China’s largest hotpot restaurant chain wants to list its overseas business in Hong Kong. Haidilao has become a household name with an $11bn market value at home. In addition to its addictive soups it offers a range of services in its stores, including free manicures. But the wider sector is struggling under the double burden of lockdowns and inflation. A spin-off of Super Hi International Holding, which operates Haidilao’s business outside Greater China and accounts for about a tenth of total sales, would provide investors with exposure to a fast-growing business. It has more than 100 stores in countries including Canada and the UK. Based on sales from the overseas operations of about Rmb3bn ($440mn) and comparable industry multiples, its valuation should exceed $1bn.
Spin-offs are common in Asia’s restaurant sector. Haidilao listed its condiment subsidiary Yihai International in Hong Kong in 2016. More recently, noodle shop chain Tam Jai International, a unit of Japan’s Toridoll Holdings, listed in Hong Kong in October.
Yet the long-term prospects for the sector are less inviting than the menus. Strict lockdowns in mainland China and social distancing in other important markets have lowered footfall and table turnover rates.
