HK Stock Market Move | HAIDILAO (06862) falls nearly 3%; August table turnover rate underperforms expectations; the founder's wife's recent discounted cash-out may exacerbate negative market sentiment.

HAIDILAO (06862) fell nearly 3%, down 1.79% as of press time, at HK$9.88, with turnover of HK$125 million. On the news front, Citi noted that according to HAIDILAO's communication with investors, the company's table turnover rate for the full month of August fell by a low single-digit percentage year-on-year, compared with management's statement after the interim results that the table turnover rate for the first three weeks of August rose by a low single-digit percentage year-on-year, underperforming expectations. The bank believes that the greater-than-expected weekly volatility in the August table turnover rate reflects the overall softness in China's consumption environment. In addition, regarding the recent reduction of shareholding by the wife of HAIDILAO's founder through a block trade, Citi believes that the sale of approximately 259 million shares, equivalent to about 4.7% equity, by Shu Ping (wife of founder Zhang Yong), a member of the company's controlling shareholders, further exacerbated negative sentiment toward the stock; the sale price was about 20% lower than Zhang Yong's buyback price in late May, and after the sale, the controlling shareholders' combined shareholding decreased from about 50.2% to about 45.5%. The market expects the proceeds may be used to pay taxes related to China's new personal income tax arrangements for offshore trusts. However, the controlling shareholders stated that they remain fully confident in the company's business prospects, growth potential, and long-term value.