Summary of Haidilao International Holding Ltd Conference Call Company Overview - **Company**: Haidilao International Holding Ltd - **Industry**: China/Hong Kong Consumer - **Stock Ticker**: 6862.HK - **Market Cap**: RMB 67,320 million - **Current Share Price**: HK$ 13.59 - **Price Target**: HK$ 17.50 (29% upside) [6][9] Key Points Business Performance - **Stabilization**: Haidilao's hotpot business operations are stabilizing and benefiting from a low base [3][4] - **Profit Contribution**: The delivery business and new brands are growth drivers, but their profit contributions remain non-material. The hotpot segment is the major profit contributor [4][3] - **Delivery Revenue Growth**: Accelerated by 60% in Q3 compared to 1H 2025, with average selling prices (ASP) between RMB 30-50 [8] Financial Metrics - **Revenue Projections**: Expected net revenue for 2025 is RMB 42,405 million, with a projected CAGR of 26% from 2025 to 2027 [6][9] - **Earnings Per Share (EPS)**: Projected EPS for 2025 is RMB 0.73, with an increase to RMB 0.94 in 2026 [6] - **EBITDA**: Expected to be RMB 6,963 million in 2025, increasing to RMB 8,523 million in 2026 [6] Market Dynamics - **Macro Factors**: Key risks include macroeconomic conditions, particularly inflation, and external factors like delivery platform price wars affecting dine-in demand [3][11] - **Store Expansion**: Slowed due to weaker-than-expected performance of YEAH Qing, with a revised target of 80+ stores by the end of 2025 [8] Valuation and Risks - **Valuation Methodology**: Target P/E of 17x 2026 earnings, reflecting cautious consumption sentiment amid macro uncertainties [9] - **Upside Risks**: Faster macro recovery, better-than-expected demand, and quicker new store openings could enhance performance [11] - **Downside Risks**: Include raw material cost inflation, delays in new store openings, and potential increases in staff costs affecting service quality [11] Additional Insights - **Table Turn Improvement**: Sequential improvement in table turn year-over-year, with low-single-digit growth observed in October [8] - **New Brand Performance**: Ju Gao Gao, a lower ASP hotpot format, has over 30 stores, with plans for more openings in 2026 [8] This summary encapsulates the essential insights from the conference call regarding Haidilao International Holding Ltd, highlighting its current performance, financial outlook, market dynamics, and associated risks.

Investment Rating - The investment rating for Haidilao International Holding Ltd is Overweight, with a price target of HK$20.00, indicating a potential upside of 28% from the current price of HK$15.58 [4]. Core Insights - The report highlights that Haidilao is on track to meet its 2025 target for gross store openings, with an expected acceleration in the second half of 2025. The company aims for a gross opening of more than a mid-single-digit percentage of its existing network [6]. - The gross profit margin (GPM) for 2025 is projected to be lower than in 2024 due to rising raw material costs and enhanced customer services, although lower depreciation expenses may provide some mitigation [6][2]. - The report notes that the staff cost ratio is expected to remain stable year-on-year in 2025, while marketing efforts are being expanded to include regional and store-level initiatives [2]. Financial Metrics - For the fiscal year ending December 2025, the estimated net revenue is projected to be RMB 45,930 million, with an EBITDA of RMB 9,002 million and a net income of RMB 5,338 million [4]. - The earnings per share (EPS) for 2025 is estimated at RMB 0.99, with a projected compound annual growth rate (CAGR) of 14% for EPS from 2025 to 2027 [7]. - The report indicates a price-to-earnings (P/E) ratio of 14.5 for 2025, which is considered reasonable given the macroeconomic uncertainties [7]. Market Context - The report mentions that the overall consumption sentiment remains weak, impacting top-line growth, with a year-on-year decline in table turn for Haidilao observed in May 2025 [6]. - The company is also adjusting its store opening strategy for YEAH Qing BBQ, scaling back slightly to ensure quality openings, targeting 100 gross store openings in 2025 [6].

Investment 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].