Investment Rating - The report maintains a "Buy" rating for Haidilao with a target price of HK$20.40, indicating a potential upside of 41% from the current price of HK$14.47 [1][6]. Core Insights - Haidilao's 1H25 performance was below expectations, with revenue of RMB 20.703 billion, a year-on-year decline of 3.7%. The brand's revenue accounted for 90% of total income, with significant contributions from various city tiers [3][4]. - The company is actively adjusting its operational strategies to improve performance in 2H25, focusing on personalized customer service and enhancing dining experiences to attract younger consumers [4][5]. - Despite a decline in profits and revenue, Haidilao maintains a high dividend payout ratio of 95%, with cash reserves of approximately RMB 6 billion, indicating strong cash flow management [5][6]. Financial Summary - Revenue projections for 2025-2027 are expected to grow at rates of 3.3%, 3.3%, and 3.1%, reaching RMB 441.5 billion, RMB 455.9 billion, and RMB 470.0 billion respectively. Net profit is projected to grow at 2.7%, 3.0%, and 2.9% over the same period [6][7]. - The company reported a net profit of RMB 1.759 billion for 1H25, reflecting a year-on-year decrease of 13.7%, with a net profit margin of 8.5% [3][4]. - The financial outlook remains stable, with a projected P/E ratio of 21 times for 2026, supporting the target price of HK$20.40 [6][7].