SUPER HI INTERNATIONAL HOLDING Ltd. American Depositary Shares (NASDAQ:HDL) Q1 2026 Earnings Call Transcript

SUPER HI INTERNATIONAL HOLDING Ltd. American Depositary Shares (NASDAQ:HDL) Q1 2026 Earnings Call Transcript May 20, 2026

SUPER HI INTERNATIONAL HOLDING Ltd. American Depositary Shares misses on earnings expectations. Reported EPS is $0.1 EPS, expectations were $0.26.

Unknown Analyst: [Interpreted] Hello, respected investors and analysts. Thank you for joining today’s super high earnings call. Participating in today’s meeting are Mr. Li Yu, Executive Director and CEO; and Ms. Qu Cong, Financial Controller and Board Secretary. Today’s meeting may contain forward-looking statements, including, but not limited to, the company’s statements on strategies and business plans as well as outlook on performance. The content published by the company during the earnings presentation as well as comments in response to all your questions represent only management’s views as of today. Please refer to the latest safe harbor statement in the earnings press release, which applies to the conference call. The meeting is conducted in Chinese with simultaneous English interpretation provided by external agency.

In case of any discrepancies, the Chinese version shall prevail. The presentation materials have been uploaded to the company’s Investor Relations page for your review.

Yu Li: [Interpreted] Hello, investors and analysts. I’m Li Yu, Executive Director and CEO of Super High International. Welcome to Super High International Q1 2026 Earnings Call. And I’m going to be talking to you about — on behalf of the company, I thank you for your interest and support. It is my honor to share with you the super high international operating performance for this quarter. In the first quarter of 2026, the company’s operations maintained a positive improvement trend with all core operating metrics achieving simultaneous increases. As of 31, 2026, the company operated a total of 127 Haidilao restaurants in overseas market, added 1 new store in Southeast Asia during the period, recorded a net increase of 4 stores compared to the same period last year.

At the same time, the operating quality of the existing store is continuously being strengthened. In the first quarter, Haidilao Restaurant revenue was RMB 204 million, an increase of 8.4% year-over-year. Same-store sales increased by 4% year-over-year. Total customer traffic exceeded 8.1 million visits and the overall table turnover rate was 4 turns per day. an increase of 0.1 turn per day compared to the same period last year. Meanwhile, the delivery business, Red Promed project and other businesses continue to contribute to incremental growth with a combined year-over-year increase of 130.9%. The multiple initiatives drove the company’s total revenue to RMB 226 million, a year-over-year increase of 14.2%. On this basis, thanks to increased customer traffic and refined operations, we have seen a significant release of operating leverage.

In the first quarter, the company’s operating profit reached RMB 13.993 million, a year-over-year increase of 7.7%. The operating profit margin rose from 4.1% last year to 6.2%, representing a substantial improvement in profitability. In terms of specific business initiatives, we continue to focus on strengthening the 3 fundamentals: focus on employees, focus on customers and focus on line employees. Therefore, the quarter, we continuously emphasized flexible operations, helping employees understand the logic behind services actions by strengthening post-event reviews and store manager mentoring and granting them more on-site discretion. While maintaining high standard operations, we provide more personalized and flexible service, thereby continuously improving customer satisfaction at individual stores.

Q&A Session

We’re gradually seeing that these actions focused on enhancing employee awareness and capabilities are translating into better customer experiences. In terms of the product and menu innovation, this quarter headquarters focused on scenario segmentation, differentiation and product empowerment, providing targeted support to various regional markets globally. First, we deeply explored dining scenarios. We offered various kids meal sets for families with young children. For late night hours, we focused on launching spicy brazed dishes paired with refreshing drinks to precisely drive the consumption during that period. Second, following the summer season, we collaboratively launched a combination products such as vegetable and mushroom factor and beef and lamb combo in multiple regions of our core categories, we focused on upgrading the beef series, offering premium Australian value and freshly cut beef to meet the quality experience and needs of different customer segments.

Looking at the results, the menu innovation in the first quarter were more customer-centric and each market produced excellent localized products. This not only effectively drove a single store sale, but also validated the effectiveness of our strategy of localized product selection and refining menu planning. In terms of the business expansion, we added 1 new restaurant in Southeast Asia during this period. Since last year, the company has imposed stricter requirements on new store location accuracy, profit expectation and execution quality Currently, our pipeline of reserved stores remains in the double digits and the overall expansion pace going forward will continue to adhere to the principle of balancing stability and quality. Regarding the Red Prama Granite project, we are actively building a multiple brand matrix, continuously incubating prototype stores and second brand projects in different countries.

