Nomura raises Haidilao's target price by 8% and maintains a 'buy' rating

Jins data on January 16th, Nomura issued a report stating that it raised the target price of Haidilao (06862.HK) by 7.9%, from HK$15.1 to HK$16.3, and maintained a “buy” rating. Nomura pointed out that Haidilao’s same-store sales pressure in the second half of the 2024 fiscal year is due to a high base, with better profit margins under favorable cost conditions. It is expected that Haidilao’s net profit will rise steadily by 13% year-on-year in the second half of the 2024 fiscal year. Revenue in the second half is expected to increase by 2% year-on-year, benefiting from a low unit same-store sales rise. On the positive side, Nomura expects Haidilao’s average selling price (ASP) to improve by 1 percentage point year-on-year. At the same time, despite the accelerated opening of new stores by Haidilao, 50 new stores will be opened in the second half of 2024, but the speed of its store expansion is lower than expected. Nomura expects that due to favorable costs and better operational efficiency, Haidilao’s operating profit margin will improve year-on-year and by half year.