Goldman Sachs released a research report stating that the target price of Yue Yuen Ind (00551) was raised by 22.1% from HK$17.2 to HK$21, while at the same time the target price of its subsidiary Pou Sheng Int'l (03813) was lowered by 13% from HK$1 to HK$0.87. Both maintain a "buy" rating.

The bank mentioned that it lowered profit forecasts for Pou Sheng Int'l for 2024-2026 by 19-31%, mainly due to pressures on sales, gross margin, and operating profit margin. For Yue Yuen Ind's original equipment manufacturing (OEM) business, it slightly raised sales, gross margin, and operating profit margin forecasts, therefore raising profit forecasts for 2024-2026 by 13-18%, benefiting from healthy order growth and an expected good dividend yield in 2025, around 9%.

Goldman Sachs pointed out that Yue Yuen Ind, as an original equipment manufacturer, has shown strong growth since October, with OEM performance in the third quarter exceeding expectations. Management has raised its guidance for the 2024 fiscal year to around a 16% increase in orders (previously low double-digit growth), which is a huge surprise. Its subsidiary, Pou Sheng, maintained flat singles' day sales compared to the previous year, and it continues to optimize its store network and leasing agreements in order to further narrow the profit margin gap between online and offline channels.