Shares of Haidilao (06862) fell nearly 3% in early trading, with the stock down 1.79% to HK$9.88 at the time of writing, on turnover of HK$125 million.
According to a note from Citigroup, based on management communications with investors, the company's full-month turnover rate for August declined by low single digits year-on-year. This compares unfavorably with management's earlier guidance following the first-half results, which had indicated a low single-digit year-on-year increase for the first three weeks of August.
The brokerage noted that the weekly volatility in turnover rates during August was greater than expected, reflecting a softer overall consumption environment in China. Additionally, regarding the recent disposal of shares by the founder's wife through a block trade, Citigroup believes that Shu Ping, wife of founder Zhang Yong and a member of the controlling shareholder group, sold approximately 259 million shares, representing about 4.7% of equity. This move has further intensified negative market sentiment toward the stock.
The sale price was approximately 20% below the price at which Zhang Yong repurchased shares in late May. Following the transaction, the controlling shareholders' combined stake decreased from roughly 50.2% to about 45.5%. Market expectations suggest the proceeds may be used to settle personal income tax liabilities related to China's new tax arrangements for offshore trusts. Nevertheless, the controlling shareholders have expressed full confidence in the company's business prospects, growth potential, and long-term value.
Comments