HAIDILAO(HK:06862)2025-11-18 09:41Investment Rating - The investment rating for Haidilao International Holding Ltd is maintained as "Buy" with a target price of HK$18.50, indicating an expected share price return of 31.5% and an expected total return of 33.3% [4][7]. Core Insights - Haidilao experienced low single-digit year-over-year growth in table-turn in October, showing significant month-over-month improvement compared to a largely flat performance in the third quarter [1][2]. - Management anticipates less pressure on table-turn in the fourth quarter of 2025 due to seasonally cold weather and a low comparison base from the previous year, along with positive momentum expected in the first quarter of 2026 due to a longer Chinese New Year holiday period [1][2]. - The gross profit margin (GPM) improved sequentially in the third quarter of 2025, reaching 60.2%, aided by menu optimization efforts and lower labor costs [3]. - Management plans to terminate several loss-making pilot programs in the first quarter of 2026, which is expected to yield operational expense savings for the full year [3][4]. Summary by Sections Sales Performance - Table-turn growth in October was driven by holiday consumption, effective consumer activation campaigns, and remodeled stores catering to new scenarios such as nightlife and family gatherings [2]. - The average selling price (ASP) for dine-in increased slightly in the third quarter of 2025, attributed to a higher mix of premium items [2]. Store Operations - Haidilao opened 59 new stores and closed approximately 60 stores while transferring over 50 stores to franchisees in the first ten months of 2025 [2]. - Delivery sales grew approximately 100% year-over-year in the third quarter of 2025, with projected delivery sales reaching around RMB 2 billion for the full year [2]. Margin Analysis - The GPM improved sequentially in the third quarter of 2025 compared to the first half of 2025, supported by menu optimization and reduced labor costs [3]. - Despite the improvement, 16 new piloting brands remain loss-making on an aggregate basis, prompting management to consider program terminations [3][4]. Valuation - The target price of HK$18.50 is based on a 12x 2025E EV/adjusted EBITDA, aligning with the trading average of global restaurant peers [7].