(Yicai Global) Aug. 15 -- Shares of Haidilao International Holding rallied as the Chinese hotpot chain’s first-half loss, which it attributed to Covid-19 outbreaks in the country, was not a large as investors had feared.

After surging more than 10 percent earlier in the day, Haidilao’s stock price [HKG: 6862] closed up 8 percent at HKD17.30 (USD2.21).

Haidilao fell into the red in the six months ended June 30, the Beijing-based company said yesterday. It had a net loss of between CNY225 million and CNY297 million (USD33.2 million and USD43.9 million), compared with CNY96 million in net profit a year earlier. Revenue likely fell 17 percent.

Haidilao expanded rapidly in 2020 and had 1,443 direct-sale restaurants globally. Covid-19 outbreaks have dealt a heavy blow to the chain, which has had to close nearly 300 underperforming restaurants since last November and slowed the pace of openings. Western Securities said in a research report today that Haidilao opened 15 to 20 new eateries in the first half.

Business has picked up since June as Covid-19 outbreaks eased, Haidilao said.

Haidilao made a small profit after deducting an impairment loss, and even that was better than expected, Western Securities said. China International Capital Corporation also estimated today that Haidilao’s first-half loss would be less than foreseen.

Haidilao reported a net loss of CNY4.2 billion (USD622.9 million) for last year, most of which was the result of closing 276 stores in the second half, per its full year 2021 earnings report published on March 23.

Xiabu Xiabu Catering Management, another Chinese hotpot chain, released its earnings forecast before Haidilao, saying the virus struck about 79 percent of the cities in which it has restaurants. The firm expects first-half revenue of CNY2.2 billion, down about 29 percent from a year ago, and a net loss of CNY270 million to CNY290 million, widening from CNY47 million a year earlier.

Editors: Shi Yi, Tom Litting