Daiwa has released a research report stating that it has lowered its earnings per share forecasts for HAIDILAO (06862) for the 2026 to 2028 period, reflecting both the lack of demand improvement and losses from disposals. The target price has been reduced from HK$13.2 to HK$11.3, while the "Outperform" rating has been reaffirmed.

Daiwa noted that the controlling shareholder of HAIDILAO reduced its stake by 259 million shares due to personal funding needs and financial arrangements. The firm leans toward viewing this as a one-off event and believes the associated pressure has subsided, although negative sentiment from similar occurrences may continue to affect Chinese consumption and consumer stocks in the short term.

Daiwa does not anticipate that similar risks will extend to Yihai International (01579), given the controlling shareholder's lower stake in Yihai and its smaller market capitalization. The firm suggests the current focus should remain on HAIDILAO's operations and growth prospects.

Daiwa indicated that August table turnover rates may improve sequentially but may not show year-on-year growth. September turnover rates are expected to improve year-on-year, supported by a low base, but demand visibility for the fourth quarter of 2026 remains uncertain.

During the August results briefing, management stated that 2026 will mark the first year of mid-platform construction, aimed at accelerating HAIDILAO's restaurant expansion—with overall store openings in the mid-single-digit percentage range, including 10 to 20 stores in lower-tier markets and core business districts, with a faster pace planned for 2027. Under the "Red Pomegranate Plan," new brands are now ready for large-scale replication, with expectations of approximately 30 small-stall hotpot stores and 10 sushi stores in 2026, growing to high-double-digit and mid-double-digit store counts respectively by 2027. Daiwa believes market expectations for these formats remain modest.