Fitch changes Haidilao view to positive

Fitch Ratings said it changed its outlook for Haidilao International Holding Ltd. to positive from stable and affirmed the BBB- ratings on the company and its dollar-denominated senior unsecured ratings.

“The outlook revision reflects the meaningful increase in Haidilao's profitability as a result of improvement in restaurant productivity after management's strategy shift and the lifting of China's strict Covid-19 containment measures in early 2023. Fitch may take positive rating action if there is a longer record of improvement in operating performance and disciplined restaurant expansion, which would result in sustained positive free cash flow (FCF) generation and low leverage,” the agency said in a press release.

Fitch said it expects Haidilao's EBITDA margin to widen to 17% in 2023 from 13% in 2022 and its table turnover rate to rise towards 4x in 2024-2025, from 3.3x in the first half of 2023 and 3x in 2022.

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