Goldman Sachs updated profit forecasts for Yuanyi (00551.HK) and Baosheng (03813.HK). The bank reduced Baosheng's Q2 revenue forecast by 10.5% year-on-year, reflecting overall weak consumption and unfavorable weather factors, while gross margin expansion still benefits from disciplined discounts, but is partially offset by deleveraging operations and a less favorable channel sales mix. The bank expects Yuanyi to be on track for high single-digit growth in annual sales, with equipment utilization and efficiency growth supporting margin expansion.

The bank lowered its average net profit forecast for Baosheng from this year to 2026 by 9%, and lowered its profit forecast for Yuanyi by 1% over the same period, believing that growth in contract manufacturing business offsets weaker-than-expected retail performance. The bank believes that Yuanyi's stock price has retreated 18% this month, reflecting market negative sentiment about potential U.S. tariffs, but equipment utilization and efficiency improvements support relatively higher profit visibility. The bank expects Yuanyi's second quarter net profit to be USD 82 million, up 151% year-on-year. The bank finds Yuanyi's risk-return attractive, with a forecast P/E ratio of 7 and a 10% dividend yield.

The bank lowered Yuanyi's target price from HKD 19 to HKD 18.8, and Baosheng's target price from HKD 1.15 to HKD 1.04. Both are rated "buy".