DBS: Haidilao International Holding Ltd – BUY TP HK$21.80
alanyeo
Profit Warning expected by market
Haidilao had release a profit warning and expects to record a net loss of Rmb3.8-Rnb4.5bn in 2021 (2020: net earnings Rmb309.5m). The Group expects revenue to grow by 40% y-o-y to over Rmb40bn (2020: Rmb28.6bn). This is largely within the market expectations as the Company had communicated the closure of 300 units by end 2021, with impairment losses expected.
The expected loss was due to (i) one-off loss on disposal of long-term assets, impairment losses accounting more than Rmb3.3-Rmb3.9bn, due to the closure and suspension of operations of more than 300 restaurants, (ii) impact of the operations of Haidilao restaurants due to global pandemic, as well as internal management issues. In 2021, 2H21 restaurant operations was impacted by regional outbreaks and public health control measures. Overseas restaurants also suffered a heavier loss.
The market has largely anticipated for a large write-off in relation to the closure of stores. Our last rating was a BUY, TP at HK$21.80
