Morningstar

Haidilao International Holding Ltd 06862

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Stock XHKG Rating as of
HK$19.66 +0.66 (3.47%)
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As of Delayed Price Open

Company Report

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Haidilao Earnings: Rising Ticket Average Boosts Earnings Visibility; Shares Undervalued

Ivan Su

While Haidilao’s interim results don’t change our outlook for the company, we feel more confident coming out of its earnings call as the firm is seeing average spending improvement for the Chinese restaurant sector. While other pieces of the puzzle remain, we see increased earnings visibility for the sector, reinforcing our favorable long-term view. Overall, we maintain Haidilao’s fair value estimate at HKD 17.10. We think shares are undervalued, trading at just 12 times our estimated 2024 earnings.

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Price vs Fair Value

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06862 is trading at a 324% premium.
Price
HK$19.00
Fair Value
HK$68.20
Uncertainty
High
1-Star Price
HK$92.36
5-Star Price
HK$98.98
Economic Moat
Bqp
Capital Allocation
Znwfktdst

Bulls Say, Bears Say

Bulls

Wage hikes, urbanization trends, and relatively young populations should continue to drive restaurant spending across China.

Bears

Although the zero-covid-19 policy is now over, restaurants still contend with cautious spending patterns.

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News

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Trading Information

Previous Close Price
HK$19.00
Day Range
HK$19.48–19.96
52-Week Range
HK$11.42–22.00
Bid/Ask
HK$19.66 / HK$19.70
Market Cap
HK$107.00 Bil
Volume/Avg
5.4 Mil / 21.6 Mil

Key Statistics

Price/Earnings (Normalized)
21.39
Price/Sales
2.15
Dividend Yield (Trailing)
6.39%
Dividend Yield (Forward)
6.39%
Total Yield
6.39%

Company Profile

Haidilao International is a Chinese hot pot restaurant operator that started in Sichuan in 1998. In 2022, the restaurant chain served over 276 million customers across more than the 1,300 stores it had in Greater China. With CNY 31 billion in 2022 systemwide sales, the firm is the second-largest restaurant company in China, behind Yum China (CNY 68 billion) but ahead of Xiabuxiabu and Jiumaojiu. All of Haidilao’s restaurants are company-owned, as the firm is focusing more on the quality of its restaurants than quantity.Haidilao is known for serving Sichuan-style hot pot along with exceptional service. It’s still looking to expand its store footprint, but expansion opportunities are now limited to only Greater China following the spinoff of Super Hi—the operator of Haidilao stores overseas.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Large Core
Total Number of Employees
143,034
Website
https://www.haidilao.com

Competitors

Valuation

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Metric
06862
00520
YUMC
Price/Earnings (Normalized)
 21.39—24.00
Price/Book Value
 10.021.673.35
Price/Sales
 2.150.271.86
Price/Cash Flow
 13.201.5411.44
Price/Earnings
06862
00520
YUMC

Financial Strength

Metric
06862
00520
YUMC
Quick Ratio
 1.460.601.04
Current Ratio
 1.600.851.23
Interest Coverage
 18.70−4.55—
Quick Ratio
06862
00520
YUMC

Profitability

Metric
06862
00520
YUMC
Return on Assets (Normalized)
 17.88%−3.48%7.25%
Return on Equity (Normalized)
 43.06%−11.97%13.62%
Return on Invested Capital (Normalized)
 24.46%−2.78%7.78%
Return on Assets
06862
00520
YUMC

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