The company announced its 2023 results. Revenue for 2023 was $686 million, up 23.0% year over year, and net profit attributable to mother of US$26 million. 2H23's revenue was US$362 million, up 16.0% year on year, and net profit was US$22 million, up 52.8% year on year. The results were in line with previous forecasts. The operating profit margin at the restaurant level in '23 was 9.0%, up 4.9pct year on year, the net profit margin was 3.7%, and the year-on-year increase was 11.1pct. The increase in performance was mainly due to: ① 2H23 restaurant business improvements, with significant increases in turnover rate and customer traffic. ② The restaurant network has been further expanded, and the overall international market service industry continues to recover.
Restaurant revenue increased 13.9%, and East Asia's share increased 2%. 2H23, in terms of revenue structure: ① Restaurant operating revenue of US$348 million, up 13.9% year on year. Among them, Southeast Asia, East Asia, North America, and others (Australia, the United Kingdom, and the United Arab Emirates) accounted for 54.0% /-4.6pct, 12.4% /+2.0pct, 20.7% /-1.0pct, 12.9% /+3.5pct, respectively. ② Takeout business revenue of US$06 billion, a significant increase of 143.5%.
③ Other revenue was US$09 million, up 107.3% year over year, mainly due to sales of hot pot condiments and Haidilao brand and sub-brand foods to local customers and retailers becoming more popular in the market, and sales continued to grow.
The restaurant network has remained stable, and the operating capacity has improved markedly. ① Restaurant size: At the end of 2H23, the total number of restaurants was 115. A total of 5 new restaurants were opened throughout the year, and 1 was closed due to property transformation. By region, there are 70, 17, 18, and 10 in Southeast Asia, East Asia, North America, and other regions (Australia, the United Kingdom, and the United Arab Emirates).
② Restaurant performance: The total number of customers received in 23 years was 0.27 million, up 23.0% year on year; the overall customer unit price was 24.8 US dollars, down 1.6% year on year; the overall average turnover rate was 3.5 times per day, of which 2H23 had an average turnover rate of 3.8 times per day, up 0.5 times per day from 3.3 times per day in 1H23, and the restaurant's reception capacity improved significantly.
③ Same-store operation: Average daily sales of the same store in Southeast Asia, East Asia, North America, and other regions were US$1.6, 1.6, 2.0, and 25,000, respectively, up 2.5%, 30.3%, 11.5%, and 16.2% year-on-year; same-store turnover rates were 3.6, 4.0, 3.6, and 3.6 times per day, respectively, with year-on-year increases of 0.2, 0.8, 0.6, and 0.5 times/day, respectively.
Restaurant level profits continue to grow, and costs and expenses are optimized. 2H23, (1) Raw materials and consumables: increased by 14.01% to US$125 million, accounting for 34.6% of revenue, an increase of 0.9 pct over the previous year, a year-on-year decrease of 0.6 pct, mainly due to increased revenue, optimization of procurement costs, and strengthening of restaurant management strategies. (2) Employee costs: Increased by 20.19% to US$118 million, accounting for 32.7% of revenue, a decrease of 0.6 pct month-on-month and an increase of 1.1 pct year-on-year, mainly due to increased revenue. (3) Depreciation and amortization: Decreased by 7.22% to US$37 million, accounting for 10.1% of revenue, a decrease of 2.8 pct month-on-month, and a decrease of 2.5 pct year-on-year. (4) Property rent and related expenses (short-term rental portion): increased by 47.36% to US$11 million, accounting for 3.0% of revenue, up 1.1 pct month-on-month and 0.6 pct year-on-year. Mainly due to the opening of new restaurants, property management fees have increased. (5) Electricity and water expenditure: increased by 23.41% to US$13 million, accounting for 3.7% of revenue, a decrease of 0.2 pct over the previous year, an increase of 0.2 pct over the previous year, mainly due to an increase in the number of restaurants, an increase in the turnover rate, and an increase in electricity costs in several jurisdictions. (6) Travel and related expenses: Increased by 43.83% to USD 0.03 billion, accounting for 1.0% of revenue, an increase of 0.2 pct month-on-month and year-on-year. Business travel has increased mainly due to business expansion. (7) Other expenses: Increased by 6.54% to US$35 million, accounting for 9.6% of revenue, an increase of 1.1 pct over the previous year, and a year-on-year decrease of 0.9 pct, mainly due to the increase in administrative and outsourced services expenses due to the expansion of restaurants.
(8) Other revenue: Decreased by 22.80% to US$0.11 million, accounting for 3.1% of revenue, a year-on-year decrease of 1.5 pct, and a month-on-month increase of 6.1 pct. Mainly due to a decrease in net exchange losses, business development continued to resume after the pandemic. (9) Financial costs:
The decrease was 0.37% to US$0.04 billion, accounting for 1.1% of revenue, a decrease of 0.2 pct year-on-year and month-on-month, mainly due to the settlement of loans with Haidilao International Holdings Co., Ltd.
Continue to reduce costs and increase efficiency, adjust the management structure, and implement the “standardization+localization” strategy. 2H23, significant improvement in restaurant management capacity and operating efficiency in all regions of the company, mainly stemmed from: ① continuing to promote a “low base salary and high dividend” salary structure to effectively motivate managers at all levels; ② adjusting the management structure to a “headquarters - regional manager - country leader - store manager” management structure; ③ actively building a membership system and online operation to provide customers with a rich dining experience through unique services such as basic services+changing faces to celebrate the birthday; ④ Implementing the “standardization+localization” strategy and continuously enriching flavors and menu combinations according to the seasons or festivals in different markets Launch compatible items to provide customers in different regions with diverse products and experiences suited to local tastes and habits.
Update profit forecasts and valuations. Revenue for 2024-26 is expected to be US$8.3, 9.4 billion, and 1.07 billion, respectively, up 20%, 14%, and 13%, respectively, and net profit to mother of US$0.49, 0.64, and 80 million, respectively, with year-on-year increases of 92%, 32%, and 24%, respectively. Corresponding EPS is $0.08, 0.10, and $0.13 per share, respectively. Based on 2024's 1.2-1.4 times PS, calculate a reasonable value range of 1.60-1.87 USD/share, corresponding to HK$12.51-14.60 per share (converted from USD 1 = HK$7.8238); maintaining a “superior to market” rating.
Risk warning: Store expansion falls short of expectations, increased market competition, food safety risks.