CICC Cuts Haidilao's Target Price by 6% to HK$16.9 as it Gradually Recovers in FY2025

On January 16, Jinshi Data reported that ICBC International published a report, lowering the target price of Haidilao (06862.HK) by 5.6% to 16.9 Hong Kong dollars from 17.9 Hong Kong dollars, maintaining an “outperform” rating. The bank lowered its profit forecast for the 2024/25 fiscal year by 6% and 10% to reflect lower-than-expected sales in the second half of the 2024 fiscal year and a more conservative assumption about customer traffic in the 2025 fiscal year. The report pointed out that Haidilao’s performance in the second half of 2024 was lower than expected. Considering the slowdown in customer traffic, the bank revised its sales rise forecast for the second half of 2024 from a rise of 15% to a decrease of 3%. Based on favorable raw material costs, the gross profit margin for the second half of 2024 is assumed to be raised by 1.5 percentage points to 60.5%, reflecting a year-on-year increase of 1.5 percentage points. The bank said that the group is expected to gradually recover in the 2025 fiscal year, store efficiency will improve, menu updates and consumption vouchers will drive customer traffic rise. The bank expects that with the 6% rise in sales timing intelligence system, revenue in the 2025 fiscal year will rise by 7%. It is forecasted that the operating profit margin for the 2025 fiscal year will increase by 0.6 percentage points to 14.2%.