Goldman Sachs raises YUE YUEN IND target price to HKD 16.9 and upgrades earnings forecast

Goldman Sachs' research report pointed out that after attending the briefing following the third quarter performance release of YUE YUEN IND (00551.HK), YUE YUEN's stock price rose over 8% after the announcement, which may reflect a profit margin that exceeded expectations for the third quarter. However, it closed with just over a 2% increase, possibly due to the bumpy recovery path for sales and profit margins of OEMs in the coming quarters.

Goldman Sachs also indicated that based on preliminary information, YUE YUEN's OEMs hold a cautiously optimistic outlook for 2026, noting that orders from some clients are expected to be resilient and healthy. Although visibility remains low recently, the company stated that with the reciprocal tariffs in ASEAN countries now confirmed, they can better control the allocation of orders across different production bases.

Goldman Sachs generally maintains its sales forecast for YUE YUEN but raises its profit margin expectations to reflect the company's efforts in flexible order allocation and savings in sales and management expenses; it has raised the net profit forecast for YUE YUEN IND for 2025 to 2027 by 7% to 11%. It maintains a "Buy" rating on YUE YUEN, with a target price raised from the previous HKD 14.8 to HKD 16.9