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Original title: Haidilao opened 3 stores in two days, the turnover rate dropped to 3 times a day Zhang Yong frankly confessed to blindly expanding the second shareholder “flashing back” the board of directors
Source: Yangtze River Commercial Daily
Haidilao completed a year’s “workload” in half a year, but it was not pleased.
On August 24, Haidilao (06862.HK) announced the 2021 annual report semi-annual report, showing that the company’s operating income and net profit have doubled, and it has added 299 stores in half a year, which is equivalent to opening 3 stores in two days.
However, in the first half of the year, the Haidilao turnover rate dropped to 3.0 times per day, the per capita consumption of customers dropped to 107.3 yuan, and the average daily sales of a single store fell to 84,800 yuan.
The three major statistics are declining, and Haidilao founder Zhang Yong replied: “In June 2020, I judged that the epidemic would end in September, and further plans to expand the store are now seen as blind faith.”
On August 24, Haidilao adjusted its internal organizational structure. Zhang Yong’s wife Shu Ping and “second in command” and second shareholder Shi Yonghong resigned at the same time. At the same time, the company also added executive director members, with an average age of 38.9 years.
In the secondary market, as of August 25, Haidilao’s share price has fallen 58% in the past month, and its market value has evaporated by more than 210 billion Hong Kong dollars.
Per capita consumption of customers has fallen
Haidilao issued a “good” and “bad” semi-annual report.
On August 24, Haidilao announced its 2021 semi-annual report, showing that the company achieved operating income of 20.094 billion yuan in the first half of the year, a year-on-year increase of 105.9%; and realized a net profit of 96.508 million yuan, a year-on-year increase of 110%.
Both operating income and net profit have doubled, especially when the net profit has turned from a loss of 965 million yuan in the first half of 2020 to profit, Haidilao seems to have handed over a full score.
Moreover, as of June 30, 2021, the number of Haidilao stores worldwide was 1,597, a 23% increase from 1,298 at the end of 2020, a net increase of 299, and a net increase of 108% from 768 at the end of 2019. 829 Family.
Opening 299 new stores is equivalent to opening three stores in two days. Haidilao’s expansion speed can be described as “magical”. Moreover, the company added 262 stores in 2018, and opened 302 new stores in 2019. Haidilao completed a year of “workload” in half a year.
However, in the first half of 2021, Haidilao’s overturning rate dropped to 3.0 times per day. Among them, the turnover rate in first-tier cities was 3.0 times/day, the turnover rate in second-tier cities was 3.1 times/day, and the turnover rate in third-tier cities and below dropped the most, from 3.6 times/day to 2.9 times/day.
From 2016 to 2019, Haidilao’s overturning rates were 4.5 times/day, 5.0 times/day, 5.0 times/day, and 4.8 times/day. Even in 2020, Haidilao’s turnover rate will be 3.5 times per day.
At the same time, in the first half of 2021, the average daily sales of Haidilao’s single store was 84,800 yuan, which was down from 87,200 yuan in the same period last year.
Moreover, the per capita consumption of Haidilao restaurant customers has decreased from 112.8 yuan in the first half of 2020 to 107.3 yuan, compared with 110.1 yuan in 2020 and 105.2 yuan in 2019.
Specifically, in the first half of the first half of the year, Haidilao’s per capita consumption gap among customers in first-, second- and third-tier cities was not large. The per capita consumption of customers in first-tier cities was 114.9 yuan, 15.9 yuan higher than that in cities below third-tier cities, and the per capita consumption of customers in second-tier cities reached 104.6 yuan.
In fact, as early as June this year, Zhang Yong, the founder of Haidilao, had already reflected on the situation of opening a store.
Zhang Yong said frankly at the Haidilao investor exchange meeting: “In June 2020, I judged that the epidemic would end in September. I made further plans to expand the store. Now it is indeed blind faith. When I realized the problem, it was already this year. January, when I reacted, it was already March.”
