The Zhitong Finance app learned that Macquarie published a research report stating that Yu Minhua Holdings (01999) “outperformed the market” rating, downgraded earnings estimates for the 2024/25 fiscal year by 9% and 11% respectively, reflecting the downgradation of its revenue forecast and the increase in its operating expenses ratio forecast. The target price fell 9% to HK$10. The company's revenue for the first half of the fiscal year fell 4% year on year, lower than the company's forecast of 11%, but benefiting from lower raw material costs and freight costs, net profit increased 4% year on year, higher than the company's forecast by 6.1%.
The bank pointed out that the group's export business has improved. In September, sales in North America increased by more than 20% year on year, reflecting the end of customer inventory removal actions and management becoming more positive about the region's prospects. In terms of mainland business, management plans to further penetrate below third-tier cities, while existing stores in higher-tier cities will focus on productivity. According to the bank, average sales prices are expected to be pressured as consumption is downgraded due to entry into cities below the third tier.