Sinolink: Gives HAIDILAO (06862) a "buy" rating with a target price of 18.94 Hong Kong dollars.

Sinolink released a research report predicting that HAIDILAO (06862) will achieve operating revenue of 47.55/50.25/53.11 billion yuan in 2026/2027/2028, with a year-on-year growth of +10.0%/+5.7%/+5.7%; net profit attributable to shareholders will be 4.6/5.06/5.54 billion yuan, with a year-on-year growth of +13.5%/+10.0%/+9.6%, corresponding to EPS of 0.82/0.91/0.99 yuan. The firm believes that HAIDILAO is a leading company in the catering industry and should be given a certain premium valuation. Giving the company a 20 times PE ratio for 2026, the corresponding target price is HK$18.94, and a "buy" rating is given. Sinolink's main points are as follows: The resilience of the hot pot industry remains unchanged, and cost reduction and efficiency improvement bring benefits. As a leading company in the domestic catering industry, the company has a large number of stores covering a wide area. As of the end of 2025, the group operated a total of 1383 HAIDILAO restaurants, with 1304 being self-operated and 79 being franchised. The company's high shareholder return characteristics continue to be evident. According to the company's 2025 annual report, the company plans to distribute a final cash dividend of HK$0.384 per share, plus a mid-year cash dividend of HK$0.338 per share, at a closing price of HK$15.09 on May 12, 2026, the corresponding dividend yield is approximately 4.8%. The company is well-known for its high-quality ingredients, personalized services, and unique user experience. By adopting a highly concentrated equity structure and flat management, the company improves operational efficiency and implements a series of strategic measures such as the "Woodpecker Plan," "Hard Bone Plan," and "Red Pomegranate Plan," demonstrating the company's strong operational resilience. Steady macroeconomic recovery, strong and resilient growth in the hot pot industry. Benefiting from the continuous expansion of the industry's scale and the concentration of leading brands, the company has become a leader in the hot pot segment. With the steady growth of China's GDP and the promotion of domestic demand policies, Chinese dining consumption has become an important driver of economic growth. As one of the sub-sectors with a large audience in the catering industry, the market size of the hot pot industry is expected to reach 650 billion yuan in 2025, with a growth rate higher than the overall level of the catering industry. Comprehensive competitiveness builds barriers, information strategy positions the future. HAIDILAO actively builds a digital transformation, deploys core talent incentive policies "link interests, lock management," and consolidates supply chain layout to build its unique barriers. The company's independent operating supply chain system, including Shuhai Supply Chain, YIHAI INTL, etc., accurately empowers the industry chain upstream and downstream, reducing operating costs while enhancing its own risk resistance. "Red Pomegranate Plan" drives growth, strategic direction fits demand trends. The company launched the "Red Pomegranate Plan" corporate strategy, aiming to encourage senior employees to incubate more new brands and expand into new catering segments. It has successfully launched several sub-brands such as Flame Please BBQ, Jugaro Self-service Hot Pot, and Roshima Sushi, better aligning with the current trends in domestic catering consumption. The multi-scenario, multi-brand layout of the "Red Pomegranate Plan" broadens the company's future development space and builds a more diverse catering ecosystem for the group. Risk warning The company's store expansion speed is lower than expected; demand for catering business is lower than expected; food safety issues.