ratio rising from 40% in 2022 to 90% in 2023, and reaching 95% in 2024 [19][20].

Core Viewpoint - Haidilao is undergoing a significant transformation, shifting from a traditional hotpot chain to a more diversified restaurant ecosystem, exploring new business models and marketing strategies to counter declining revenues and customer traffic [1][5][38] Group 1: Financial Performance - In the first half of 2025, Haidilao reported a 3.7% year-on-year decline in revenue and a 13.7% drop in net profit, with key metrics such as table turnover rate, customer traffic, and store count under pressure [1][3] - The total number of Haidilao restaurants decreased by 5, totaling 1,363, with 1,299 in mainland China and 41 franchises [1][2] - The table turnover rate for self-operated restaurants was 3.8 times per day, down from 4.2 times the previous year, indicating a struggle to meet the previously set benchmark of 4 times [2][3] Group 2: Business Strategy and Innovation - Haidilao is actively pursuing a multi-brand strategy and enhancing its delivery services, with revenue from "other restaurants" and delivery business growing by 227% and nearly 60% respectively in the first half of 2025 [3][24] - The company is experimenting with new concepts such as "nightclub mode" and launching themed menus to attract customers, including a "night snack menu" featuring new dishes and cocktails [8][13][15] - The "Red Pomegranate Plan" was introduced to encourage internal entrepreneurship among employees, aiming to expand and incubate new brands beyond the main Haidilao brand [22][23] Group 3: Market Position and Challenges - Despite the rapid growth of the delivery business, it still contributes a relatively small portion to overall revenue, and maintaining service quality during this expansion poses a significant challenge [35][37] - The company faces intense competition in the delivery market, having entered a crowded space where many players are vying for market share [37] - Haidilao's traditional service model is being challenged by changing consumer preferences, necessitating a balance between standardization and personalized experiences [38]

Investment Rating - The report maintains a "Buy" rating for Haidilao with a target price of HK$20.40, indicating a potential upside of 41% from the current price of HK$14.47 [1][6]. Core Insights - Haidilao's 1H25 performance was below expectations, with revenue of RMB 20.703 billion, a year-on-year decline of 3.7%. The brand's revenue accounted for 90% of total income, with significant contributions from various city tiers [3][4]. - The company is actively adjusting its operational strategies to improve performance in 2H25, focusing on personalized customer service and enhancing dining experiences to attract younger consumers [4][5]. - Despite a decline in profits and revenue, Haidilao maintains a high dividend payout ratio of 95%, with cash reserves of approximately RMB 6 billion, indicating strong cash flow management [5][6]. Financial Summary - Revenue projections for 2025-2027 are expected to grow at rates of 3.3%, 3.3%, and 3.1%, reaching RMB 441.5 billion, RMB 455.9 billion, and RMB 470.0 billion respectively. Net profit is projected to grow at 2.7%, 3.0%, and 2.9% over the same period [6][7]. - The company reported a net profit of RMB 1.759 billion for 1H25, reflecting a year-on-year decrease of 13.7%, with a net profit margin of 8.5% [3][4]. - The financial outlook remains stable, with a projected P/E ratio of 21 times for 2026, supporting the target price of HK$20.40 [6][7].

Core Insights - Haidilao's revenue for the first half of 2025 was 20.703 billion yuan, a year-on-year decrease of 3.66%, with net profit attributable to shareholders at 1.759 billion yuan, down 13.72% [1] - The company experienced a shift in its restaurant operations, with a decrease in self-operated restaurants and a significant increase in franchise locations [1][2] - The decline in performance is attributed to a decrease in table turnover rates and initial adjustments in product and service innovation [1][2] Financial Performance - Restaurant operating income for the first half of 2025 was 18.58 billion yuan, a decrease of 8.97% compared to the same period in 2024 [2] - The takeaway and other restaurant income saw significant increases, recording 928 million yuan and 596 million yuan respectively, which helped mitigate the overall decline [2] - Employee count decreased to 130,384 as of June 30, 2025, down from 143,034 a year earlier, with total employee costs amounting to 6.988 billion yuan [2] Market Position and Competition - The competitive landscape in the hot pot sector is intensifying, with emerging competitors like Banlu Maodu and the rise of Cantonese hot pot posing challenges to Haidilao's market share [2] - Haidilao is exploring both high-end and lower-tier market segments, including the launch of a premium store in Beijing and a budget-friendly self-service hot pot brand [3] - The company plans to continue diversifying its operations and enhancing dining experiences while strategically seeking acquisitions to enrich its business model [3]