Huatai Securities raised the target price of YIHAI to 18.17 yuan with a rating of "Buy," citing stable third-party operations

Huatai Securities research report indicates that YIHAI INTL (01579.HK) reported revenue of RMB 2.927 billion in the first half of this year, a year-on-year increase of 0.02%, and a net profit attributable to the parent company of RMB 309 million, a year-on-year increase of 0.39%, corresponding to a net profit margin of 10.6%, an increase of 0.04 percentage points year-on-year, with overall performance in revenue and profit being stable. Looking long-term, the firm believes that the company is continuously promoting the globalization of its supply chain and building B-end capabilities, actively advancing an internal assessment system with incremental profit as the key incentive indicator, and the stability of profitability and operational resilience is expected to continue to be validated, thus maintaining a "Buy" rating.

The firm stated that from the perspective of related parties, affected by the operational pressure of Haidilao, the company recorded revenue of RMB 864 million in the first half of the year, a year-on-year decrease of 12.7%. It is expected that in the second half of the year, with the improvement of Haidilao restaurant operations and the alleviation of base pressure, the revenue growth rate from related parties is expected to stabilize and recover.

In addition, the company's Southeast Asia factory has been completed, and the firm expects capacity to be gradually released. With the optimization of supporting resources, the group's market share in the overseas B-end market is expected to further increase; it is also anticipated that as the supply chain system continues to improve, the overseas and B-end markets are expected to become new engines driving revenue growth.

Huatai Securities, considering the decline in related party revenue in the first half of this year and the continued pressure on unit prices across various categories, has lowered the company's net profit attributable to the parent company for 2025 to 2027 by 8%, 9%, and 11% to RMB 783 million, RMB 860 million, and RMB 959 million, respectively, corresponding to earnings per share of RMB 0.76, RMB 0.83, and RMB 0.92.

Referring to comparable company iFind's consensus expectation of a 25 times price-to-earnings ratio for 2025, and considering that the company is actively exploring third-party B-end channels with initial results in the first half of this year, a valuation of 22 times price-to-earnings ratio for 2025 is given (discounted, with the discount rate reduced by 5% compared to the previous value), adjusting the target price to HKD 18.17 (previous value HKD 17.83, corresponding to a forecast price-to-earnings ratio of 20 times for 2025)