UBS has reaffirmed its "Buy" recommendation for HAIDILAO (06862) while lowering the target price to HK$16.30, according to a research report released by the bank. The adjustment follows the company's first-half results, which broadly aligned with market expectations.

Revenue and net profit for the first half grew 8% and remained flat year-on-year, respectively, reaching RMB 22.3 billion and RMB 1.8 billion. While revenue was largely in line with the bank's estimates, net profit came in 3% below forecasts, primarily due to reduced net gains from financial assets measured at fair value through profit or loss and higher losses from the disposal of property, plant, and equipment.

During the period, earnings before interest and tax (EBIT) increased 9% year-on-year, exceeding the bank's projection by 3%. The EBIT margin also outperformed expectations by 0.4 percentage points, and the gross margin was similarly 0.4 percentage points higher than anticipated. The dividend payout ratio stood at approximately 100%, surpassing the 95% recorded in the first half of last year and exceeding the bank's expectations.

UBS noted that HAIDILAO's operational performance in July and August exceeded the bank's forecasts, with operating margins demonstrating resilience in the first half despite macroeconomic uncertainties. During this period, the average daily table turnover rate improved slightly year-on-year in both July and August and recorded sequential growth, supported by the summer peak season and the launch of IP-themed products and marketing campaigns.

The company opened a net of six stores in the first half, including franchised outlets. Management plans to maintain mid-single-digit overall store growth for standard HAIDILAO restaurants throughout the year, while further expanding its network of different store formats into both high-tier and lower-tier cities, alongside upgrading or relocating some existing locations.