HAIDILAO(HK:06862)2024-09-02 06:48Investment Rating - The report maintains a "Buy" rating for Haidilao with a target price of HKD 20.8, indicating a potential upside of 58% from the current stock price [1][2][4]. Core Insights - Haidilao's revenue for the first half of 2024 reached HKD 21.5 billion, representing a year-on-year increase of 13.8%, while net profit was HKD 2.03 billion, down 10%. However, core net profit grew by 13% to HKD 2.8 billion [1][2]. - The company has slightly adjusted its net profit forecasts for 2024, 2025, and 2026 to HKD 4.63 billion, HKD 5.12 billion, and HKD 5.42 billion respectively, with corresponding EPS of HKD 0.91, HKD 1.01, and HKD 1.07 [1][2]. Summary by Sections Financial Performance - As of June 2024, Haidilao operated 1,343 stores, with a net decrease of 31 stores in the first half of the year due to closures of underperforming locations [1]. - The overall table turnover rate improved to 4.2 times per day, a 27% increase year-on-year, returning to levels seen in 2019 despite a 75% increase in store count since then [1]. - The core profit margin remained stable at 13%, with a gross margin of 61%, up 1.7 percentage points due to lower raw material costs [1][2]. Strategic Initiatives - The company is launching the "Pomegranate Plan" to foster a second growth curve through the incubation of new brands and businesses, led by the CEO's innovation committee [2]. - Haidilao continues to implement a high dividend policy, declaring an interim dividend of HKD 0.391 per share, with a payout ratio of 94% and an expected dividend yield of over 5% [2]. Valuation Analysis - The report employs comparable company analysis and DCF methods for valuation, estimating a target price of HKD 20.8 based on a 20x PE ratio for 2024 and a DCF valuation yielding a price of HKD 21.4 [8][10].