Guoyuan International has released a research report stating that ZHOU HEI YA (01458) has demonstrated significant results from its store reforms, with impressive performance metrics per individual store. Furthermore, new sales channels have begun contributing to incremental earnings. The report suggests that future growth will be driven by the dual engines of "store optimization" and "channel expansion." The firm forecasts the company's net profit attributable to shareholders for 2026-2028 to be RMB 188 million, RMB 222 million, and RMB 256 million, respectively. Applying a price-to-earnings ratio of approximately 20 times for 2026, this corresponds to a target price of HK$2.11, representing a potential upside of 33.5% from the current price, leading to a maintained "Buy" rating.
Key points from Guoyuan International's analysis are as follows:
**Steady Revenue Growth and Strong Profitability Increase** In 2025, the company achieved revenue of RMB 2.536 billion and a net profit of RMB 157 million, a year-on-year increase of 59.6%. This robust earnings growth was primarily driven by enhanced operational quality across its store network.
**Significant Improvement in Per-Store Efficiency and Contribution from New Channels** In 2025, revenue from self-operated stores, franchised stores, online channels, and other channels amounted to RMB 1.492 billion, RMB 5.241 billion, RMB 363 million, and RMB 156 million, respectively. By the end of 2025, the company operated 3,019 stores, comprising 1,805 self-operated and 1,214 franchised locations. By optimizing its store portfolio to improve operational quality, the average monthly sales per store saw a notable increase of 13.6% year-on-year. Concurrently, the expansion into new channels, including product launches in membership stores like Sam's Club, partnerships with retailers such as Yonghui, and expansion into overseas markets, has consistently contributed to incremental performance.
**Improved Gross Margin Benefiting from Cost Advantages and Enhanced Operational Efficiency** The company's gross profit margin for 2025 was 57.5%, an increase of 0.7 percentage points compared to the previous year. The sales expense ratio was 39.4%, while the administrative expense ratio was 10.7%, remaining largely stable year-on-year. On the cost side, benefits were derived from lower prices of raw materials such as duck by-products and the company's active efforts to optimize supply chain efficiency. On the expense side, improvements stemmed from measures like optimizing underperforming stores and enhancing staff productivity per store. The net profit margin reached 6.2%, an increase of 2.2 percentage points year-on-year.
**Risk Factors** 1. Raw material costs rising more than anticipated. 2. Intensification of market competition. 3. Consumer demand falling short of expectations.
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