Daiwa has issued a research report revising its earnings per share forecasts for HAIDILAO (06862) for the 2026 to 2028 period, reflecting subdued demand conditions and losses from divestitures. The brokerage has consequently lowered its target price from HK$13.2 to HK$11.3, while reiterating an "Outperform" rating.
Daiwa noted that the controlling shareholder of HAIDILAO reduced its stake by 259 million shares due to personal funding needs and financial arrangements. The firm tends to interpret this as a one-off event, suggesting that the associated pressure has been alleviated. However, it acknowledged that Chinese consumer and consumer-related stocks could still face negative sentiment from similar occurrences in the near term.
The brokerage does not anticipate that comparable risks will extend to Yihai International Holding (01579), given the controlling shareholder's lower stake and the smaller market capitalization of that entity. Daiwa believes the current focus should remain on HAIDILAO's operational performance and future prospects.
Regarding operational metrics, Daiwa indicated that the table turnover rate for August may show a sequential improvement, though a year-on-year increase is not guaranteed. It expects September's turnover rate to improve year-on-year, supported by a low comparison base. However, demand visibility for the fourth quarter of 2026 remains uncertain.
During the August results briefing, management stated that 2026 will mark the inaugural year for middle-office development, aimed at accelerating HAIDILAO restaurant expansion—with a mid-single-digit percentage growth in total store count, including 10 to 20 new locations in lower-tier markets and core commercial districts, followed by faster expansion in 2027. Under the "Red Pomegranate Plan," new brands have reached a stage suitable for large-scale replication. The company projects approximately 30 small-stall hotpot outlets and 10 sushi outlets by 2026, rising to high-double-digit and mid-double-digit outlet numbers respectively by 2027. Daiwa observed that market expectations for these new business formats remain modest.