The Zhitong Finance App learned that Goldman Sachs released a research report saying that the target price of Shengyuyuan Group (00551) rose by 22.1% from HK$17.2 to HK$21, while also reducing the target price of its subsidiary Baosheng International (03813) by 13%, from HK$1 to HK$0.87. They all maintain a “buy” rating.

The bank said it lowered the net profit forecast for Baosheng International 2024-2026 by 19-31%, mainly due to pressure on sales, gross profit margin, and operating profit margin. For the original equipment manufacturer (OEM) business of Yuyuan Group, sales, gross profit margin, and operating profit margin forecasts were raised slightly, so the profit forecast for 2024-2026 was raised by 13-18%, benefiting from healthy order growth and the expected dividend yield for 2025, which is about 9%.

Goldman Sachs pointed out that Yuyuan Group, as an original equipment manufacturer, began growing strongly in October. The OEM third quarter was better than expected, and management increased its guidance for FY2024 to an increase in order volume by about 16% (previously a low double-digit increase), which was a huge surprise. Its sales volume in Double Eleven remained the same year on year. Baosheng is still optimizing the store network and leasing agreements, and is committed to further narrowing the profit margin gap between online and offline.