China’s insatiable demand for spicy hotpot is placing the founders of a restaurant chain atop one of the world’s fastest-growing fortunes, allowing them to outpace many of the wealthiest families globally.
As of Monday, Zhang Yong, chairman of Haidilao International Holding Ltd., and his wife Shu Ping, had grown $6 billion richer in 2019, a 79 percent jump in just over three months.
That pace is the fastest in Asia and globally only topped by Australian mining baron Andrew Forrest, who has doubled his fortune this year, according to the Bloomberg Billionaire’s Index, a ranking of the world’s 500 richest people.
Haidilao went public in September, and it’s been a lucrative time for China’s largest hotpot chain, popular for the spicy broths in which diners cook their meats and vegetables. The company is pushing to make its restaurants more efficient by creating automated kitchens. Perks like the free manicures it offers waiting customers have kept families coming in. And the brand is expanding overseas with new locations planned in New York and London.
Last year, revenue surged 60 percent to 17 billion yuan ($2.6 billion), and that’s helping to push the stock up more than 75 percent this year. At about $21 billion, the company’s market value is now higher than Chipotle Mexican Grill Inc.
"A good set of results has resulted in the stock rallying to new highs," said Tristan D’Aboville, an analyst at William O’Neil & Co., pointing to increases in sales growth and new restaurants added in the second half of last year.
Another power couple behind Haidilao, co-founder and executive director Shi Yonghong and his wife Li Haiyan, have also grown 79 percent wealthier this year, based on Monday’s data. Their fortune is now worth $6.4 billion.
Still, the enthusiasm for Haidilao’s stock has made it increasingly expensive. Recently valued at about 47 times projected earnings for the next 12 months, it’s around four times more expensive than Hong Kong’s benchmark Hang Seng Index, according to data compiled by Bloomberg.
China’s increasingly competitive hotpot market is projected to grow at a compounded annual rate of more than 10 percent, with revenue topping 700 billion yuan by 2022, according to consultancy Frost & Sullivan.
Besides small, privately owned restaurants, there are other competing brands like the publicly listed Xiabuxiabu Catering Management China Holdings. Haidilao has a less than 3 percent share of the Chinese hotpot market, according to its September prospectus.