Hotpot chain Haidilao, controlled by Singapore’s richest couple, sees turnaround as China’s economy rebounds

Enoch Yiu
·3-min read

Chinese hotpot restaurant chain Haidilao International surprised investors by saying it will deliver a profit in 2020, suggesting the business turned around in the second half as the mainland economy rebounded.

The group, controlled by two of Singapore’s richest tycoons, said it expects earnings to slide by 90 per cent in 2020 in a profit warning issued to the stock exchange in a filing late Monday. It cited the impact of Covid-19 pandemic for the decline in takings. It had a net profit of 2.347 billion yuan (US$362.9 million) in 2019.

The warning, however, suggests it returned to profitability in the second half. The business slumped in the first six months of the year, incurring a bigger-than-expected net loss of 964.6 million yuan to shareholders, according to a September filing. The latest 2020 report card would be released later this month, it said in the filing.

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China’s economy rebounded last quarter, helping the group which had 92 per cent of its 935 outlets in 164 mainland cities. The slump in the first half of 2020 reflected measures by governments worldwide in restricting or banning dine-in operations to stem infection cases.

Haidilao fell 0.5 per cent to HK$68.50 in Hong Kong on Tuesday, after swinging between a 2.2 per cent gain and 3 per cent loss. The stock surged 8.2 per cent after a decision to add it to the benchmark Hang Seng Index from March 15.

The stock has gained more than 14 per cent this year, after handing investors a 91 per cent gain in 2020 and an 82 per cent rise in 2019. Chairman Zhang Yong and his spouse Shu Ping, who are co-founders, controlled 68.2 per cent of the group, based on the interim report published in September.

The spicy Sichuan hotpot chain group boosted its outlets to 935 from 768 outlets in mainland China and elsewhere during the first half of 2020.

Chairman Zhang Yong and his spouse Shu Ping, co-founders, control 68.2 per cent of the hotpot chain.
Chairman Zhang Yong and his spouse Shu Ping, co-founders, control 68.2 per cent of the hotpot chain.

Apart from the slowdown in customer patronage, Haidilao also expects to suffer a net foreign-currency loss of about 235 million yuan due to fluctuations in the yuan-US dollar exchange rate, according to its filing.

The group has monitored market conditions and adjusted its business strategies and operations to reduce the negative impact, Zhang said in the exchange filing. It also took measures to control rents and other operating costs, working capital and borrowings to ensure a healthy cash flow position, he added.

Zhang, 50, who was born in mainland China and moved to Singapore in 2019. He and his spouse were ranked No. 1 in 2020 by Forbes on Singapore’s list of billionaires with a net worth US$19 billion, ahead of Li Xiting of medical devices maker Shenzhen Mindray.

Additional reporting by Zhang Shidong

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