Has #ideas2invest been useful to you?
Please click here to share your feedback.
Hotpot dine-in volume in China has been low compared to pre-COVID levels due to regional Covid-19 outbreaks, which has shifted consumer preferences towards delivery and takeaways. However, an estimated 1bn Chinese citizens have already been vaccinated, which may boost consumer confidence to dine out more frequently.
The upcoming hotpot peak season, where 5-6 months in the second half of the year account for the bulk of earnings, should provide a boost to sales. With hotpot operators' share prices retreating 60-70% from their peaks in early 2021, DBS Group Research believes the current prices present an opportunity to capitalise on the incoming boost.
Ready to act now?
Simply click on the stock name below for direct access to our online equity trading platform.
Haidilao
Among hotpot operators, Haidilao is our top pick as the company readjusts its store expansion pace and looks to raise store productivity.
Haidilao should sustain 96% growth in FY22E, supported by store expansion, and improvement in productivity in new stores.
Xiabuxiabu
We also like Xiabuxiabu as store expansion and improved productivity in new stores should support sustained growth.
We expect the worst should be over with the removal of loss-making stores to raise the overall operating margin, and forecast a 48% growth in FY22E.
Not a DBS client?
Open a trading account with us today.
5-min article
China’s power shortage5-min article
Investing as a restorative power to the global economy
