Haidilao (06862) granted a loan of 100 million yuan to Chairman Zhang Yong, and Citi lowered its target price to HK$15.5

The Zhitong Finance App learned that on October 12, Haidilao (06862) agreed to grant Hong Kong dollar loan financing up to 100 million yuan to the controlling shareholder, chairman of the board of directors and CEO Zhang Yong, for a period of 30 days. Citi published a report lowering the target price of Haidilao from HK$19.3 to HK$15.5, a reduction of about 20%, maintaining the “buy” rating. Haidilao fell about 7% during the intraday session today (13th), to a low of HK$8.925.

According to Haidilao's announcement on Monday, the proceeds will only be used for Zhang Yong's personal financial arrangements and must not be used for illegal activities, buying shares of Haidilao, providing loans to third parties, or violating regulatory requirements. The company has the right to monitor the use of funds and require mandatory early repayment in the event of major default or adverse changes in financial conditions.

It is worth noting that this loan comes at a sensitive time when the mainland is strengthening tax collection for high-income groups. According to some sources, the mainland has set up a special task force to track down the rich, and some teams have even targeted only one billionaire.

Citi pointed out in the report that the loan occurred only about five weeks after the controlling shareholder reduced their holdings on September 8. Market concerns about its controlling shareholders' capital requirements are heating up again, and investor sentiment is expected to be negative in the short term. The bank also lowered Haidilao's performance forecast, cutting net profit forecasts for 2026, 2027 and 2028 by 9%, 14%, and 15%, respectively, and sales forecasts by 2%, 3%, and 3%, respectively. It is more cautious about the performance forecast for October to December.