Fitch revises Haidilao view to negative

Fitch Ratings said it revised Haidilao International Holding Ltd.'s outlook to negative from stable, and affirmed the issuer default and senior unsecured ratings at BBB. Fitch also affirmed the rating on the dollar-denominated senior unsecured notes at BBB.

“The negative outlook reflects our expectation that funds flow from operations (FFO) adjusted net leverage could be sustained above 2x in the near term as a result of weaker profitability and high capex for restaurant expansion. Haidilao's deleveraging capacity will depend on its pace of expansion and restaurant operating performance, particularly the ramp up of new restaurants. We will have more visibility on the recovery trajectory in 2H21 as the company focuses on increasing restaurant-level operating efficiency and new restaurant operations may mature,” Fitch said in a press release.

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