CMSC International: HAIDILAO (06862) has an extremely attractive risk-reward ratio, rating upgraded to "Add".

CMSC International has released a research report stating that HAIDILAO (06862) currently has a stock price corresponding to a 13.8 times mid-year earnings ratio for 2027, which is at a near two-year low, making it an excellent window for positioning in its long-term fundamental recovery. The high dividend yield creates a solid downside safety net, combined with the acceleration of multi-brand expansion, making the risk-reward ratio of the target particularly attractive. The rating has been upgraded from "Neutral" to "Buy." Considering the contribution of the delivery business and new brand revenues, the bank has slightly raised its revenue forecasts for 2026-2027, with an average increase of 1%. However, due to increased short-term promotional investments and rising raw material costs, the two-year net profit forecast has been downgraded by 2.5%. The target price has been lowered from HKD 16 to HKD 14.4. The company's performance in the first half of 2026 is robust, clearly signaling an operational turning point, with revenue increasing by 7.9% year-on-year to RMB 22.3 billion, at the upper limit of the bank's forecast range. The increased promotional efforts have led to a decline in gross margins, with net profit slightly below expectations. Nonetheless, the bank believes that this round of margin pressure is a proactive investment and a necessary step for the company to solidify its market share and enhance store traffic. More notably, management unexpectedly declared an interim dividend of HKD 0.377 per share, with a payout ratio close to 100%, reflecting their confidence in the company's strong cash flow generation capabilities and long-term operational fundamentals.