Company Reports

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to increase its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, in 2005 to supply Haidilao with hot pot soup bases. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

Yihai International's sales grew 14% in the first half, underpinned by successful direct sales initiatives and new channel expansion. Gross margin expanded to 34% from 30% a year ago, supporting 20% net profit growth during the period.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to increase its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, in 2005 to supply Haidilao with hot pot soup bases. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

We review our 2026 earnings forecasts for Yihai International ahead of its interim results in August.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

Yihai's 2025 revenue grew 1.1% year on year, but net profit surged 16%. Gross margin expansion was the key driver, thanks to lower unit labor costs and improved supply chain efficiency. For 2026, management expects continued pressure on the average selling price, as rivalry remains intense.

Yihai’s related-party sales depend heavily on the Haidilao restaurant chain. Haidilao’s first-half 2025 results were disappointing, with revenue falling 4% year on year. The broader China restaurant sector continues to struggle amid weak demand and persistent macroeconomic headwinds.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

Yihai reported flat year-on-year revenue growth in the first half, as sales to related party declined by 13%. However, third-party revenue grew by 6%, driven by new product launches and channel expansion in the business-to-business segment.

We reviewed our 2025 forecasts for Yihai ahead of its interim earnings release, considering recent market trends in the hotpot and compound condiments sector across both retail and catering channels.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.

We cut no-moat Yihai's fair value estimate by 5% to HKD 14.80 per share following its disappointing 2024 results, with net profit trailing our estimate by 13% and declining 13% year on year. We lower our 2025-28 earnings forecasts by 1%-5% after reducing our volume growth projection to reflect heightened competition in Yihai's sales to the Haidilao chain. We also expect Yihai to continue lowering product prices to protect its market share in the related-party segment and expand volume in the third-party hot pot segment. Our fair value estimate implies a 2025 price/earnings ratio of 16 times and an expected dividend yield of over 5%. We see the shares as fairly valued.

We maintain our fair value estimate of HKD 15.60 per share for no-moat Yihai International ahead of the release of its 2024 results in late March. Since January 2025, leading restaurant chains in China have either raised menu prices or reported a stabilization in spending per guest. We believe this fits well with our expectation of a gradual sales recovery for Yihai this year. We view the company’s shares as fairly valued with a decent estimated 2025 dividend yield of 5.3%.

We initiate coverage on Yihai International with a no-moat rating as we think the company has yet to build entrenched retailer relationships that could last beyond the next decade. The company leverages the Haidilao brand name to achieve a reduction in sales and marketing expenses as well as distribution expansion. However, the hot pot restaurants sector is highly competitive, and the popularity of the Haidilao brand beyond the next decade remains uncertain, which clouds the return on investment capital outlook for Yihai. Our fair value estimate of HKD 15.60 per share implies 17 times 2025 price/earnings, 9 times enterprise value/EBITDA, and a 5.0% dividend yield. We think the shares are fairly valued.

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.