Haidilao released its 2023 financial report. During the reporting period, the company achieved revenue of 41.45 billion yuan/ +33.6%, and net profit to mother of 4.50 billion yuan/ +227.3%. Of these, 23H2 achieved revenue of 22.57 billion yuan/ +58.1%, and realized net profit of 2.24 billion yuan/ +36.6%. The overall operating performance was in line with guideline expectations. With the recovery of the company's turnover rate since the beginning of January, compounded by a steady opening plan, we are optimistic about the company's subsequent performance growth. High dividends are expected to contribute continuous returns to shareholders and maintain a “highly recommended” rating.
Operating performance was in line with guideline expectations, and the increase in the turnover rate drove a recovery in revenue. Haidilao released the company's 2023 financial report, achieving revenue of 41.45 billion yuan/ +33.6%, and achieving net profit of 4.50 billion yuan/ +227.3%.
23H2 achieved operating income of 22.57 billion yuan/ +58.1%, achieving net profit of 2.24 billion yuan/ +36.6%, including restaurant business revenue of 21.33 billion yuan/ +45.7%; takeout business revenue of 570 million yuan/ -31.5%; and revenue from sales of seasoning products and ingredients of 420 million yuan/ +22.9%. The operating performance was in line with guideline expectations.
The improvement in passenger flow led to an increase in the turnover rate, and the customer unit price declined slightly. At the end of 2023, the number of company stores was 1,374/ +0.22%, of which 9 newly opened stores, 26 closed restaurants resumed business, 32 closed restaurants, and 3 net stores. The overall number of stores remained stable. In 2023, Haidilao received 400 million customers/ +43.7%, benefiting from improved customer flow. The company's overall/same-store turnover rate in '23 was 3.8/3.9 times/day, up 26.7%/25.8% year-on-year respectively, with a significant increase over the first half of the year (23H1 was 3.3/3.5); in terms of customer unit price, affected by the hot pot industry price war in the second half of the year, the company's customer unit price in '23 was 99.1 yuan/ -5.5%, of which the customer unit price in Tier 1-3 cities was 105.7/98.3/92.8 yuan, respectively. Change -7.4%/5.8%/-5.2%.
Expense rates continued to be optimized during the period, and profitability declined slightly. 23H2 Company's raw material cost rate/employee cost rate/rental cost rate/discounted cost ratio were 41.0%/32.2%/0.7%/6.4%, respectively. The year-on-year change was -0.04pct/+1.8pct/+0.2pct/ -3.5pct. As the turnover rate picked up, the labor cost rate increased slightly. As the stable and superimposed customer flow in stores led to revenue growth, discounted costs declined. 23H2's net profit margin to mother was 9.9% /-1.6pct, and profitability declined slightly.
High dividends boost market confidence and lead the industry in dividend rates. In 2023, the company expects to pay a dividend of about 4.05 billion yuan, with a cash dividend of 0.748 yuan (0.824hkd) per share. The corresponding dividend rate is as high as 92.6%. Compared with the dividend payout rate of 43.1% for the same period in Jiumaojiu 23, the dividend ratio leads the industry, which is expected to boost market confidence.
Investment advice: As a leader in the hot pot industry, Haidilao's service, management, brand and supply chain capabilities are still at the ceiling level of the industry. The company's current opening plan remains steady. The subsequent franchise model and incubation process for the new brand “Hi Lao” are worth paying attention to. As the company's turnover rate picks up since the beginning of January, we are optimistic that the company's subsequent performance will grow steadily. High dividends are expected to contribute continuous returns to shareholders. It is expected that between 2024-2026, the company will achieve net profit of 51.5/56.7/6.28 billion yuan, which is 20 times PE in 24 years. The corresponding target price is HK$20.0, maintaining the “Highly Recommended” rating.
Risk warning: The epidemic has repeatedly hindered the recovery of passenger flow, increased market competition, and rising raw material prices.