In a report released today, Walter Woo from CMB International Securities maintained a Buy rating on Haidilao International Holding (HDALF – Research Report), with a price target of HK$20.20.
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Walter Woo has given his Buy rating due to a combination of factors that suggest a positive outlook for Haidilao International Holding. The company has shown a slight improvement in its financial performance, with a better-than-expected gross profit margin in FY24. Looking forward to FY25, Woo anticipates a mild recovery driven by the potential acceleration of store expansion and improved margins, supported by more efficient supply chain management and the adoption of multi-store management strategies.
Furthermore, Woo highlights the company’s strategic initiatives, such as the ‘Red Guava’ project, which encourages existing store managers to open new restaurants under different brands. This initiative has already resulted in the establishment of 74 stores under 11 new brands, with plans to introduce more brands in the near future. Additionally, the expected stabilization of same-store sales growth and improvements in operational margins, aided by digitalization and AI, contribute to a forecasted 4% sales growth and a 10% net profit growth in FY25. These factors, combined with a limited downside risk and an attractive dividend yield, underpin Woo’s Buy rating.
In another report released yesterday, CLSA also maintained a Buy rating on the stock with a HK$19.00 price target.