Goyuan International: Maintains 'Buy' rating for Zhou Hei Ya (01458) with a target price of 2.11 Hong Kong dollars

According to Zhitong Finance APP, Goyuan International issued a research report stating that Zhou Hei Ya (01458) $ZHOU HEI YA (01458.HK)$ The reform of stores has shown significant results, with outstanding performance in per-store efficiency. New channels have started contributing to earnings growth. In the future, driven by the dual engines of 'stores' and 'channels,' the company is expected to unlock new growth potential. The firm forecasts net profits attributable to shareholders to reach 188/222/256 million yuan in 2026-2028, applying a PE ratio of approximately 20 times for 2026, corresponding to a target price of 2.11 Hong Kong dollars, representing a potential upside of 33.5% from the current price. It maintains a 'Buy' rating.

The main points of view of Guoyuan International are as follows:

Revenue performance was solid, with impressive profit growth

In 2025, the company achieved revenue of 2.536 billion yuan and net profit of 157 million yuan, representing a year-on-year increase of 59.6%. The earnings growth was mainly driven by the improvement in store operation quality.

Store efficiency per location showed significant improvement, and new channels began to gain traction

In 2025, the company's self-operated stores/franchise operations/online channels/other channels generated revenue of 1.492 billion/5.241 billion/363 million/156 million yuan respectively. By the end of 2025, the company operated 3,019 stores, including 1,805 self-operated stores and 1,214 franchise stores. The company primarily improved operational quality by optimizing its store portfolio, resulting in a notable increase in per-store efficiency, with average monthly per-store efficiency rising by 13.6% year-on-year. Additionally, the company expanded into new channels, launching new products in Sam's Club, Yonghui, bulk sales channels, and overseas markets, contributing continuously to earnings growth.

Gross margin benefited from cost advantages, and operational efficiency continued to improve

In 2025, the company achieved a gross margin of 57.5%, up 0.7 percentage points year-on-year; the sales expense ratio was 39.4%; the management expense ratio was 10.7%, remaining largely unchanged year-on-year. On the cost side, benefits were seen from reductions in raw material costs such as duck by-products, as well as the company’s active optimization of supply chain efficiency. On the expense side, improvements were driven by measures such as optimizing inefficient stores and increasing labor productivity. The net profit margin reached 6.2%, up 2.2 percentage points year-on-year.

Risk Warning

1. Raw material costs rising beyond expectations; 2. Intensified market competition; 3. Consumer demand falling short of expectations.

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