CICC: maintain target price of HK$3.0 for ZHOU HEI YA (01458) and maintain "outperform" rating.

CICC released a research report stating that it basically maintains its profit forecast for ZHOU HEI YA (01458) for 2025 and 2026. The bank maintains a target price of 3.0 Hong Kong dollars. The current stock price corresponds to a P/E ratio of 26.8/24.1 times for 25/26 years. The target price corresponds to a P/E ratio of about 32/29 times for 25/26 years. The current price has an upside potential of about 20.5% from the target price, and the bank maintains an outperform rating in the industry. In the second half of 2025, the company will optimize its promotion strategy for emerging channels in the hopes of continuous scale expansion, summarizing the sales and sales data of emerging channel products in the first half of 2025, and matching and optimizing the products and channels, with the bank expecting further expansion in scale in the second half of the year. Key points from CICC: The company's 1H25 profit forecast shows a year-on-year growth of 55.2%-94.8% The company released a profit forecast for 1H25: revenues of 1.2-1.24 billion yuan, profits (excluding uncompleted statistics of share of profits and losses of associates and related tax effects) of 90-113 million yuan, with a year-on-year increase of 55.2%-94.8% under the same calculation method. The performance forecast slightly exceeds market expectations, with the bank predicting that this is mainly due to the company's better-than-expected expense control (including good control of expenses on storefronts and emerging channels, with the company focusing on efficiency improvement). Revenue side: The bank estimates that the average single store sales in 1H25 will increase by a single digit year-on-year This year the company focuses on improving store quality, and in the first half of the year, single store quality has shown good recovery through the optimization and adjustment of personnel, goods, and field in the store. In terms of emerging channels, the team was established in 2024, and in late March 2025, the company's braised meat products entered Sam's channel, as well as Pandonglai and some Yonghui stores. However, the contribution to revenue in the first half of the year was still relatively small. The bank expects the company to reevaluate based on sales data of new channel products in 1H25, preparing for the optimization of product and channel deployment strategies for 2H25. Profit side: The bank predicts that the gross profit margin will increase year-on-year, coupled with lean management optimization of the sales expense ratio, to comprehensively boost profitability The cost of duck by-products is relatively low, and the bank estimates an improvement in the company's gross profit margin year-on-year. In addition, the bank predicts that in 1H25, as store quality improves, the number of loss-making stores below the breakeven line will continue to decrease, and the company's expenditure on emerging channels in 1H25 can be controlled. The net profit margins for 1H24/2H24 were 2.6%/5.5%, and if the mid-point of the revenue and profit in 1H25 profit forecast is taken, the estimated net profit margin is about 8.3%, with profitability improving quarter by quarter.