Shares of Haidilao International Holding Ltd soared as much as 20 per cent on Monday after the Beijing-based hotpot restaurant chain said it would be profitable for 2022, boosting other food and beverage stocks on bets of a revival of demand in China.
Haidilao’s stock scaled a one-month high of US$2.85, before easing to trade up 12 per cent at $2.74. It was the biggest percentage gainer on Hong Kong’s Hang Seng Index, which was down 0.63 per cent on the day due to geopolitical worries.
China started dismantling its ‘zero-Covid’ restrictions in December, in a boost to consumer and food companies that were battered during the pandemic, with Haidilao and peers Jiumaojiu International Holdings Ltd, LH Group Ltd and Cafe De Coral among those expected to benefit.
Haidilao said it expects to record a net profit of no less than $187 million for 2022, compared to a loss of $143.7 million in 2021, also helped by a gain of $42.3 million on the cancellation of its 2026 notes as well as its restructuring plan.
The company’s business performance will be further improved, it said late on Friday, due to the easing of Covid curbs in mainland China.
Brokerage Nomura said the company’s adjusted net profit margin in the second half of last year could return to the level seen in the second half of 2020, and the faster-than-expected margin recovery trend may boost sentiment on the stock.
The stock is up roughly 90 per cent since the start of November, far outperforming the broader Hang Seng Index’s gain of 35 per cent in the same period.
Shares of Jiumaojiu International, LH Group, Cafe De Coral, China Resources Beer and Budweiser Brewing Co APAC all rose between 2 per cent and 4 per centon Monday after Haidilao’s forecast.
- Reporting by Ankur Banerjee in Singapore; Editing by Savio D’Souza, of Reuters.
