[ET Net News Agency, 18 November 2020] Daiwa Research lowered its target price for
Yihai International (01579) to HK$101 from HK$120 and maintained its "hold" rating.
The research house cited Yihai's management noting short-term pressure on pricing from
RP (related-party) sales, due to high condiment product demand and certain SKUs procured
from 3P (third-party) suppliers.
ASPs for RP sales fell by 6% in 1H, and Daiwa does not expect them to rise significantly
in 2021. To ease the pressure, Yihai aims to lift the number of raw-material suppliers
and enhance the efficiency of production capacity. Daiwa forecast the gross margin on RP
sales to decline by 2.3pp to 25.2% in 2020 and be stable over 2021-22.
Daiwa reduced its 2020-22 net profit forecasts by 7-8%. (KL)