Bank of America Securities: Downgraded HAIDILAO (06862) target price to HKD 12.3, half-year results generally in line with expectations.

Bank of America Securities released a research report stating that it has lowered the target price for HAIDILAO (06862) from HKD 13 to HKD 12.3. The bank has reduced its earnings per share forecast for HAIDILAO for 2026 and 2027 by 4% and reiterated a "Neutral" rating. Bank of America noted that HAIDILAO's performance in the first half of the year was generally in line with expectations, with revenue increasing by 8% year-on-year. Restaurant revenue decreased by 4% year-on-year, same-store sales fell by 1.3%, and net profit remained roughly flat. The companys interim dividend payout ratio was about 100%, higher than 95% in the same period last year and 82% in the second half of last year. The bank indicated that HAIDILAO's table turnover rate in July was essentially flat year-on-year, but there was month-on-month improvement, and it is expected to remain stable in the second half of the year. However, due to increased contributions from franchising, takeout, and sub-brands, profit margins in the second half are still expected to face headwinds. The bank expects that the net profit margin in the second half will continue to contract, but the extent of the contraction will be narrower than in the first half, with net profit expected to register low single-digit growth.