Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Haidilao- HaidilaoInternational InternationalHolding Ltd (6862.HK)Holding Ltd (6862.HK)

Strong operating leverage; attractive risk-reward

PRICE TARGET HK$17.50 OVERWEIGHT THESIS

Base case, target P/E of 18x 2026e earnings. Our target P/E factors in gradual macro recovery ▪This distinctive Chinese cuisine player has

and lowflation, with the company to slowly expand its store network. Business diversification a model that is scalable and not easy to

to non-hotpot business and disciplined cost control drives a 2025-27e EPS CAGR of 15%. Our replicate, supported by its ecosystem of a

target P/E is about 1SD below the average valuation since 2018. We see upside potential supply chain and an incentive scheme to

should the macro recovery be faster and store expansions turn more proactive. train store management.

agile bottom-up store management HK$17.41 ▪The

approach helps the company achieve

Consensus Price Target Distribution HK$12.75 HK$21.00 resilient profitability and cash flow, which is MS PT

rare in China's casual dining market, againstSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

a weak macro backdrop. The company is

diversifying its business via new brand

incubation and developing its delivery

RISK REWARD CHART business, supporting growth and more

resilient sales in the medium term.

see the impact from delivery platform HKD ▪We

HK$34.00HK$34.00(+186.44%)HK$34.00(+186.44%)(+186.44%) competition as short-term, and expect a

more visible recovery from 2026.

Consensus Rating Distribution

24 72% Overweight

28% Equal-weight

HK$17.50HK$17.50(+47.43%)HK$17.50(+47.43%)(+47.43%) 0% Underweight

MS Rating

HK$11.87HK$11.87HK$11.87

Source: Refinitiv, Morgan Stanley Research