[ET Net News Agency, 23 August 2019] HSBC Global Research raised its target price for
Yihai International (01579) to HK$41.53 from HK$39.1 and maintained its "hold" rating.
The research house said Yihai increased expenses to shore up revenue growth, with
selling-/admin-expense to sales ratio rising 1.2/1.4ppts to 9.9% and 6.9%, pressuring the
net margin by 2.1ppts to 16.3%.
Benefiting from the partner incentive scheme, Yihai's total number of distributors
increased from 1500 in end-2018 to 2000 in 1H 2019, including 1200 self-heating hotpot
distributors. The large capacity under construction is sufficient to meet the market
expansion demands of the company.
But HSBC expects 2H growth to slow sharply. It raised its 2019-21 revenue estimates by
6%, and lower net profit estimates by 1-2% based on the high expenses forecast. (KL)