China's catering leader Haidilao (06862.HK) experienced a rare high-volume sell-off on September 9, with shares plunging 9.14% and total turnover reaching HK$3.78 billion. The stock's turnover rate exceeded 6%, and its market capitalization shrank to HK$57.635 billion. Since the beginning of this year, Haidilao's cumulative decline has surpassed 23%, making it one of the most disappointing heavyweight consumer stocks on the Hong Kong Stock Exchange despite the Hang Seng Index's relatively resilient performance this year.

The immediate trigger for the sell-off was a substantial stake reduction by the founder's family. According to foreign media reports, Shu Ping, wife of Haidilao founder Zhang Yong, cashed out approximately HK$2.75 billion. The company urgently filed a filing after the market closed on September 9, revealing that SP NP Ltd., the controlling shareholder, placed 259 million shares at approximately HK$10.62 per share, raising about HK$2.75 billion. This sale accounted for approximately 4.65% of the total issued shares, reducing the controlling shareholders' combined stake to 45.49%. SP NP Ltd., which handled the sale, is wholly owned by Shu Ping. The announcement stated the disposal was purely for SP NP Ltd.'s own capital needs and financial arrangements, unrelated to the group's business, operations, financial condition, or development prospects.

Fading Growth Narrative for the Hotpot Giant

Analysts told Sina Finance that the major shareholder's reduction is merely a surface symptom; the real concern lies in the hotpot giant's continuously fading growth narrative. At the interim results briefing two weeks ago, Haidilao's management delivered what appeared to be a decent report card. First-half core operating profit grew 12% year-on-year, with an interim dividend of HK$0.377 per share and a payout ratio raised to approximately 100%, both exceeding market expectations. However, no foreign investment bank raised its target price for Haidilao, instead expressing pessimism about the company's earnings forecasts.

Goldman Sachs believes the company's "store-centric" expansion pace is falling short of expectations. The bank has cut its target price for Haidilao from HK$18.5 in August 2023 to the current HK$12.2, with almost no rebound in between. Deutsche Bank is even more bearish, trimming its target price from HK$12.7 to HK$11.9 following the 2026 interim results and cutting its net profit forecasts for 2026-2028 by an average of 11%. Haidilao's share price has been on a downward trajectory this year, and sell-side confidence in the company's prospects over the next two years has turned more negative than before. According to Deutsche Bank's estimates, Haidilao's net profit will decline approximately 14% in 2025 and another 3.3% in 2026, marking two consecutive years of negative growth. Operating margin forecasts have been cut from 13% to 12.4%, while recurring net profit margin has been reduced from 9.8% to 8.4%.

Goldman Sachs has also revised down Haidilao's adjusted EBITDA for the next two years, with "other expenses" being raised significantly by 27%, primarily due to rising store depreciation and amortization costs as store ages increase, squeezing profit margins. Goldman Sachs believes Haidilao's revenue growth center has slipped from previous high double-digit levels to mid-single digits. Given management's guidance for only mid-single-digit net store additions in 2026, Goldman Sachs has even reduced its store count forecast by 30 stores for 2026-2028. Haidilao previously implemented a "Woodpecker Plan" in 2021, closing approximately 300 stores, followed by a "Hard Bone Plan" in 2022 to reopen previously shuttered locations, though it has yet to return to earlier levels. As the growth story fades, will Haidilao initiate a second "Woodpecker"?

Management's Forced 'Internet-Fication' Approach Draws Cautious Bank Reactions

During the results conference, management explicitly stated that "2026 is the first year of the company's 'mid-to-back office capability building'," shifting the growth logic from "store-driven" to "headquarters-driven." Goldman Sachs' response in its research report was telling. Haidilao's success stems from its "store-oriented" model, akin to a "master-apprentice system" where headquarters provides strong incentives to store manager partners, who in turn have significant reward power over employees. If, as management suggests, functions such as product planning, R&D, supply chain, and marketing are centralized at headquarters with the growth engine shifting to the mid-to-back office, Goldman Sachs believes "Haidilao's capabilities may change and warrant close monitoring." Haidilao aims to reinvent itself with more industrial, standardized, and even internet-style operations, but whether its core "store-oriented" advantage will be eroded by process-driven management remains an open question with no definitive answer.

Both 'Delivery Business' and 'Pomegranate Plan' Face Skepticism as Growth Engines

Hong Kong market analysts believe Haidilao's concentrated push into its "delivery business" is eroding its profit margins, while the sub-brand "Pomegranate Plan" remains in a cash-burning phase, with neither confirmed as a viable growth engine. Analysts note that delivery profit margins are significantly lower than dine-in, and platforms charge high commissions, casting doubt on whether delivery can unlock incremental growth. Goldman Sachs points out that the rising share of delivery sales and lower gross margins from new businesses could drag on overall profitability. According to Haidilao's 2026 interim report, the company continues to prioritize delivery as a key expansion area, with delivery revenue share climbing rapidly and expected to maintain high double-digit growth in the second half. As for the "Pomegranate Plan," the highly anticipated small hotpot concept currently operates only 12 stores, with sushi at just 3 locations. Management targets reaching high double-digit store counts for the former and double-digit for the latter by the end of 2027, but as it stands, the path to scalable profitability for a "second curve" remains considerable distance away.

Hong Kong market analysts contend that Haidilao faces a challenging landscape. The controlling shareholder's massive cash-out at this juncture, regardless of official explanations, sends a message to the market: those most familiar with the company are choosing to realize gains and exit.