The stock of Haidilao International Holding Ltd, China's largest hotpot chain and known around the world for its quirky perks for customers, bloated to as much as 78 percent barely a year after its initial public offering in September. The stock has surged 2.4 percent in Hong Kong trading at the time of publication.
The stock showed resiliency at a time when worldwide markets are dampened by geopolitical issues and trade conflicts. Its resiliency has been in display since its successful public debut when it raised nearly $1 billion despite the Hang Seng Index dipping at about 8.5 percent at the same time. In fact, on Tuesday, the index has plunged to its lowest level since January 3.
Analysts now estimate that there still more room for Haidilao stock to continue its surge and have given a 12-month consensus target price of about $4.21. The estimated price range is well above the stock's present average pricing. Further, analysts estimated that Haidilao will rake in revenues 60 percent more this year, with a continuing positive trend of about 40 percent in 2020.
All these positive estimates for the stock is well-aligned with how the general hotpot industry is rapidly growing in China. Hotpot accounted for as much as 14 percent of the Asian powerhouse's restaurant industry which is estimated to be worth $21 billion at present.
The hotpot market segment also holds the top spot for the country's cuisine market in 2017. By comparison, local dishes from Southwest China's Sichuan Province only accounted for 12.4 percent of the cuisine market while Cantonese dishes from southern China accounted for 8.2 percent.
According to a report from iiMedia Research, the hotpot market could swell to more than $103 billion markets by 2020. A significant factor to the forecasted growth are consumers born after the 1980s. A separate estimate from Frost&Sullivan said the China's hotpot market will grow to a $99 billion by 2022.
Even with a rich local market for hotpot, Haidilao continues to set foot in international markets with its London location being the most recent addition. Overall, Haidilao has about 46 stores across the world.
Meanwhile, its toughest rival, Xiaolongkan, announced plans of opening its first shop in the United States by 2020. It plans to open more restaurants in international markets - Los Angeles, Houston, Tokyo, Kuala Lumpur, Penang, and Auckland - in the next two years. Xiaolongkan already has 800 stores in China and 10 overseas stores across Canada, Australia, New Zealand, and Singapore.