To date, we have operated a total of 10 brands with a total of 18 stores, including formats such as Canadian Malatong, Indonesian Halaot, Japanese Isakawa, Korean Scores and SPARC Cora BBQ. This quarter, other business revenues achieved a strong growth of 166.7%, marking substantial growth in the diversifying of our revenue structure and expanding our customer base. Looking ahead, the company remains committed to its long-term development goal of becoming a leading global integrated catering group, continuously improving in 5 areas: customer experience, restaurants and network, operational enhancement, new businesses and headquarter capabilities. That concludes my introduction of the business situation. Next, let me invite Mr. Chi Song to present the financials.

Cong Qu: [Interpreted] Thank you. President, Li Yu next, I will report on the financial situation. In the first quarter of 2026, the company achieved a total revenue of RMB 226 million, an increase of 14.2% year-over-year. Haidilao restaurant operating revenue accounted for 90.4% of total revenue, reaching $204 million this quarter, an increase of 8.4% year-over-year. This was mainly attributable to the continued improvement in operating performance of the existing [indiscernible] stores in both the table turnover rate and customer traffic. Second, a net increase of 4 stores in the company’s restaurant network compared to the same period last year, with adjustments in the store network layout contributing incremental revenue.

Delivery businesses, revenue accounted for 3.2% of total revenue, reaching $7.3 million this quarter an increase of 82.5% year-over-year, primarily because we continue to optimize delivery products and services based on market demand and strengthen the corporation and joint marketing with local delivery platforms Other businesses, the revenue accounted for 6.4% of total revenue, reaching 14.4 million this quarter, an increase of 166.7% year-over-year. The revenue growth came primarily from the sales of food products and seasoning under the Haidilao brand and from the company’s own Central Kitchen as well as from the active development of some new brand restaurants business under the red pomegranate project in other businesses this quarter, external sales from the Central Kitchen contributed significantly.

We have commercially converted some of the central kitchens excess capacity for external use, although the gross margin of this type of B end, supply chain business is lower than that of the C end in restaurant business. And there is a order volatility dilutes our supply chain fixed cost, of course, from the perspective of our core model the high on restaurant domain business remains our most core business. Next, regarding cost and expenses benefiting from the company’s proactive investment in employee management and customer experiences throughout to 2025, the operating leverage brought by revenue growth in this quarter has led to further improvement in the cost structure. Raw material cost for this quarter was $76 million with a gross margin of 66.1% an increase of 0.1 percentage points compared to the same period last year.

Employee costs were $76.6 Page 6 million with employee cost as a percentage of revenue at 34%, a decrease of 1.3 percentage points compared to the same period last year. This improvement was mainly because after the company proactively shared profits with the employees and strengthened the team last year, we began to see in the first quarter of this year, the release of personal efficiency brought by higher customer traffic, rental expenses over $6 million representing 2.8% of revenue remaining relatively stable. Utilities expenses were $7 million, representing 3.2% revenue, a decrease of 0.4 percentage points compared to the same period last year. Depreciation and amortization were $20.658 million representing 9.2% of revenue, a decrease of 0.9 percentage points compared to the same period last year, demonstrating the diluting effect of revenue growth on the fixed cost.

Meanwhile, the end of the amortization period of certain individual stores that brought to some short-term optimization. Travel and other operating expenses were $23.891 million, representing 10.6% revenue, a decrease of 0.1 percentage point compared to the same period last year. On the profit side, by — driven by both revenue growth and cost structure optimization, the company’s core profitability improved significantly this quarter. Operating profit reached HKD 13.99 million a substantial year-over-year increased 78.7% with an operating margin of 6.2% a year-over-year increase of 2.6 percentage points, representing a clear improvement in operating quality. A special note is warranted regarding the fluctuation in net profit for the period.

This quarter, we had a net foreign exchange loans of approximately $4.292 million compared to a foreign exchange of — compared to a foreign exchange gain of the HKD 7.435 million in the same period last year. The difference in nonoperating exchange rate fluctuations amounts to HKD 11.73 million, affected by this book change Translation impact to the reported net profit for this quarter was $4 million, a decline compared to the same period last year, excluding the nonoperating factor of the exchange rate fluctuations, the company’s actual business profitability showed a growth trend. The company’s operating cash flow for this quarter was HKD 24.24 million, an increase of 23.1% compared to HKD 19.69 million in the same period last year. As of the same period end, our cash reserves were $240 million, a decrease of HKD 30 million compared to HKD 270 million at the end of 2025, but primarily due to investment in the continuous expansion of the stores and the development of a second brand business.

