The Great Voyage Era of Hot Pot: Haidilao Sounds the Alarm for Profit Protection

As competition in the overseas hot pot market intensifies, SUPER HI recorded strong profit growth last year, but cost pressures are gradually emerging after excluding exchange rate factors. Key Points: SUPER HI's net profit surged by about 56% last year, partly benefiting from exchange gains. The company mentioned that under its proactive discount strategy, operating profit margins declined last year. Li Shida Long queues at hot pot restaurants have become the norm in shopping malls in downtown Vancouver and in Chinese communities in Los Angeles and New York. It's not just Chinese families; more and more local young people are also familiar with how to dip beef in the bubbling red broth. This highly Chinese dining format of hot pot is becoming a popular dining option overseas. This change provides a clear signal for Chinese chain restaurant companies. As consumption in the local Chinese market declines and the hot pot dining sector gradually saturates, expanding hot pot businesses overseas has become an important source of growth. The well-known Chinese hot pot chain Haidilao (6862.HK) has clearly positioned its overseas business as a strategic focus against this backdrop. SUPER HI Holdings Limited (HDL.US; 9658.HK), which operates Haidilao's international business, recently announced that it expects last year's revenue to be no less than $840 million, an increase of about 7.9% compared to $778 million in 2024. Net profit is expected to be no less than $34 million, a significant increase of about 56% compared to $21.8 million the previous year. In terms of revenue scale, substantial profit growth and steady revenue increase indicate that market demand has not weakened. However, a closer look at the announcement reveals that the structure of profit improvement is noteworthy. Profit growth mainly came from positive exchange gains, with approximately $14 million in exchange gains recorded in 2025, compared to about $19.7 million in exchange losses in 2024. In other words, if we exclude exchange rate factors, the improvement in operational aspects is not significant. The company also mentioned a slight decline in restaurant-level operating profit margins, attributed to a proactive discount strategy in the first half of the year, which increased investments in customers and employees, leading to rising costs. This reveals two messages. First, overseas revenue still has support, and market demand has not shown significant decline. Second, to maintain customer flow and market position, the company is bearing certain profit pressures. In recent years, when discussing Chinese hot pot overseas, it has almost been synonymous with Haidilao. Its first-mover advantage and brand recognition have established a solid foothold in North America and Southeast Asia. However, as more Chinese restaurant companies join the overseas expansion, the competitive structure of the hot pot market is changing. Jiu Mao Jiu Sets Up Overseas Jiu Mao Jiu Holdings (09922.HK), known for its Thai-style pickled fish, is the latest example. Earlier this year, Jiu Mao Jiu completed a notable overseas investment, increasing its stake in the North American hot pot chain Big Way Hot Pot for a total consideration of approximately $43 million, raising its total shareholding to 49%. Big Way Hot Pot is a hot pot chain brand that has localized operations in North America, offering a self-service hot pot dining experience, with a total of about 21 stores in Vancouver and Toronto in Canada, as well as in California, USA, forming a solid consumer base among both Chinese and local young demographics In addition to Big Way Hot Pot, several large regional brands have emerged on the west coast of Canada and the United States in recent years, including the overseas brand of Little Sheep, the all-you-can-eat hot pot chain Happy Lamb Hot Pot, and the rotating hot pot brand Boiling Point, as well as several Japanese and Korean fusion hot pot chain brands. The common feature of these brands is that their price positioning is closer to the local middle-class consumption level, and they operate with a high degree of localization. Haidilao continues to follow a highly standardized, service-oriented, and labor-intensive direct operation system seen in the domestic market. From store location selection, decoration style to employee training and supply chain management, a high level of consistency is maintained. The advantage of this model lies in strong brand recognition and stable experience, but it also requires higher capital investment, poses greater management challenges, and is highly dependent on single-store turnover rates and customer spending. In the face of competition, Haidilao is reducing the aggressive expansion pace of the past few years, placing more emphasis on the profitability quality of individual stores and increasing regional density. On the other hand, it is also optimizing menu structures in some markets, adding localized products, and controlling labor costs. The "proactively offering discounts" and "increasing investment in customers and employees" mentioned in the profit forecast can actually be seen as defensive actions in response to intensified market competition. From the results, Haidilao's revenue can still maintain a growth rate of nearly 8%, indicating that the brand's appeal has not weakened. However, the decline in operating profit margin also indicates that the overseas market has shifted from a blue ocean to a red ocean. Whether it can improve single-store efficiency in the future will become a core variable for valuation. From the stock price performance perspective, the market's evaluation of SUPER HI remains cautious. The stock price of Hong Kong stocks has accumulated a decline of about 29% over the past year, currently hovering around HKD 13, which is at a relatively low position within the 52-week range. After the profit forecast was announced, it still recorded a slight decline, reflecting investors' wait-and-see attitude towards its profit quality and growth certainty. It is worth noting that the company's current extended price-to-earnings ratio is about 17 times, lower than JiuMaoJiu's 20 times and Yum China (9987.HK)'s 25 times. The great maritime era of hot pot has clearly moved beyond the stage of brand dividends, and participants may gradually discover that competition in the Chinese domestic market seems to have gradually gone overseas. As the popularity of Sichuan opera face-changing and noodle performances wanes, Haidilao still has to face a more realistic account