Guotai Haitong: Maintains a buy rating for HAIDILAO (06862) with a target price of HK$20.23.

Guotai Haitong released a research report stating that they maintain a "buy" rating on HAIDILAO (06862). The company predicts that the company's revenue for the years 2025-2027 will be 43.183/45.691/49.373 billion yuan respectively, with year-on-year growth of 1%/6%/8%; the company predicts that the company's net profit attributable to shareholders for the years 2025-2027 will be 4.038/4.510/5.024 billion yuan. Referring to the valuation of comparable companies in the industry, considering that HAIDILAO is a leader in the domestic catering industry, the company is given a 22xPE valuation for the year 2026, with a target market value of HKD 112.8 billion and a target price of HKD 20.23 (assuming 1 Hong Kong dollar = 0.88 yuan). Guotai Haitong's main points are as follows: The founder taking on the role of CEO is expected to increase employee enthusiasm and improve management efficiency. Since its listing, HAIDILAO has gone through several stages in its development, such as rapid expansion, strategic adjustment, and development of multiple brands, and its management changes have matched the company's development stages. At the beginning of its listing, Mr. Zhang Yong served as the Chairman of the Board and CEO, overseeing group management and strategic development. As the founder of the company, Mr. Zhang Yong led HAIDILAO to its listing and established its leading position in the industry. From 2022 to 2025, Ms. Yang Lijuan and Mr. Gou Yiqun respectively led the company in implementing the "Woodpecker Plan/Hard Bone Plan" and the "Red Pomegranate Plan." Starting from January 13, 2026, Mr. Zhang Yong was reappointed as the CEO, which is expected to increase employee enthusiasm, improve management execution efficiency, and enhance information dissemination effectiveness. The single-store model has optimization flexibility, and there is still room for the main brand to open new stores. 1) With the backdrop of recovering consumer demand, the table turnover rate is expected to increase, and digitalization will enhance operational efficiency. Based on the 2024 annual report data, the break-even point for HAIDILAO's directly operated restaurants corresponds to a turnover rate of less than 2.5 times. When the turnover rate reaches 4 times/day, the store's operating profit margin is about 15.5%; when the turnover rate reaches 4.4 times/day, the store's operating profit margin is about 16.1%; when the turnover rate reaches 4.8 times/day, the store's operating profit margin is about 16.6%. Therefore, if consumer demand picks up and restaurant turnover rates increase, single-store profitability has the potential to be optimally upgraded. 2) The analysis indicates that HAIDILAO's main brand has a domestic expansion space of over 1800 stores, with the franchise model assisting in the layout in lower-tier markets. The Red Pomegranate Plan is steadily progressing. In 2024, the group officially launched the "Red Pomegranate Plan," aimed at encouraging the incubation and development of more new dining brands to drive innovation in dining services. As of June 30, 2025, in addition to HAIDILAO hotpot, the company operates a total of 126 restaurants under 14 dining brands. In the first half of 2025, 46 new "Flame Please BBQ House" restaurants opened, reaching a total of 70 by June 30, 2025. The revenue from other restaurants in the first half of 2025 was 597 million yuan, a year-on-year increase of +227%. Looking ahead, BBQ, hot pot, sushi, and other segments have expansion potential.