Haidilao's June operation remained soft, with table turnover slightly lower year-on-year

Overview

This report is Morgan Stanley's event commentary on Haidilao International Holding Ltd (6862.HK) for June 2026 operating performance. The core observation is that Haidilao's table turnover in June was slightly down year-on-year and below expectations; even after the Dragon Boat Festival holiday shifted into June, traffic recovery still appears weak.

Core views

The report argues that short-term operating pressure is mainly from demand and traffic: unfavorable weather may have some impact, but weak macro recovery remains the primary cause. The year-on-year base in the second half should ease, but summer travel-related indicators have not shown a strong rebound, so summer traffic may remain soft. On a medium-term basis, there is an upside case if macro and demand recover faster and if store or brand expansion becomes more aggressive; conversely, slower recovery in turnover, rising raw-material and labor costs, and delayed store openings would restrain earnings and valuation.

Analysis framework

The report focuses on the June operating update, with primary attention on year-over-year changes in table turnover, and combines weather, macro recovery, hotel RevPAR, domestic flights, and other travel and consumption indicators to judge summer traffic. The valuation section uses a 20x target P/E on 2026e earnings and assesses 2025-2027e earnings growth through store expansion, cost control, and operating leverage.

Methodology notes

• Valuation methodTarget P/E approach

  20x 2026e earnings

  The base case uses 20x 2026e earnings as the target P/E, assuming macro recovery gradually improves, a low-inflation environment persists, and the company expands its store network gradually.

• Research frameworkMorgan Stanley ModelWare

  Forecast model foundation

  Unless otherwise specified, all metrics in the report are based on the Morgan Stanley ModelWare framework.

• Earnings driversOperating leverage and cost control

  2025-2027e EPS CAGR of 27%

  The report believes strong operating leverage and disciplined cost control drive 2025-2027e EPS CAGR to 27%.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 6862.HK / Haidilao International Holding Ltd

  The covered name, a Hong Kong listed restaurant consumption company.

  Strengths

  Strong operating leverage, cost discipline capability, and store network expansion potential; valuation modeling shows relatively high EPS compound growth over 2025-2027e.

  Weaknesses

  Table turnover in June declined modestly year-on-year, with traffic recovery weaker than expected, making the company sensitive to macro and travel consumption conditions.

  Comparison

  The report does not provide a detailed operating comparison with direct peers, but uses relative industry coverage with an In-Line sector view and an Overweight rating.

  Risks

  Slow recovery in table turnover, raw-material cost inflation eroding margins, faster-than-expected labor cost increases, delayed store openings, or overly tight cost control harming service quality and medium-term growth prospects.

Key data

• Stock ratingOverweightStock rating disclosed in the report.
• Industry viewIn-LineIndustry view disclosed in the report.
• Target priceHK$20.00Base-case target price based on 20x 2026e earnings.
• Close priceHK$10.95Close price as of July 10, 2026.
• Implied upside83%Upside potential relative to target price versus the close.
• 2026e revenueRmb49,588mn2026e net revenue in the financial forecast table.
• 2026e EPSRmb0.902026e consensus-EPS basis in the financial forecast table.
• 2025-2027e EPS CAGR27%Earnings per-share compound annual growth rate disclosed in valuation section.

Impact & implications

Weak short-term operating data means the market should lower expectations for a quick rebound in summer consumption and table turnover. But the target price and rating still indicate that Morgan Stanley believes Haidilao has medium-term earnings recovery potential if macro recovery gradually improves, supported by store expansion and cost discipline.

Risks

• Macroeconomic recovery is slower than expected.
• Demand recovery is weaker than expected, leading to slower rebound in table turnover.
• Raw-material cost inflation erodes margins.
• Opening pace for new stores is delayed.
• Employee cost increases exceed expectations, or overly tight cost control harms service quality and medium-term growth prospects.

What to watch

• Whether table turnover improves in July and over the summer.
• Whether hotel RevPAR and travel indicators such as domestic flights show stronger recovery.
• Speed of macro consumption-demand recovery.
• Whether the pace of store and brand expansion becomes more active.
• The impact of raw material and labor cost changes on profit margins.