Top Stock Market Highlights of the Week: Haidilao, Nvidia and Starbucks #NewsUnitedStates

Welcome to this week’s edition of top stock market highlights.

Haidilao International Holdings (SEHK: 6862)

Haidilao, or HDL, intends to expand into established foreign markets such as the US in the coming years.

The hotpot specialist is working to draw in new customers as its domestic market in China suffers from weak spending.

Super Hi International Holding (NASDAQ: HDL), or SHIH, the operator for HDL’s overseas business, will open new outlets in New York and Los Angeles next year.

CEO of SHIH, Yang Lijuan, believes that the US is the market that offers the best potential globally.

HDL is one of China’s most popular eateries that is looking at foreign growth to offset a saturated and overly-competitive food and beverage scene back home, with constant price wars breaking out.

HDL slowed its China expansion in recent years following debilitating losses suffered during the COVID-19 period.

The company closed around 3%, or 39, of its restaurants in Greater China by the end of June from the previous year, with average spend per customer declining steadily.

SHIH needs to venture abroad to lure diners who are not Chinese and who find the concept of hotpot alien.

Currently, HDL has around 61% of its restaurants in Southeast Asia, 16.4% in the US, 14.8% in East Asia, and the remainder (8.1%) in “Others”.

SHIH had opened its first foreign restaurant back in 2012 in Singapore and now has 122 outlets outside of China as of June 2024.

For the second quarter of 2024, SHIH saw revenue rise 12.4% year on year to US$183.3 million.

However, the restaurant operator booked a small net loss of US$104,000 because of listing expenses.

Excluding these listing expenses, SHIH would have been profitable to the tune of US$1.7 million.

Nvidia (NASDAQ: NVDA)

Nvidia’s CEO, Jensen Huang, recently attended the Goldman Sachs Communacopia and Technology Conference.

He revealed that the company’s customers are “getting emotional” because demand exceeds what Nvidia can supply.

The technology, infrastructure, and software directly impact these customers’ revenues and competitiveness.

Huang believes that generative artificial intelligence (AI) is not just a tool but a skill and that this skill can augment people’s abilities, making them more effective and efficient.

Huang thinks that every dollar a cloud service provider spends with Nvidia translates into $5 worth of rentals.

With generative AI, code will no longer be written by software engineers.

Instead, these software engineers will have “companion digital engineers” beside them 24/7.

He also commented that although Nvidia’s servers may seem expensive, they are doing the job of replacing thousands of nodes, with companies such as Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOGL) using Nvidia’s graphics processing units (GPUs).

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Finally, Huang said that training AI models may seem intensive, but this effort will pay off in the long run.

When you start to use the model, that’s when you save huge amounts of processing time.

Starbucks (NASDAQ: SBUX)

Starbucks recently appointed its new CEO Brian Niccol, a savvy executive who helped to transform Mexican food chain Chipotle Mexican Grill (NYSE: CMG).

Back then, his focus on people, culture, brand, menu innovation, operational excellence and digital transformation helped drive significant value creation for shareholders.

Under his tenure, Chipotle Mexican Grill saw revenue almost double, profits soar sevenfold, and its share price surge by nearly 800%.

With his tenure at Starbucks commencing on 9 September, he has his work cut out for him.

Niccol’s first priority is to improve the company’s US store operations.

He said that cafes need to be more welcoming and avoid getting overwhelmed by too many orders.

Penning a letter to employees, customers, and shareholders, Niccol made it clear that baristas needed time to better serve customers and deliver orders on time, especially in the mornings.

In a hard-hitting commentary, he remarked that the purchase process for customers can feel “transactional”, with menus being “overwhelming” coupled with an inconsistent product.

In addition, wait times are too long while the handoff (of the beverage) is too hectic.

After spending time speaking with Starbucks’ teams in operations, store design, marketing and product development, Niccol concluded that people still love Starbucks, but the company has veered away from serving high-quality coffee in stores.

Niccol is a self-confessed long-time Starbucks customer and is making a commitment to “get back to Starbucks”.

The coffee chain will invest in technology to improve operations and its app.

Its stores should also have comfortable seating and “thoughtful design”.

After working on the US stores, Niccol plans to understand the path to growing in China, Starbucks’ second-largest market, as well as explore the potential for expanding into regions such as the Middle East, Asia, Europe, and Latin America.

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Disclosure: Royston Yang owns shares of Alphabet and Starbucks.

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