Super Hi International reported 1H23 revenue of US$324m (+32% YoY), and net profit of US$3m, lower than our expectation, mainly due to lower-than-expected store openings. We lower 23E EPS forecast from US$0.05 to US$0.02, lower 24E forecast from US$0.12 to US$0.09 (+356% YoY), and lower 25E forecast from US$0.14 to US$0.12 (+25% YoY). We lower target price from HK$25.8 to HK$18, and with 39% upside potential, we maintain Buy rating.

Stores grew steadily. During 1H23, the company opened 4 new restaurants, in Singapore, Thailand and Australia where it has already had stores, and newly entered the United Arab Emirates. As of 1H23, Super Hi has operated 115 Haidilao restaurants in the international market, 70 of which are located in Southeast Asia, 17 are located in East Asia, 18 are located in North America, and 10 are located in other regions.

Table turnover recovery. The table turnover rate increased from 3x in 1H22 to 3.3x in 1H23, and same-store table turnover rate increased from 3.1x to 3.4x.

Restaurant-level operating profit margin improvement. The restaurant level OPM improved by 6.8ppts YoY to 8.3%, mainly benefiting from the higher operating efficiency under the "low basic salary + high bonus" salary structure, improving customer satisfaction through better products and marketing activities, and optimization of the cost structure, etc.

Maintain BUY. We like the company's potential in overseas store opening with Haidilao brand, as well as its innovation capability in localisation, qualified management team and mature management mechanism that supports rapid store expansion, and continuously optimised supply chain management to bring higher margins. We lower target price from HK$25.8 to HK$18, and with 39% upside potential, we maintain Buy rating.

Risks: Slower-than-expected store openings; negative news and food safety incidents.