Company releases November data

In 2024, the company's manufacturing business revenue increased 17% year-on-year, with a cumulative increase of 10.9%; Baosheng's revenue increased -12% in a single month, with a cumulative increase of -8.4%;

Listed companies' overall monthly revenue of 0.68 billion US dollars increased 7.5% in November 2024, with cumulative revenue of 7.5 billion US dollars, an increase of 3.4%.

We believe that the core logic of weaving is to capture relative certainty in the midst of uncertainty and continue to be optimistic about the 2025 market interpretation; the multi-customer layout can hedge terminal retail and cycle risks; the Matthew effect in the industry is conducive to increasing the share of the leading supply chain and seizing excessive growth opportunities in a relatively stable market; the advantages of the leading supply chain are usually reflected in a better customer structure, cost advantages brought about by manufacturing management capabilities, and years of trust accumulation.

Manufacturing recovery can be expected in the long run

Looking back at the first nine months of 2024, with the further normalization of the global footwear market, demand for footwear products supplied by Yuyuan increased dramatically, and its manufacturing business was full of orders to drive continued growth in overall capacity utilization and production efficiency; brand customers focused on strategic supply chain partners with development capabilities also deepened this good trend.

Yu Yuan remains optimistic about the long-term prospects of the sports industry and will continue to work on medium- to long-term capacity layout strategies, including targeting Indonesia and India where labor supply and infrastructure can support sustainable growth, and diversify manufacturing capacity.

The company will continue to uphold the strategy of prioritizing value growth, integrated product development practices combining automation technology and R&D capabilities, consolidate its core competitiveness as an industry leader, continue to provide the best end-to-end solutions for brand partners, and bring high-quality returns to shareholders.

Focus on shareholder returns

Since the beginning of 2024, Yuyuan's stock price has increased by about 90% cumulatively. The company adheres to a sound dividend policy. The dividend payout rates for the full year of 2022 and 2023 were 77% and 70%, respectively. Based on the year-end stock price, the dividend ratio was 10% or more; the 2024 interim dividend was HK$0.40, with a dividend payout ratio of 45%.

Furthermore, the Board of Directors approved the implementation of a share repurchase plan of approximately US$15 million in 2024; as of October 2024, Yuyuan had repurchased 3.632 million shares, using nearly HK$50 million (approximately US$6.4 million).

Maintain profit forecasts and maintain “buy” ratings

We expect the company's FY24-26 revenue to be 8.65/9.65/10.94 billion US dollars, respectively; net profit to mother will be 0.46/0.54/0.62 billion, respectively;

Corresponding EPS is $0.28/0.33/0.38/share, respectively;

Corresponding PE is 8x, 7x, and 6x respectively.

Risk Warning: Increased labor costs, loss of core executives, fierce market competition