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UOB Kay Hian expects 'strong traction' in Haidilao’s new store openings for FY2020 despite net loss for 1H20

Felicia Tan
Felicia Tan9/1/2020 04:07 PM GMT+08  • 3 min read
UOB Kay Hian expects 'strong traction' in Haidilao’s new store openings for FY2020 despite net loss for 1H20
UOB Kay Hian has also maintained “buy” on the stock, with an increased target price of HK$52.10 ($9.14) from HK$38.90 previously.
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Haidilao International may have reported a net loss of RMB965 million ($191.5 million) in 1H20 due to the impact of the Covid-19 pandemic, but UOB Kay Hian is positive on the China hotpot chain’s results for FY20 on the back of its 173 new store openings in 1H20.

Of the 173 restaurants, 158 stores were opened in mainland China. The total number of restaurants stood at 935 as at end June, from 768 and 593 outlets as at end 2019, and end June 2019, respectively.

Haidilao on August 25 reported a 16.5% y-o-y decline in its revenue to RMB9.76 billion for the 1H20 ended June. Gross profit fell 20.3% y-o-y to RMB5.41 billion, while gross profit margin fell 2.6 percentage points y-o-y to 55.5%. Its overall operating expenses increased 15% y-o-y as the company has not suspended its new store openings, and its expenditures are mostly rigid.

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