Morgan Stanley has released a research report stating that Haidilao (06862) has provided its chairman with a loan of up to RMB 100 million for a one-month term, which may further dampen investor sentiment.
The bank has downgraded the stock rating from "Overweight" to "In-Line" and lowered its target price from HK$16.5 to HK$10.5.
The bank noted that the loan has minimal financial impact on the company, but as a related-party transaction, it could further increase valuation pressure following the earlier reduction in holdings by major shareholders.
Macroeconomic conditions and catering demand remain persistently weak, with same-store turnover rate recovery lagging on a year-on-year basis, and the company has yet to show any clear catalysts.
The bank has revised down Haidilao's revenue forecasts for 2026 to 2028 by 1% and earnings per share forecasts by 3% to 4%, reflecting slower-than-expected macroeconomic and catering demand recovery in the third quarter.
The new target price corresponds to 12 times 2026 price-to-earnings ratio, which is more than one standard deviation below the average P/E ratio since 2024.
The bank believes that at the current price of approximately 10 to 11 times 2026 to 2027 P/E ratio and a dividend yield of over 7%, the risk-reward profile is reasonable.
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