A recent earnings report revealed a 60% surge in net profit and a 16% jump in market value, raising the question of whether industry leader ZHOU HEI YA (01458) has reached a dual inflection point in both performance and valuation. The company's 2025 financial results showed growth in both revenue and profit, with total revenue reaching RMB 2.536 billion, a year-on-year increase of 3.5%. Shareholder net profit amounted to RMB 157 million, surging 59.6% compared to the previous year, while the net profit margin for shareholders rose by 2.2 percentage points to 6.2%. Additionally, the company proposed a final dividend of HKD 0.09 per share (approximately RMB 0.08), totaling about RMB 168 million, representing a payout ratio of 107.2%. Boosted by the strong results and dividend announcement, investor demand surged the following day, with trading volume expanding more than tenfold and market capitalization climbing 16.5%. Despite this, the price-to-book ratio remains at just 0.8 times, and the dividend yield exceeds 6%.
Over the past two years, the prepared poultry snack industry has undergone continuous adjustment. ZHOU HEI YA has adhered to its core strategy of dual-driven growth through "physical stores + distribution channels," shifting its store operations from scale expansion to quality enhancement. In 2025, store quality reforms yielded significant results, driving double-digit growth in performance and allowing the company to stand out among its peers. Furthermore, the company has been generous with dividends over the past three years, with an average payout ratio exceeding 100%, ensuring maximum returns for shareholders.
A detailed review of ZHOU HEI YA's 2025 financial report shows that, thanks to the dual-driven "stores + channels" strategy, all key performance indicators achieved stable growth, and profitability improved markedly. On the revenue side, both store and channel businesses contributed to the recovery. Store operations saw continued structural optimization, with self-operated store revenue reaching RMB 1.492 billion, up 7.27% year-on-year, increasing its contribution to total revenue to 58.8%. The channel business experienced growth both online and offline. Online revenue rose 8.6% to RMB 363 million, while offline revenue jumped 49.85% to RMB 142 million, contributing 14.3% and 5.6% of total revenue, respectively.
On the profitability front, measures focused on "quality improvement, cost reduction, efficiency gains, and empowerment" delivered clear results. The gross profit margin for 2025 was 57.6%, showing a sustained upward trend over the past three years. The net profit margin for shareholders also continued to climb, reaching 6.2%. Average gross profit per store increased by 5.3%, while average net profit per store surged 60.8%. In terms of expenses, the core sales expense ratio was 39.4%, down 1 percentage point year-on-year. Administrative and financial expense ratios remained stable, leading to a total period expense ratio of 50.5%, a decrease of 0.9 percentage points.
In essence, 2025 marked ZHOU HEI YA's full transition to a high-quality development path. The company deepened the implementation of its "stores + channels" strategy, strengthening its core business through multi-dimensional initiatives while fostering new growth drivers through business innovation and overseas market expansion. The company balanced growth resilience with profitability, maintaining a strong financial position as core operational metrics continued to optimize, and the results of its strategic transformation gradually materialized.
Specifically, the store business serves as ZHOU HEI YA's foundation. The company focused on three dimensions—operational scenarios, staff empowerment, and store network—to solidify this base and activate growth momentum. In operational scenarios, it deepened partnerships with supermarkets to broaden reach, implemented in-store live streaming to empower both online and offline sales, and continuously upgraded its membership system, adding over 5 million new members for the year. For staff empowerment, regional competitions and a year-round 360° evaluation mechanism motivated frontline employees, while specialized training and incentives enhanced team professionalism and cohesion. In store network development, the company prioritized high-potential self-operated stores in core regions, strictly controlling standards to improve overall operational quality. By the end of 2025, the retail store count reached 3,019, including 1,805 self-operated stores, a net increase of 214 year-on-year. Stores in Central China continued to optimize, with average revenue per store rising 4.6%, contributing 52.4% of total revenue. Other regions like South, North, and West China also saw net store additions, with North China revenue growing 6.3% and contributing 18.4% to the total. Overall, average monthly terminal sales per store increased 13.6% year-on-year, indicating sustained improvement in store efficiency.
The channel business achieved a breakthrough from scratch in 2025. With the establishment of a dedicated Channel Business Division, the company systematically built a multi-channel presence that quickly became a new engine for growth. E-commerce operations were integrated into this division, evolving from a mere sales platform into a core base for brand growth and consumer engagement, leading to stable online growth. Offline channels expanded rapidly, successfully penetrating diverse outlets from membership warehouses and hypermarkets to convenience stores. The products are now available in over 80 key retail systems, including Sam's Club, Pang Dong Lai, and Yonghui, covering nearly 40,000 terminal sales points and achieving scaled market presence. Through these diversified channels, the company built a complete product matrix comprising long-shelf-life, medium-shelf-life, customized, and gift box products to meet the needs of different customer segments both online and offline.
