HDL - Super Hi International: Cooling Down After A Hot Streak

2025-05-26 08:01:00 ET

Summary

• Super Hi International's Q1 FY25 showed a marked slowdown: Revenue up 5.4%, same-store sales nearly flat, and only one new restaurant opened.
• Margins compressed due to rising food and labor costs, with EBIT margin dropping to 4.96% and free cash flow turning negative, though cash reserves remain strong.
• Valuation multiples remain stretched versus industry peers, with limited upside to my $22 price target and no dividend or buyback support.
• I maintain my 'Hold' rating on HDL stock, as current levels offer less than 5% upside; a pullback to $16-17 would provide a safer entry point.

Looks like waiting for this hotpot to cool down was the right call after all.

Since I started covering Super Hi International ( HDL ), a global hotpot chain operating under the brands Haidilao, Hailao, and most recently its newest concept called ' Yan Qing Barbecue ', which just emerged from the incubator, a lot has happened....

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