Daiwa Research lifted its target price for Haidilao International (06862) to HK$32 from HK$23.5 and maintained its "hold" rating.
The research house said Haidilao posted a set of rather mixed 1H results. Daiwa noted emerging signs of operating deleveraging pressure due to its restaurant expansion pace, as
indicated by its like-for-like earnings growth of 50% trailing behind its top-line growth of 59%.
Daiwa expects murkier earnings visibility in the near term as the company has plans to accelerate restaurant openings in 2H. It thinks Haidilao's continued aggressive pace of restaurant openings in 2H suggests risks of cannibalisation, particularly in tier 1 and 2 cities, if seasonality tailwinds disappoint.
Daiwa lifted its 2019-21 net profit by 2-4% after factoring in more restaurant openings (it now expects 300/250/200 openings in 2019/20/21, from 220/195/175 previously).
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