HAIDILAO(HK:06862)2024-07-01 04:37Investment Rating - The report upgrades Haidilao International Holding to Neutral from Sell, with a new 12-month price target of HK$15.7, reflecting an 11.3% upside potential [2][22]. Core Insights - The share price correction of 23% since May 17 has accounted for less than expected margin expansion and slower store expansion, alongside increased competition in the restaurant sector [2][14]. - Haidilao has shown strong table turn growth year-to-date, outperforming other players in the restaurant industry, with over 20% growth each month [14][19]. - The company has committed to a high dividend payout ratio of 90% in 2023, which is expected to support the share price amid a more stable growth outlook [3][20]. Summary by Sections Financial Performance - Revenue estimates for 2024-2026 have been revised down by 2%-7% due to a slower expansion pace, with total revenue projected at RMB 41,453.3 million for 2023 and increasing to RMB 53,582.8 million by 2026 [5][11]. - The EBITDA for 2023 is estimated at RMB 7,915.8 million, with a growth trajectory leading to RMB 9,731.2 million by 2026 [5][11]. - The earnings per share (EPS) is projected to grow from RMB 0.83 in 2023 to RMB 1.09 by 2026 [5][11]. Market Position and Strategy - Haidilao's management has emphasized quality over quantity in store expansion, with only 8 new stores opened by the end of May 2024, compared to a target of 10% growth [2][14]. - The company has implemented effective turnaround initiatives, such as the "Hard Bone" and "Woodpecker" projects, which have improved operational efficiency and brand momentum [14][18]. Management Changes - A change in leadership was announced on June 21, with Mr. Gou Yiqun appointed as the new CEO, succeeding Ms. Yang Lijuan, who will lead the overseas operations [17][18]. - The new CEO's extensive experience in supply chain and digitalization is expected to support sustainable growth and operational precision in a competitive market [18].