Super Hi (HDL) Q1 2026 earnings review
Operational Acceleration Masked by Severe FX Headwinds
Super Hi's top-line growth is accelerating, with Q1 revenue jumping 14.2% YoY to $225.9M. The core 'Dual Focus' strategy is bearing fruit: table turnover held strong at 4.0x, and operating income surged 70.7% to $14.0M as margins expanded to 6.2%. However, this operational success story completely bypassed the bottom line. Net income collapsed 65% YoY to $4.1M due entirely to an $11.7M surge in net foreign exchange losses. While the underlying business metrics and new brand incubations look healthier than they have in a year, the structural vulnerability to local currency depreciation remains a massive drag on actual shareholder returns.
🐂 Bull Case
Operating margin expanded by 2.1 percentage points YoY to 6.2%. The company successfully absorbed a 9.9% increase in staff costs through positive operating leverage and better table turnover.
Delivery and 'Other' businesses are growing at blistering rates (82.5% and 166.7% respectively), proving the Pomegranate Plan and product diversification strategies are working.
🐻 Bear Case
A brilliant operational quarter was ruined by an $11.7M net foreign exchange loss due to local currency depreciation, cutting net income by 65%. This macro exposure is largely unhedged.
The company opened only 1 new Haidilao restaurant in Q1 2026. This reflects a decelerating, highly cautious approach to footprint growth that caps long-term scale potential.
⚖️ Verdict: ⚪
Neutral. Management is executing flawlessly on things they can control (turnover, operating costs, new brands), but the company is highly exposed to macro FX volatility that continues to destroy bottom-line value.
Key Themes
Pomegranate Plan Driving Non-Core Revenue Surge
The strategic incubation of secondary branded restaurants (like Sparkora BBQ and Hi Bowl) and hot pot condiment sales is scaling rapidly. Revenue from 'Other business' accelerated 166.7% YoY to $14.4M, while the delivery business grew 82.5%. This is successfully diversifying the top line away from pure dine-in operations.
Operating Leverage Returns
After enduring significant margin compression in H1 2025 due to aggressive investments in customer and employee benefits, operating leverage is finally kicking in. Operating income jumped 70.7% YoY to $14.0M. Management achieved this by reducing staff costs as a percentage of revenue from 35.3% down to 34.0%, despite absolute wage increases.
Table Turnover and Same-Store Resilience
Same-store sales reached $183.5M, a 4.0% YoY increase, supported by 8.1 million guest visits. Crucially, the overall table turnover rate stabilized at an impressive 4.0 times per day, proving that recent localized product rollouts and marketing initiatives are retaining customer interest.
Macro Currency Exposure Destroying Net Income
The starkest contradiction in the report: operating income rose $5.8M, yet net income fell $7.8M. The culprit is a massive $11.7M YoY increase in net foreign exchange losses due to local currency depreciation against the USD in Super Hi's operating markets. This highlights a severe, ongoing macro vulnerability that management seems unable to effectively hedge.
Decelerating Core Restaurant Expansion
Management opened just 1 new Haidilao restaurant in Q1 2026 (in Southeast Asia), bringing the total network to 127. This compares to 4 openings in Q1 2025. While 'bottom-up' prudence ensures higher quality locations, this stagnant footprint growth places the burden of revenue growth almost entirely on same-store sales and ancillary businesses.
Staff Costs Moving Higher in Absolute Terms
While managed well as a percentage of revenue, absolute staff costs grew 9.9% to $76.7M. Management cited increased piece-rate wages and total working hours driven by higher guest visits. Maintaining a balance between rewarding staff (a core company strategy) and protecting margins will require continuous monitoring.
Other KPIs
Accelerating. Up from $19.7M in the same period last year. This solid cash generation underscores the healthy underlying unit economics of the restaurants, contrasting heavily with the depressed GAAP net income caused by paper FX losses.
Decelerating. Down from $204.9M a year ago and $144.6M at the beginning of the period. This was impacted by $132.9M being reclassified into bank deposits with maturities over three months, reflecting active treasury management.
Guidance
Stable. Consistent with explicit statements made in previous quarters, management refuses to provide quantitative forward-looking guidance for revenue or profit margins, preferring to focus on long-term strategy execution.
Key Questions
Foreign Exchange Hedging Strategy
Given that an $11.7 million FX swing virtually wiped out a quarter of excellent operational gains, what proactive treasury or hedging steps are being evaluated to protect shareholder returns from local currency depreciation?
Pomegranate Plan Scalability
With the 'Other business' segment surging 166%, what is the timeline for new brands like Sparkora BBQ or Hi Bowl to reach a scale where they constitute a double-digit percentage of total company revenue?
Pace of Store Openings
With only 1 net new store opened in Q1 2026 compared to 4 in Q1 2025, has the timeline for international footprint expansion permanently slowed, or is this a temporary pause while focusing on secondary brands?