HAIDILAO(HK:06862)2025-05-12 03:14Investment Rating - The investment rating for Haidilao International Holding Ltd is Overweight, with an industry view of In-Line [6][67]. Core Insights - Haidilao's performance in April showed a decline in table turn by double digits year-over-year and a 10% drop during the Labor Day holiday, contrasting with a high-single-digit decline in March. The average spending per table remained stable year-over-year [9]. - The company plans to maintain stable average selling prices (ASP) while remaining flexible to macroeconomic and market conditions. In April, Haidilao opened four new locations and closed six, resulting in a net closure of 11 locations year-to-date [9]. - Despite facing top-line pressure, Haidilao's overall margin is expected to remain resilient due to slightly improved gross profit margin (GPM), stable staff cost ratios, and savings in rent and depreciation [9]. - The company attributes the weakness in April to a shift in consumer preference towards low-price casual dining and increased competition from at-home dining options [9]. Financial Projections - Revenue projections for Haidilao are as follows: Rmb 42,755 million for 2024, Rmb 45,930 million for 2025, Rmb 50,436 million for 2026, and Rmb 56,209 million for 2027 [6]. - Earnings per share (EPS) estimates are Rmb 0.87 for 2024, Rmb 0.99 for 2025, Rmb 1.12 for 2026, and Rmb 1.27 for 2027, indicating a projected compound annual growth rate (CAGR) of 14% from 2025 to 2027 [6]. - The target price for Haidilao is set at HK$20.00, representing a 19% upside from the current price of HK$16.84 [6]. Valuation Methodology - The valuation methodology suggests a target price-to-earnings (P/E) ratio of 19x for 2025 estimated earnings, reflecting a conservative approach given the current macroeconomic uncertainties [11].