Citi has issued a research report noting that Yue Yuen Industrial (Holdings) Ltd (00551) released a profit warning for the first nine months of this year, with performance falling slightly short of expectations.
Citi has cut its 2026 earnings forecast for Yue Yuen Industrial by 13% and made minor adjustments of 0% to 2% to its 2027 and 2028 forecasts. The price target has been lowered from HK$18 to HK$17.5, while the "Buy" rating is maintained. The bank expects the company's dividend yield in 2027 to be approximately 7%.
Yue Yuen Industrial reported net profit of US$72 million for the first half of the year. Based on this, third-quarter net profit is estimated at approximately US$53 million to US$67 million, representing a year-on-year decline of 37% to 50%, but a quarter-on-quarter increase of 45% to 83% compared with US$36.8 million in the second quarter.
The company has guided for net profit attributable to owners for the first nine months to decline by 50% to 55% year-on-year. Compared with US$278.7 million in the same period last year, this implies net profit of approximately US$125 million to US$139 million.
The bank believes the company's profitability is improving on a quarterly basis, but the pace of recovery is slightly slower than expected.
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