To The Moon

Industrial Securities has released a research report maintaining an "Overweight" rating on HAIDILAO (06862), noting the company's recent proactive management reshuffle to drive innovation and development. The firm believes the Chairman's return to frontline management is expected to enhance operational efficiency and facilitate the execution of diversified strategies. Since the second half of the year, the company has continued to actively explore sub-brands while maintaining stable operations for the core HAIDILAO brand; the firm anticipates a sequential and year-on-year recovery in revenue compared to the first half. Long-term, the firm remains optimistic about the company's high-quality asset base and industry-leading management capabilities. The main points from Industrial Securities are as follows: The company has proactively updated and adjusted management roles and structure. On January 13, the company announced management changes. 1) Chairman and Executive Director Mr. Zhang Yong has been appointed as Chief Executive Officer, marking a return to frontline management. 2) Four younger-generation executives have been promoted to Executive Directors. Ms. Li Nana (38, joined the company in 2005, promoted from Jiangsu Regional Manager), Ms. Zhu Yinhua (44, joined in 2007, promoted from Intern Regional Manager for Hubei and Chongqing), Ms. Jiao Defeng (39, joined in 2012, promoted from Head of Product Management Department II), and Ms. Zhu Xuanyi (35, joined in 2018, promoted from Secretary-General of the CEO's Secretariat) have been appointed as Executive Directors of the company. The table turnover rate recovered in the second half. HAIDILAO's table turnover rate for H1 2025 was 3.8 times, with restaurant operating revenue of RMB 185.8 billion. The firm expects the H2 2025 table turnover rate to perform better year-on-year than the first half, leading to a narrowing of the full-year decline rate for HAIDILAO restaurant operating revenue. The number of HAIDILAO stores remains stable, while the company actively develops the Pomegranate brand. The firm forecasts the number of HAIDILAO restaurants for full-year 2025E to be 1,372 (source: Industrial Securities estimates), roughly similar to the count at the start of the year, as the company continues to optimize its existing store portfolio to improve overall operational quality. Regarding sub-brands, the firm expects the number of Yanqing stores to reach 80 in 2025E (source: Industrial Securities estimates), while other brands such as JugaoGao and Xiao Hai Ai Zha are projected to have 39 (source: Zhamen) and 5 (source: Zhamen) stores, respectively. The company is actively developing the Pomegranate Plan, with multiple initiatives launching in H2 2025. Since the second half of 2025, the company has intensified its sub-brand development strategy, leading to the launch of several new brands. JugaoGao self-service hot pot focuses on individual dining with an average customer spend of approximately RMB 60; it saw multiple store openings simultaneously in second-tier cities in Q3 2025, resulting in rapid store count growth. The company has entered the sushi segment, with the first Sushi Yoshii store opening in Hangzhou in October 2025, featuring an average customer spend of around RMB 90. In December 2025, the first HAIDILAO Da Pai Dang hot pot store opened in Panyu, Guangzhou, using a per-plate pricing model, targeting the social dining theme with an average customer spend of about RMB 110. Xiao Hai Ai Zha continues to expand its product categories, with an average customer spend of approximately RMB 30. Risk warnings include: 1) Food safety issues; 2) Intensifying competition; 3) Declining single-store returns; 4) Store closures due to operational weakness.