S&P gives Haidilao, notes BBB

S&P said it assigned BBB ratings to Haidilao International Holding Ltd. and its planned senior unsecured notes.

“We expect Haidilao to maintain its leadership in China’s hot pot market owing to its strong brand equity and good control over its table turnover,” S&P said in a press release. Hot pot dining accounts for about 15% of China’s RMB 4.6 trillion catering-service market.

Haidilao plans to expand new stores by about 20% annually over the next two years. “It is looking to increase store density in higher-tier cities – where long waiting times have hurt customer experience – and expand into more lower-tier cities where consumption upgrades drive demand,” the agency said.

The outlook is stable. The outlook reflects the expectation Haidilao will gain market share and record healthy revenue and profit growth in the next three to five years. “We expect the company to recover from Covid-19-related disruptions and maintain a ratio of debt to EBITDA at below 1.5x from 2021,” S&P said.

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