Credit Suisse maintains HAIDILAO's "Hold" rating and lowers the target price to 15.4 yuan

Credit Suisse released a report expecting HAIDILAO's table turnover rate to be approximately 3.9 times in the second half of 2025 (4.0 times in the second half of 2024 / 3.8 times in the first half of 2025), with a slight annual increase in average selling price; other brands and delivery services will continue to contribute to revenue growth. It is estimated that the gross profit margin will improve compared to the first half of the year, but will face certain pressure year-on-year due to a higher base. The report predicts that HAIDILAO's net profit for the second half of 2025 will be RMB 2.37 billion, a year-on-year decrease of 11%; sales are expected to grow by 3% year-on-year, reaching RMB 21.96 billion. Same-store sales are expected to decline by 1% year-on-year, mainly due to a decrease in table turnover rate to approximately 3.9 times, lower than 4.0 times in the second half of 2024.

By the end of 2025, HAIDILAO's number of self-operated stores is expected to be 1,316, a net decrease of 6 from the first half of the year. The number of franchised stores is expected to increase to 78, higher than 41 in the first half of 2025, with some stores transitioning from self-operated to franchised models.

Credit Suisse predicts that HAIDILAO's gross profit margin for the second half of 2025 will be 60.6%, a year-on-year decrease of 2.6 percentage points, but slightly improved from 60.2% in the first half of the year. This is mainly due to the diminishing benefits from declining raw material costs, particularly the impact of beef prices. The proportion of employee costs to revenue is expected to be 33.3%, down from 33.8% in the first half of 2025, but still higher than 32.7% in the second half of 2024. Other operating costs are expected to remain stable.

Based on a more conservative store opening forecast and profit margin outlook, Credit Suisse has lowered HAIDILAO's earnings forecast for 2025 to 2027 by 1%, 5%, and 7%, respectively. Credit Suisse has reduced HAIDILAO's target price to RMB 15.4, corresponding to 17 times and 16 times the price-to-earnings ratio for 2026 and 2027, respectively, and maintains a "Hold" rating