Haidilao International Holding Ltd_ January 2025 and CNY Operational Updates

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: Rmb75,467 million - Current Share Price: HK$14.90 - **Price Target**: HK$18.00, representing a 21% upside potential [5][9] Operational Updates - Demand Trajectory: Slightly better than expected but still weak; year-over-year (YOY) comparison for table turnover in February is higher than January due to Chinese New Year (CNY) timing [2][8] - Earnings Growth: Expected to be driven by margin improvements in the second half of 2024 and first quarter of 2025 [2] - Cash Flow: Disciplined investment and store openings are expected to generate solid cash flow, with a projected dividend yield of 5.5% based on 2023 dividends per share (DPS) [2] Financial Performance - Revenue Projections: - 2023: Rmb41,453 million - 2024e: Rmb44,382 million - 2025e: Rmb48,757 million - 2026e: Rmb51,552 million [5] - Net Income Projections: - 2023: Rmb4,499 million - 2024e: Rmb4,494 million - 2025e: Rmb5,555 million - 2026e: Rmb6,290 million [5] - Earnings Per Share (EPS): - 2023: Rmb0.83 - 2024e: Rmb0.83 - 2025e: Rmb1.03 - 2026e: Rmb1.16 [5] Table Turn Trends - January Performance: Table turnover was slightly positive month-over-month and flat year-over-year; during the CNY holiday, turnover was down less than 5% compared to CNY 2024 [8] - Store Network Changes: - Haidilao: 8 gross openings and 10 closures, resulting in a net decrease of 2 stores - YEAH Qing BBQ: 14 new openings [8] Valuation and Risks - Valuation Methodology: Target price-to-earnings (P/E) ratio of 16x for 2025 estimated earnings, reflecting weaker consumption sentiment amid macro uncertainties [9] - Growth Projections: Projected 18% compound annual growth rate (CAGR) for EPS from 2024 to 2026 [9] - Risks to Upside: Faster macroeconomic recovery, better-than-expected demand recovery, and quicker new store openings [11] - Risks to Downside: Slower recovery in table turnover, raw material cost inflation, and delays in new store openings [11] Key Metrics - P/E Ratios: - 2023: 15.9 - 2024e: 18.0 - 2025e: 13.6 - 2026e: 12.0 [5] - Return on Equity (ROE): - 2023: 60.4% - 2024e: 39.0% - 2025e: 34.7% - 2026e: 29.2% [5] - Dividend Yield: - 2024e: 5.0% - 2025e: 6.3% [5] Conclusion Haidilao International Holding Ltd is navigating a challenging demand environment but is positioned for potential growth through disciplined investment and operational strategies. The company's financial metrics indicate a cautious but optimistic outlook, with significant upside potential if macroeconomic conditions improve.