Regarding the peak restaurant performance metrics. This quarter, Haidilao restaurants served approximately 8.1 million customers, an increase of 3.8% year-over-year, driven by customer traffic and the overall average table turnover ratio for Haidilao restaurants was 4 tons per day, an increase of 0.1x from 3.9 tonnes per day in the same period last year, the average check per customer at Haidilao restaurants this quarter was 25.3%, an increase of 1.1% from the same period of last year, of which approximately $0.8 of the increase came from exchange rate and fluctuations driven by both the customer traffic and coverage check. The average daily revenue per Haidilao restaurant was $18.4 an increase of 3.4% year-over-year, effectively improving single-store operating efficiency.

Looking at the regional breakdown, there was some divergence in regional performance, but the overall foundation of restaurant operations remained stable. This quarter, the Southeast Asia region served 5.2 million customers, an increase of 2% year-over-year, benefiting from customer traffic, the table turnover rate increased by 0.1% year-over-year to 3.8 turns the average tax in Southeast Asia was $19.6 million, an increase of $0.9 million from $18.7 in the same period last year, mainly affected by the exchange rate fluctuations of the U.S. dollar against other currencies. As of the end of the the company operated a total of 7,200 restaurants in Southeast Asia, a net increase of 1 restaurant compared to the end of previous quarter and a decrease of 1 restaurant compared to the same period last year.

Overall, Southeast Asia remains to the company’s most profitable and stable foundation with relatively steady customer traffic and average check this quarter. The Eastern Asia region continued its strong growth momentum this quarter. Haidilao restaurants in this region served 1.3 million customers, an increase of 18.2% year-over-year. The table turnover rate for high end restaurants was 5.1 per ton, a further increase of 0.1x from 5x in the same period last year. The average check in East Asia was $28.2, flat compared to the same period last year. As of the end of this quarter, the company operated a total of 21 Haidilao restaurants in East Asia, unchanged from the end of previous quarter, a net increase of 2 restaurants compared to the same period last year.

The North America region served 1 million customers this quarter, roughly flat year-over-year due to the frequent dream of cold weather in North America in January and February as well as the new stores opened at the end of last year in both the U.S. and Canada that are still in the ramping up phase. So overall table turnover for North American restaurants down from 4.0 turns to 3.6 turns this quarter. The average check was 41.4, an increase of $1.8 from the same period last year, of which is $0.7 of the increase came from the exchange rate fluctuations. As of the end of this the company operated a total of 22 Haidilao restaurants in North America unchanged from the end of previous quarter and a net increase of 2 restaurants compared to the same period last year.

The other regions had a table turnover rate of 3.6 turns this quarter, a decrease of 0.4x year-over-year, mainly because the geopolitical volatility in the Middle East had a significant impact on restaurant operations. The average check was $41.3, an increase of $3.1 from the same period last year, primarily due to the exchange rate fluctuations as of the end of this quarter. The company operated a total of 12 [indiscernible] on restaurants in other regions, unchanged from the end of previous quarter and a net increase of one restaurant compared to the same period last year, facing the uncontrollable external macro environment, we have implemented a more prudent cost control measures locally to enhance our risk resistance capabilities there.

This quarter, same store revenue for Haidilao restaurants was $184 million, representing same-store revenue growth of approximately 4%. Among them, East Asia performed the most prominently with the same-store sales growth of approximately 10.6% year-over-year. Southeast Asia and other regions saw same-store sales growth of approximately 6.3% and 1.8% year-over-year respectively. Same-store sales in North America declined by 5.1% this quarter still affected by the extreme weather in impacting customer in-store dining behavior. Table turnover rate and average the performance were generally consistent with the overall trends and will not be reiterated here. The above is the performance review of the first quarter of 2026, and we now go into the Q&A session.

We welcome questions and comments. Well, Mr. [indiscernible] departure affected the company’s established strategy of prioritizing customer and employee benefits to drive long-term growth. Will the approach to balance short-term profits and long-term development change, what specific consideration does the new management have to ensure strategic continuity and team stability. Mr. Young’s departure will not affect the Deep embedded strategy of prioritizing customer and the employee benefits, customer experience, service of action and employee engagement remain our remain on our core focus and will not change in the short term. Employee benefits, service enhancement and food quality control are key areas. We continue to advance. This quality is the profit improvement and mainly comes from a more proficient daily store operations, identifying more areas improvement in strategy execution and boosting employee motivation.

