Core views:
A leader in the hot pot industry, accumulates energy to adjust and then set sail. The company has been deeply involved in the hot pot industry for 30 years and has the highest market share in the hot pot industry. According to the company's financial report, by the end of the year, the company had 1,374 Haidilao restaurants, and the company served nearly 400 million customers in 23 years. After rapid expansion, the company faced difficulties such as store diversion and increased management difficulties. As a result, the turnover rate and single-store profit declined. Therefore, the regional management system was restarted in '21, and the “Woodpecker Plan” was announced to close or shut down some stores, slow down the progress of store expansion, and continue to polish the store and management system. Since then, store operations have gradually picked up. According to the company's financial reports, the turnover rate reached 3.8 times, an increase of 0.8 times.
Based on quality management, the ultimate service shapes the brand IP. We believe that an excellent management model is a prerequisite for the company's ultimate service and continuous innovation. Piece wage plus a clear promotion path fully stimulates growth vitality. The store level is fully authorized to meet consumer needs through bottom-up innovation, and only controls systemic risks at the headquarters level. Based on high-quality management, the company continues to strengthen extreme services, seize opportunities in segmented scenarios, and continuously improve customer acquisition capabilities.
Single store model optimization, focusing on medium- to long-term store expansion space and second curve growth. After this round of adjustments, the efficiency of the company's stores has improved markedly, and profit margins have greater upward elasticity. In terms of store expansion space, Haidilao still has plenty of room to expand stores in mainland China in the medium to long term. In addition, the company is gradually testing the waters for new store types, new themes, new scenarios, new categories, etc., which is expected to cultivate new performance growth points.
Profit forecast and investment advice: The company is expected to achieve net profit of 51.2 billion yuan, 56.7 billion yuan and 6.25 billion yuan respectively in 2024-2026, up 13.7%, 10.8%, and 10.2% respectively. Considering Haidilao's leading position, store quality and operating efficiency have improved significantly after the reform. There is still room to expand stores in the future while guaranteeing brand potential. Referring to comparable companies, 20 times PE was given in 24 years, with a corresponding reasonable value of HK$19.88 per share. For the first time, coverage was given, giving it a “buy” rating.
Risk warning: macroeconomic fluctuations, store expansion and management optimization falling short of expectations, increased market competition, food safety risks.