In the first half of 2025, ZHOU HEI YA (01458) leads the industry with a 2.3-fold increase in net profit for its shareholders.

The base remains stable, and a new growth curve is being created, reducing costs and increasing efficiency to comprehensively enhance the quality of profits. Leading the leisure pickled food industry, ZHOU HEI YA (01458) once again leads the industry. It is understood that on August 28, ZHOU HEI YA released its financial report for the first half of 2025, achieving a total revenue of 1.223 billion yuan, reaching the upper limit of the forecast range, and overall profitability improved significantly. Shareholders' net profit was 108 million yuan, a year-on-year increase of up to 228%, with a net profit margin of 8.8%, an increase of 6.2 percentage points year-on-year. During the period, the company's cash flow remained strong, achieving a net operating cash flow of 2.11 billion yuan, an 8.8% increase year-on-year. In fact, in the first half of the year, the competition in the leisure pickled food industry was fierce, with the industry leaders ZHOU HEI YA, Juewei Food Co., Ltd., and Jiangxi Huangshanghuang Group Food all experiencing performance adjustments. However, under the leadership of Zhou Fuyu, ZHOU HEI YA focused on improving the quality of store operations and expanding diversified channels, accelerating its overseas strategy to create a new growth curve. This effectively drove a significant increase in the company's performance resilience and profit quality, standing out among the three industry leaders. ZHOU HEI YA has the ability to resist economic cycles, and has built an unreplicable moat in the supply chain, product end, channel end, and globalization, driving sustainable growth in performance. Leading in performance, substantial profit improvement Looking at the performance of ZHOU HEI YA in the first half of 2025, there are two very important features: first, income resilience, under the store-operating quality strategy, there was a significant increase in per store revenue; second, continuous improvement in profitability, leading the industry level, with high-quality profits and very healthy operating cash flow. In terms of income, comparing with peers, in the first half of the year, revenues of Juewei and Jiangxi Huangshanghuang Group Food declined by 15.57% and 7.2% respectively, which was higher than ZHOU HEI YA's decline of 12.26% and 4.3% respectively. Moreover, in terms of per store revenue, ZHOU HEI YA showed a stronger performance, with an average per store revenue of 427,000 yuan, a year-on-year increase of 17.1%. Among them, the average per store revenue for self-operated stores was 452,600 yuan, a year-on-year increase of 12.7%, achieving counter-trend growth for the stores. By June 2025, ZHOU HEI YA had 2,864 stores, with 1,573 self-operated stores and 1,291 franchised stores, covering 292 cities in 28 provinces, autonomous regions, and municipalities in China. On the profitability side, ZHOU HEI YA is far ahead, with a drop of 40.71% in shareholder net profit for Juewei in the first half of the year, a net profit margin of 6.21%, while Jiangxi Huangshanghuang Group Food, with a smaller scale, saw an increase of 26.9% in shareholder net profit, with a net profit margin of 7.83%. ZHOU HEI YA, on the other hand, saw an increase of 228% and a net profit margin of 8.8% in these two indicators, far exceeding industry levels. As mentioned above, the company effectively increased per store revenue through the store-operating quality strategy, which in turn also increased per store profitability. In the first half of the year, the overall gross profit margin increased by 3.2 percentage points to 58.6%. At the same time, ZHOU HEI YA continuously optimized various expenses through cost reduction and efficiency enhancement strategies. In the first half of the year, the company's financial expense ratio decreased by 0.1 percentage points to 0.4%, the sales expense ratio decreased by 1.5 percentage points to 38.6%, and the management expense ratio remained unchanged at 9.5%. In addition, the proportion of losses from equity-accounted investees to income decreased by 2.4 percentage points to 0.3%. These optimizations significantly enhanced the company's profitability. More importantly, the company's profitability is very healthy, with a receivable ratio of only 7.5%, and strong net cash flow operation, reaching 2.11 billion yuan, an 8.8% increase year-on-year. The company's business blood-making ability is strong. By the end of June 2025, the company's interest-bearing liabilities were only 84 million yuan, and the cash and bank deposits amounted to 878 million yuan. With a solid financial situation, the company is well positioned for future development. Behind the performance resilience, comprehensive driving in three dimensions ZHOU HEI YA's achievement of surpassing its peers in income resilience and high profit growth is mainly due to the company following the diversified trend of consumer preferences and comprehensively enhancing high-quality operations through three dimensions: First, store operations remain the cornerstone, with the company focusing on improving the quality of per store operations by optimizing store focus and layout, strengthening geographical markets, enhancing store experience and attractiveness through methods such as store staff live broadcasts, membership programs, delivery services, public spaces, and late-night scenes. For example, the company established a "store-staff-private domain" linkage mechanism, utilizing big data and intelligent tools for precise marketing, strengthening member