HAIDILAO(HK:06862) Huachuang Securities·2024-03-28 16:00Investment Rating - The report maintains a "Recommended" rating for Haidilao (06862.HK) with a target price of HKD 21.22, compared to the current price of HKD 17.66 [1][2]. Core Insights - Haidilao reported a revenue of HKD 41.453 billion for 2023, representing a year-on-year increase of 33.6%. The net profit attributable to shareholders was HKD 4.499 billion, up 175% year-on-year, primarily due to revenue recovery and cost savings from refined operations [2]. - The company plans to slow down its store openings, with only 9 new stores opened in 2023, while 26 previously closed stores resumed operations and 32 underperforming stores were shut down. As of the end of 2023, Haidilao operated 1,374 restaurants [2]. - Haidilao is enhancing innovation by establishing an innovation office and diversifying its brand portfolio to include fast food, barbecue, and traditional Chinese cuisine. The company is also focusing on improving customer dining experiences through various promotional activities [2]. - The same-store turnover rate improved significantly, with an average of 3.9 times for stores open for over 300 days, compared to 3.0 times in the previous year. The turnover rate in first-tier cities increased from 3.2 to 4.1 times [2]. - Despite a decline in average customer spending due to increased promotional activities, operational efficiency improved, leading to a reduction in costs. The cost of goods sold (COGS) as a percentage of revenue decreased by 0.7 percentage points to 40.9% [2]. - The report projects an increase in earnings per share (EPS) for 2024-2026, with estimates of HKD 0.98, HKD 1.08, and HKD 1.12 respectively, leading to a price-to-earnings (PE) ratio of 20x for 2024 [2][3]. Financial Summary - Total revenue for 2023 was HKD 41,622 million, with a year-on-year growth rate of 33.7%. The net profit attributable to shareholders was HKD 4,499 million, reflecting a growth rate of 174.7% [3]. - The projected revenue for 2024 is HKD 48,675 million, with a growth rate of 16.9%, and for 2025, it is expected to reach HKD 54,564 million, with a growth rate of 12.1% [3]. - The company’s total market capitalization is approximately HKD 984.37 billion, with a debt-to-asset ratio of 53.33% and a net asset value per share of HKD 2.07 [6].