With the revenue growth that we are managing cost [indiscernible] expenses more efficiently, but our long-term strategic direction remains unchanged. Since the second half of 2025, this strategy has become ingrained in store operations, the proactive investment made earlier apart of our strategic design. As we balance the short-term returns and long-term growth, we will continue to follow the logic of the quality first, growth second. Even after Mr. Young’s department from Super Hi, the system will oversee the regional managers and store managers are responsible for store openings and the operation remains unchanged. We will further deepen employee training incentives and mentoring to steadily improve store operation quality. How is the category layout and the decision-making authority of the red pomegranate plan allocated across the region.

How is the collaboration achieved from regions of headquarters [indiscernible] have any linkage in collaboration on the Red Pomegranate after restructuring to Haidilao in China. The Red Pomegranate plant is a key part of our development strategy. It now combines a regional decision-making with headquarters empowerment, success projects such as [indiscernible] Monarto in Canada, [indiscernible] model, [indiscernible] in Japan were incubated by regional managers after in-depth local market research and the customers announced including selections of business times and products. During incubation and operation, we continuously adjusted management approaches a cross-functional team covering product, a brand marketing business analysis technology and [indiscernible] has been formed at the headquarter level to deeply engage in key projects better mobilize resources and make new brand-new incubation more efficient once the decision-making authorities remains with the regional managers.

Some brands are driven top-down and involve collaboration with China, for example, Spark Cora, BPQ overseas was inspired by BPQ in China with a brand and menu selection you’ll find from the top, after opening the first prototype, the store in Malaysia, Spacepora has been replicated to Indonesia and Vietnam with the daily operations managed by local country managers. We maintain regular but informal communication with highly announced Red Pomegranate plant in China. After Mission returns to Haidilao China. She will share her experience with overseas the Red Pomegranate projects and the new business formats. We continue to give regions sufficient autonomy to ensure local adaptation and innovation. What changes in consumer demand observed since the beginning of this year.

Are there any noticeable new trends of our characteristics based on recent consumption trends, how do you assess our medium to long-term growth potential, the most noticeable trend this year is that overseas consumer markets are not deteriorating rather consumers have become a more rational and value conscious. Value is not just about price, but also about the memorable products, the dining experience, the service quality and suitable ambience, intangible value for their money. This trend that varies by market. North America customers focus more on cost performance and are more cautious in ordering Southeast Asia remains vibrant but prioritizes the convenience, delivery and use oriented dining scenarios. Mature markets like Japan and Korea are more sensitive to the efficiency limited time offerings, light version and the social sharing.

Australia, the U.K. and the Middle East and others have their own habits and pressure points. the common strategy is that the customers are increasingly want restaurants to give them a clear reasoning to choose them. For Haidilao [indiscernible] trying to clarify our direction. What we have always done is essentially to provide a clearer value choices for customers that we continue to advance the quality to price the ratio initiatives, adjusting manustructure, product combinations, proportion sizes and price reasonableness, combined with the effective promotions to make it easier for customers to choose and fuel value, we are building the experiences, we are building a different Haidilao, not just through decoration and get by designing our products variances tailored to different scenarios such as family meals, late-night snacks, friends gatherings and people’s interactions, fresh cuts, set meals, combo launches and extended the delivery scenarios, all follow the same logic, giving customers a reason to choose the Haidilao in different contexts.

In the medium to long term, we do not see the market space shrinking, but rather industry barriers are rising. And we’re earlier management adjustment and strategy execution are making the company more resilient from employees to products from organization to operations. We believe a resilient company can quickly adapt to any market change and capture medium- to long-term growth opportunities. Number next question, what is the current status of member consumption? Members spending share repurchase rate and what are the future strategies and expected outcome for member management. As of the end of this quarter, Haidilao overseas membership reached 9.05 million. We continue to promote the membership of work overseas. This quarter, over 92% of the table turns that came from the member customers, member [indiscernible] rate 92.5%, a slight increase from last year in terms of consumption composition over 20% of spending came from newly registered numbers this year and about 1/3 came from repeat customers over in 3 months at the overall members contribution structure remains stable.