and private domain operations to increase member repurchase and loyalty. By June 30, the company had added 2.45 million registered members, with member sales accounting for over 60%. While maintaining the base, the company is creating a second growth curve through multiple channels. The company has successfully collaborated with Sam's Club to develop customized classic condiment packages and flavored duck sauce; strategic partnerships have been established with Yonghui, Panda Retail, and others to provide vacuum-packed and bulk products, effectively expanding new channel scenes. With the expansion of multiple channels, the company is expected to become a highlight of growth. At the same time, ZHOU HEI YA's overseas business has successfully entered the markets of Malaysia and Singapore, and will continue to explore Southeast Asia and other regions, bringing long-term growth potential to the company. Second, high-quality products are the basis for success. The company has built a "classic + innovation" dual-drive system, adhering to the high-quality requirements of "ZHOU HEI YA Standard", promoting the optimization and iteration of classic products, building product differentiation barriers based on taste characteristics, and introducing new product categories such as sauce duck and braised squid. At the same time, focusing on the changing consumer demands of the Z generation, the company has launched diverse innovative products, such as developing sauce duck wingtips and regionally limited Sichuan-style spicy duck necks. The company is also actively incubating new brands, such as the "Ya Ya Ye" brand invested and incubated in the first half of the year, which has launched fresh coconut water, creating a one-stop experience of "pickled food + beverages". The company also established a joint venture with Sichuan Shentang Industrial Group to jointly develop the "Gaga Xiang" series of compound seasoning and convenient fast food products. By creating a diverse product matrix, incubating new brands, and adapting to multi-channel layouts, the company has established a competitive advantage in brand differentiation. Finally, achieving a balance between growth and profitability, the company firmly controls the supply side resources, establishing long-term and stable cooperation relationships with leading companies, focusing on cost reduction and efficiency enhancement, agile response, and quality improvement to promote the refined operation of the supply chain. Through in-depth market analysis and supplier structure optimization, the company accurately seizes procurement windows to lock in cost advantages. At the same time, the company has built its logistics system, continuously optimizing cost and expenses to drive continuous improvement in profit levels. Adhering to long-termism, long-term investment value highlighted In fact, ZHOU HEI YA's high-quality development strategy embodies the long-term business philosophy, balancing growth and profitability, ensuring the sustainability of the business and the stability of scale expansion. The company, with innovation as the engine, quality as the foundation, and user-centric approach, not only continues to deepen the traditional pickled food field, but also continuously breaks through growth boundaries through diversified, internationalized, and youthful multi-dimensional strategies, leading industry innovation and transformation. In July of this year, the company's founder and chairman, Zhou Fuyu, proposed to break the industry dilemma with "heart" quality productivity, reshaping industry value. His two major initiatives shift from "upstream and downstream internal battle" to "industrial chain collaborative competition" and from "cost priority" to "quality priority". These two initiatives have been fully recognized by the industry and are a strong validation of the company's high-quality growth under its long-termism philosophy. In conclusion, ZHOU HEI YA's "store base + new growth points + high-quality products" strategy drives quality growth, while "supply chain management + refinement for comprehensive cost reduction and efficiency enhancement" improves profitability. This "focus on quality, increase efficiency" multidimensional strategic combination has been proven to be correct, effective, and actionable. In the first half of the year, the company saw significant increases in per store revenue and profitability. With the industry continuing to recover in the second half of the year, the expansion of multiple channels is expected to fully unleash performance expectations. From an investment bank perspective, for example, CMSC's research report on ZHOU HEI YA's first-half performance release stated that the company's strategic determination, reform effectiveness, and new retail channel contributions were evident. Looking ahead to the second half of the year, the company will continue to actively connect with new retail channels, expand into Southeast Asian markets, and optimize expenses through cost reduction and efficiency enhancement, optimizing the cost-effectiveness ratio, expecting improvements in revenue and profits, giving a "strongly recommended" rating. Since the beginning of this year, ZHOU HEI YA's market value has increased by more than 40%. The company adheres to a long-term development philosophy, leading the industry in performance capabilities, with continuous improvement in fundamentals and greatly enhanced profitability. In the short to medium term, it has a high value betting rate driven by the overall market. Its long-term investment value is highlighted and continues to be favored by value investors.