Shares of HAIDILAO tumbled on Monday morning, falling more than 10% in early trading, following reports that a major shareholder plans to sell a significant stake in the hotpot chain.

According to foreign media reports, the company's largest shareholder intends to offload 259 million shares on September 9, with the placement managed by UBS. The shares are priced at approximately HK$10.6 to HK$10.7 each, representing a discount of 5.98% to 6.85% from the previous closing price.

Morgan Stanley's research note identified the selling shareholder as Shu Ping, wife of Yong Zhang, founder and chairman of HAIDILAO. The reduction comes as a surprise, given that Zhang had just increased his stake in May by purchasing 11.35 million shares at HK$13.39 apiece, with the company characterizing the move as a personal financial arrangement for the shareholder.

The brokerage noted that this divestment will likely pressure market sentiment in the near term, until investors regain confidence in the company's growth trajectory and are assured that no further share reductions will occur. Morgan Stanley maintains its "overweight" rating on the stock, reiterating a target price of HK$16.50.

As of press time, HAIDILAO has not issued an official response to the reports.