Huatai Securities lowers the target price of YOFC to 53.38 yuan, maintaining a "Buy" rating

Huatai Securities research report indicates that YOFC (06869.HK) reported revenue of RMB 3.891 billion in the third quarter, an increase of 16.27% year-on-year and 11.46% quarter-on-quarter, with a net profit attributable to shareholders of RMB 174 million, a decrease of 10.89% year-on-year and an increase of 20.75% quarter-on-quarter.

In the first three quarters of this year, cumulative revenue reached RMB 10.275 billion, an increase of 18.18% year-on-year, with a net profit attributable to shareholders of RMB 470 million, a decrease of 18.02% year-on-year, and a net profit excluding non-recurring items of RMB 283 million, a decrease of 8.15% year-on-year.

The firm believes that the profit decline is mainly due to a high base of non-recurring gains and losses in the same period last year, as well as a significant increase in income tax expenses during the current period. The company's core profitability has strengthened, with operating profit in the first three quarters growing 63.3% year-on-year to RMB 611 million, and total profit for the third quarter growing 37.23% year-on-year, mainly benefiting from revenue growth and improved gross margin.

The firm maintains its profit forecast and "Buy" rating, with the target price for H shares adjusted from HKD 64.12 to HKD 53.38, and the target price for YOFC A shares (601869.SH) lowered from RMB 115.52 to RMB 100.55