However, Zhang Yong also said that in the current situation, it is a blessing to say that “when the business is not good, a group of store managers will be trained, because we do not advocate finding a good location and paying the traffic fee to the staff instead of the landlord.”
The increase in the number of Haidilao stores has also led to a year-on-year increase in cost-end data such as property rentals and related expenses, depreciation and amortization.
In the first half of 2021, Haidilao’s property rental and related expenses were approximately 199 million yuan, an increase of 125.2% year-on-year; depreciation and amortization expenses were 2.169 billion yuan, an increase of 67.2%.
As of June 30, 2021, Haidilao’s debt-to-equity ratio is 75.4%.
Zhang Yong’s wife resigned
Under the unfavorable situation, how does Haidilao seek change?
In June, Zhang Yong publicly stated that the most important reason for the decline in Haidilao’s performance was internal management problems. “Internal management problems always exist. I have always emphasized the weak aspects of Haidilao’s management in public, whether before or after listing.”
In the semi-annual report, Haidilao also stated that the company’s operating results did not meet management expectations, reflecting the need for efforts to adjust and improve the company’s internal management and operations.
On the same day that the semi-annual report was released, Zhang Yong began to “hands on” the senior management.
On August 24, Haidilao announced that from now on, Shu Ping resigned as a non-executive director and member of the audit committee of the company, and Shi Yonghong resigned as an executive director of the company.
The 2020 annual report shows that Shu Ping is one of the founders of Haidilao and Zhang Yong’s wife.
According to data, Shu Ping became a director of the company in 2015 and was transferred to a non-executive director in 2018, mainly responsible for overseeing the management and strategic development of the group.
Shi Yonghong is the “second commander” of Haidilao and one of the founders.
Shi Yonghong became a director of the company in 2015 and was transferred to executive director in 2018. He is mainly responsible for participating in and supervising the management and strategic development of the group.
In addition to his position in the group, Shi Yonghong is also the executive director and chairman of Haidilao’s hot pot ingredient supplier Yihai International, and holds directorships in many member companies of Haidilao.
At present, Shu Ping and Zhang Yong control a total of 3.612.5 billion shares of Haidilao and are the actual controllers. Shi Yonghong is the company’s second largest shareholder, holding 845 million shares of Haidilao.
Haidilao said that the reason for Shu Ping’s resignation was the adjustment of the company’s internal organizational structure, while Shi Yonghong was to devote more time and energy to other businesses.
At the same time, Haidilao announced that Yang Lijuan was appointed as the company’s deputy chief executive officer, Cai Xinmin was appointed as a member of the company’s audit committee, and seven new members Yang Lijuan, Li Peng, Yang Hua, Liu Linyi, Li Yu, Song Qing and Yang Li were added. Executive directors, two new independent non-executive directors, Ma Weihua and Wu Xiaoguang.
Yang Lijuan was the chief operating officer of Haidilao before this appointment, mainly responsible for overseeing the group’s operations. After this appointment, she will be responsible for assisting the CEO to manage the overall operations of the group.
Haidilao revealed that the average age of the new executive directors is 38.9 years old, and most of them are managers who have grown up in the Haidilao system, which is in line with the requirements of Haidilao’s succession plan.
In 2020, Haidilao will launch a succession plan, the selection mechanism is open to all employees, and the plan period is 10 to 15 years. In essence, it is to reserve and exercise talents for the sustainable development of the company by strengthening the effective internal promotion mechanism.
In the secondary market, Haidilao’s share price has continued to decline since February 2021. As of August 25, the company’s share price has fallen 58% in the past month, and its market value has evaporated by more than HK$210 billion.
According to the Credit Suisse Research Report, Haidilao’s revenue turned into a profit in the first half of the year, and its revenue increased by 1.06 times year-on-year to 20.09 billion yuan, which was in line with the group’s preliminary audit. However, the average turnover rate and per capita consumption of customers have both declined, so there are concerns about Haidilao’s profit prospects and restaurant expansion. The bank also sharply lowered its target price for Haidilao by 36% from HK$50 to HK$32, maintaining a “neutral” rating.
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