Lyon's report states that Vitasoy Int'l (00345.HK) sales in the first half of the fiscal year ending in September increased by 2% year-on-year based on the reporting standards, while sales in the mainland remained roughly flat, and Hong Kong sales increased by 3% year-on-year. Due to favorable decrease in raw material prices and strict control over sales and distribution costs, its operating margin increased by 2.4 percentage points year-on-year. The company's goal is to achieve positive sales growth in the second half of this fiscal year, especially in the mainland, and to continue expanding the profit margin.

Lyon believes that the recovery of Vitasoy's profit margin is a key driver of future mid-term profit growth. Due to the current high valuation, it maintains a 'hold' rating with the target price raised from 6.9 yuan to 9.6 yuan.