Haitong International: Raises target price for Yihai International (01579) to HKD 20, expects steady improvement in earnings quality

According to Zhitong Finance APP, Haitong International released a research report stating that based on recent communication with the listed company, Yihai International (01579) $YIHAI INTL (01579.HK)$ has a clear business strategy for 2026, shifting its focus from scale expansion to structural optimization. The B-end shifts from new customer acquisition to deep cultivation, overseas maintains high growth, ready-to-eat meals stabilize and rebound, costs and capital expenditures remain controllable, and earnings quality improves steadily, showing strong resilience in performance growth. Maintains an 18x P/E ratio valuation for the company in 2026, with the target price raised from HKD 19.8 to HKD 20 due to exchange rate fluctuations. Considering the rapid growth of the company's B-end and overseas businesses, and the recovery outlook for related-party transactions, it reiterates an 'Outperform' rating.

The company's third-party business demonstrates robust growth momentum, with a solid dual-driving pattern from the B-end and overseas markets. For 2026, large B-end business is expected to grow between 20% to 30%, serving approximately 200 existing clients. Product offerings are being upgraded from low-margin items like spices and chicken essence to higher-value categories such as sauces and seasonings, reducing substitution risks and enhancing profit stability. Small B-end operations shift to acquiring customers online via Douyin, using standardized product bundles to ensure profitability, currently in a rapid ramp-up phase. Overseas third-party business is expected to grow by 30%. Channels in mature regions like Southeast Asia and the US are well-developed, while channels in Japan and Korea are gaining traction quickly. The Thailand factory enhances capacity utilization through product expansion and B-end development, with no immediate plans for new overseas plants, ensuring steady and orderly global expansion.

The bank maintains its previous forecast, expecting total revenues for 2026 to 2028 to reach RMB 7 billion, RMB 7.62 billion, and RMB 8.21 billion respectively, with net profits of RMB 1.01 billion, RMB 1.12 billion, and RMB 1.22 billion, corresponding to earnings per share of RMB 0.97, RMB 1.08, and RMB 1.18.

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