[ET Net News Agency, 29 October 2018] Goldman Sachs initiated coverage on Haidilao
International Holding (06862) with a "buy" rating, and a target price of HK$22.
The research house said Haidilao is a fast growing leader in China's foodservice market
focusing on the hot pot category with a rising global presence. Goldman believes its key
strengths of being "T.A.S.T.Y." will support its growth potential over the next five
years.
It noted that: (1) Top recognized brand - reflected in high customer satisfaction, high
table turns, and low rental costs to sales ratio. (2) Aligned interests between managers
and Headquarters - backed by unique KPI and compensation systems. (3) Scalable business
model. (4) Technology-enriched system. (5) Yield/returns rank top among global peers.
As such, it expects Haidilao to achieve a net income (before minorities) CAGR of 48% in
2017-20, on 50% sales CAGR (48% store expansion CAGR and 3.6% SSSG p.a.). (KL)