Regarding membership work, we will continue to strengthen front end and back end corporation. At the headquarter level, we will enhance the digitalization of the membership system and a focus on optimizing member experience, including improving each reach [indiscernible] and refining a point system and the benefit designs. On the operations side, we are committed to having a strong managers and frontline staff plays a greater emphasis on customers by designing different tier the benefits that we enable members to experience exclusive services handled thereby increasing customer loyalty. Next question. Based on current oil prices and raw material cost, what is the impact on the company’s gross margin this year? Based on current observations, the impact of rising oil prices and cost on our gross margin is relatively controllable.

On one hand, the product mix adjustment and supply chain optimization can buffer some pressure, regional manager can choose more cost advanced suppliers while ensuring quality. The local supplier model — we can see that the overall margin is controllable. And the first reason is that for hot pot and basically there is control in there is a flexibility. So we can see, for instance, including different seafood and restaurants, et cetera, and all of these are actually quite flexible. And this means that once we are ensuring the experience of the customers, we are able to provide them with better choices. And the second is that respect to our overseas business, we continue to have a localization. We have a localized supply chain. And some of those, we have worked, strengthen our collaboration with the local customers and some of those, we will be working with for instance, collaborations, and this has helped us to offset the commodities cost and in the meantime, in terms of where cost on the store front side, and we have also been able to control the store front.

And with respect to other fees, for instance, the labor costs, et cetera, on this front, in terms of our optimization, it’s not sacrificing the benefits of the customers and the growth really comes from the business growth. In terms of the human labor and at the moment, it’s about 3.3% to 3.4%, and that is in the range. And going forward in the future, it’s about the flexible arrangement of the labor allocation to further improve our human efficiency, for instance, in terms of rent, and we can see that it is a quite stable going forward, will also be adopting more strict selection of locations and to further improve our space in the stores and to further improve our negotiation prices. So Apart from this, we can also see that in terms of different cost of consumption as well as the store front management for the cost in terms of cost outside, we do think that is quite under control.

Thank you, Mr. [indiscernible]. It’s very clear.

Unknown Analyst: Thank you, Mr.. How do you see the room for optimization and labor cost ratio, rent costs and other expenses this year?

Cong Qu: We have always maintained to ensuring customer experience and service quality is the most important. So store staffing has a certain rig rigidity. This quarter, overall labor costs accounted for 34%, a reasonable level that — thank you very much for your question. And with respect to the turnover since April and our performance overall speaking, is relatively stable. And generally speaking, we have been able to continue with the trend of the first quarter and in terms of the turnover rate and we can see that in different regions, there are some variations and the reasons would be roughly the same. In terms of the price wise [indiscernible] have been working through optimization of combinations in the localized marketing.

And in the meantime, and we continue to maintain a stable unit price per customer. And right now, we have entered into the off-season of hot part. And we are relying on the following areas to further improve. So first of all, we know that this is the low season, and that’s something that we cannot change. But during this period, we continue to improve our internal capabilities. And for instance, for the summer and as well as for the customers, we will be providing them with the summer food. And in the meantime, we’re also launching new products as well as in the summer. And we have, for instance, barbecued sushi and various different drinks that are suitable for the summer drinks. So we are also adjusting for some allocation in a more flexible fashion.

In the meantime, in terms of our scenarios, we continue to further expand our scenarios. For instance, interactive marketing with the various IPs using local performance in social events overseas to with set mills and gifts to attract customers a number form, whether it is our existing customers or it is our new customers, and we will be able to find new ways to tap into these comments, and we are trying our best so that we are able to maintain healthy turnover and a good customer experience even during the half season.

Unknown Analyst: [Interpreted] So my next question is about the store opening expectations in a store opening plans for this year in the next 3 years as well as the approximate numbers by regions. Can you please tell us more about these aspects.

Yu Li: [Interpreted] Okay. No problem. Thank you for your question. Our store opening strategy, we have always adhered to bottom up, and Mr. Li has also said that have put forward strict requirements. And at the moment, we have double-digit stores that we have already signed or we are already entering into the substantial contract signing stage. Apart from Haidilao and in various places, we will also have a Red Pomegranate plant and 1 type is bottom up. And so this is based on the local regional managers in and those are the ones that they rely on the local platforms and another 1 is from top to bottom, and those are the ones being pushed by the company from the headquarter and which will also help us to further expand and grow within the company ourselves.

So we are not going to be providing any specific numbers or figures, and it’s really because relying on the local people and rely on their local situations to specifically come up with a plan that is suitable for them for their future development and opening. Thank you, management, and thank you, hosting. Thank you, everyone, for joining the call.