海底捞：Potential store and margin expansion ahead-20250327

Investment Rating - The report maintains a BUY rating for Haidilao and raises the target price to HK$ 20.20, based on an 18x FY25E P/E, up from 16x due to faster expansion and sector re-rating [1][13]. Core Insights - FY24 results showed a small beat primarily driven by robust gross profit margin expansion, with sales increasing by 3% YoY to RMB 42.8 billion, although this was below estimates due to greater-than-expected store closures [1][13]. - The company is expected to experience a mild turnaround in FY25E, supported by potential store expansion acceleration and margin improvements, despite stable same-store sales growth (SSSG) [1][10]. - The "Red Guava" project aims to encourage current store managers to open new restaurants under different brands, with 74 stores already established under 11 new brands as of FY24 [10]. Financial Summary - Revenue is projected to grow from RMB 42,755 million in FY24 to RMB 44,607 million in FY25, reflecting a 4.3% YoY growth [2][15]. - Net profit is expected to increase from RMB 4,700 million in FY24 to RMB 5,213 million in FY25, indicating a 10.3% YoY growth [2][15]. - The gross profit margin is anticipated to remain stable at 62.1% for FY25, supported by improved supply chain capabilities and better input costs [11][16]. Store Expansion and Management - Haidilao opened 59 self-owned stores and 3 franchise stores in FY24, resulting in a net decrease of 19 stores due to 70 closures [10]. - For FY25E, the company expects a net increase of approximately 40 stores, equivalent to about 3% YoY growth, with management estimating around 60-70 new openings [10]. - The adoption of multi-store management and digitalization is expected to enhance operational efficiency and staff productivity [10][11]. Earnings Revision - The FY25E net profit forecast has been cut by 10% to RMB 5,192 million, reflecting greater-than-expected store closures and a more conservative outlook on SSSG [11][13]. - The report indicates a significant improvement in gross profit margin, which is expected to positively impact overall profitability [11][13].