Notably, while solidifying its dual "stores + channels" strategy, ZHOU HEI YA is exploring long-term growth avenues. Its overseas business and new prepared seasoning category are accelerating expansion, alongside experiments with new consumption scenarios like table-side prepared snacks, gradually shaping a long-term growth trajectory. In overseas markets, products have successfully entered mainstream retail channels in 12 countries, including Malaysia, Canada, and France, establishing a preliminary global distribution network. The first brand-owned store in Port Klang, Malaysia, marked a significant milestone in its international exploration. In business innovation, a strategic partnership with Sichuan Shentang focuses on flavor extension and category innovation. The "Ga Ga Xiang" prepared seasoning series has launched 29 SKUs, including marinade packs, spicy hot pot base, and spicy noodle sauce, catering to broader consumption scenarios.
From an industry perspective, the prepared snack sector faced dual pressures of consumption fragmentation and intensified competition in 2025, with most brands struggling with store contraction and profit margin pressure. Against this backdrop, ZHOU HEI YA achieved growth in both revenue and net profit, demonstrating strong operational resilience and anti-cyclical capability, while most peers saw declining performance. Competitors are also adapting, exploring more diverse revenue scenarios. For instance, Juewei attempted to address evolving demands across different consumption occasions like meals, snacks, late-night dining, and gifting. However, these efforts yielded limited results; according to its 2025 forecast, Juewei expects a double-digit revenue decline and an annual net loss between RMB 160 million and RMB 220 million.
Over the past three years, ZHOU HEI YA's profit trend has been the most prominent among the top three prepared snack players. The performance divergence primarily stems from differences in business models. Franchisee revenue accounts for only about 20% of ZHOU HEI YA's total, whereas Juewei and Huangshanghuang rely heavily on franchise-driven models. For Juewei, over 70% of revenue comes from wholesale sales to franchisees, and Huangshanghuang's franchise stores constitute over 90% of its network. High reliance on franchisees leads to a relatively singular business model and introduces uncontrollable factors under passive management. In contrast, ZHOU HEI YA proactively adjusted its business structure in recent years, focusing on "enhancing operational quality and accelerating performance improvement." Multiple store reforms were meticulously implemented, particularly for self-operated stores. Leveraging scale advantages, product innovation, a robust supply chain, and efficient management execution, the company increased the proportion of self-operated store revenue,初步 formed a diversified channel growth curve, consistently outperformed peers, and solidified its market leadership.
Looking ahead, ZHOU HEI YA has positive earnings growth expectations for 2026. On one hand, amid industry volatility and heightened external uncertainties, the company maintains strategic focus on its dual-driven "stores + channels" approach, continuously advancing systematic organizational and supply chain development to lay a solid foundation for long-term, high-quality growth. On the other hand, innovation initiatives like overseas expansion and the "Ga Ga Xiang" series are positioning themselves as future growth engines. Industry professionals, such as China food industry analyst Zhu Danpeng, believe that ZHOU HEI YA has established a comprehensive competitive advantage combining brand power, scale, a loyal fan base, and supply chain integrity. Through its dual-driven strategy, the company is strengthening its core business while steadily advancing its overseas layout, positioning it to lead the industry's high-quality development in the future.
It is noteworthy that ZHOU HEI YA adheres to a long-term development philosophy. While balancing growth and profitability, it maintains a healthy financial structure to support sustained development. In 2025, its asset-liability ratio was just 23%, and the interest-bearing debt ratio was only 3.7%, both historically low levels. Furthermore, the company actively shares its success with shareholders through a combination of share buybacks and dividends. Since March 2024, the company has conducted 237 buybacks, totaling HKD 497 million, with HKD 194 million repurchased in 2025 alone. Regarding dividends, the company has paid dividends in 9 out of the 10 years since 2016, with cumulative dividends reaching RMB 2.322 billion and an average payout ratio exceeding 60%. Over the past three years (2023-2025), the payout ratios were 93.5%, 104.2%, and 107.2% respectively, averaging over 100%.
In summary, ZHOU HEI YA achieved growth in both revenue and profit in 2025. Vertically, all performance indicators showed continuous improvement, store quality reforms were effective, channels created new growth points, and profitability steadily increased. Horizontally, its business model is more diversified, with a high proportion of self-operated stores enabling proactive adjustments to enhance store efficiency. Both growth and profitability metrics lead the industry, highlighting its operational resilience and anti-cyclical strength. With positive earnings growth expectations, a strong commitment to shareholder returns evidenced by ongoing buybacks in 2026, an attractive dividend yield exceeding 6%, and a low PB ratio of 0.8 times, the company presents a potential opportunity for stable and value investors. As the industry cycle enters a phase of recovery and growth, ZHOU HEI YA's performance is poised to continue outpacing peers, potentially leading to a dual boost in both earnings and valuation.
Comments