Core Viewpoint - Zhou Hei Ya, a leading brand in the marinated food sector, is diversifying into the compound seasoning market amid declining sales in its core products, raising questions about the viability of this strategic shift [1][4]. Financial Performance - Zhou Hei Ya's total revenue for 2024 decreased to 2.451 billion RMB from 2.744 billion RMB in 2023, representing a year-on-year decline of 10.7% [2]. - The net profit for 2024 fell to 98.204 million RMB from 115.576 million RMB in 2023, a decrease of 15% [2]. - The average transaction value dropped from 56.9 RMB in 2023 to 54.39 RMB in 2024, a reduction of approximately 4.4% [2]. Market Strategy and Adjustments - Zhou Hei Ya is closing underperforming stores, reducing its total number of offline stores from 3,816 at the end of 2023 to 3,031 by the end of 2024, marking a net decrease of 785 stores [4]. - The company is focusing on retaining stores in high-tier cities and key commercial areas while closing 129 self-operated and 656 franchised stores [4]. New Ventures - Zhou Hei Ya has entered a strategic partnership with Sichuan Shentang Industrial Group to establish a joint venture, "Sichuan Zhou Hei Ya Food Technology Co., Ltd.," aimed at developing the "Gaga Flavor" series of compound seasonings and convenient ready-to-eat products [5][7]. - The joint venture will leverage Zhou Hei Ya's expertise in marinated products and Shentang's experience in compound seasonings to create a dual-engine model that integrates ready-to-eat and cooking scenarios [7]. Industry Context - The compound seasoning market in China has shown double-digit growth over the past five years and is expected to maintain a 13.5% annual growth rate in the next five years, with a market size projected to reach 687.1 billion RMB in 2024 [8][16]. - The marinated food market has seen slower growth, with a compound annual growth rate of approximately 6.42% from 2018 to 2023, indicating a need for Zhou Hei Ya to explore new growth avenues [8][16]. Competitive Landscape - The compound seasoning market is characterized by a fragmented competitive landscape, with leading players like Tianwei Foods and Yihai International dominating the market [16]. - Zhou Hei Ya's entry into this market will require differentiation through product innovation and competitive pricing to establish a foothold [20].

Summary of Conference Call Company Overview - The conference call involved a discussion about the company, focusing on its financial performance, strategic initiatives, and market outlook. Key Points Financial Performance and Growth Strategy - The company aims to return to a growth trajectory, with a focus on long-term strategic planning for 2025. The goal is to achieve double-digit growth in revenue and maintain a store count around 3,000 by 2024 [2][36]. - The company plans to enhance operational efficiency and product offerings, particularly in the beverage and overseas markets, with a target to break into the U.S. market by 2025 [2][36]. Store Performance and Expansion - The company has implemented a dual-store model, combining retail and wholesale, which has shown positive results. However, there is a need to reassess the long-term viability of this model [6][8]. - The company has halted blind expansion and is focusing on optimizing existing stores, with a goal to reduce the proportion of loss-making stores significantly [14][15]. Channel Development - The company is actively developing its distribution channels, including partnerships with major retailers like Sam's Club and Yonghui, and is exploring opportunities in convenience stores and local distributors [4][5][16]. - The focus is on enhancing the product range, particularly in vacuum-sealed products, with a sales target to increase their market share from 11% to over 15% [26]. E-commerce and Membership Strategy - The company has seen significant growth in its membership program, with sales through its app reaching 150 million, a 217% increase year-over-year. Membership sales now account for 30-40% of total sales [22][23]. - The company is leveraging online platforms like Douyin for customer engagement and sales, with a strong focus on maintaining profitability in online channels [13][24]. Operational Efficiency and Employee Engagement - The company emphasizes the importance of employee performance and engagement, with plans to enhance training and incentive programs for staff, which are seen as critical to improving store performance [31][32]. - The management is committed to maintaining a high dividend payout ratio, aiming for at least 60% in the coming years, reflecting strong cash flow and financial health [37]. Future Outlook - The company is optimistic about its growth prospects, particularly in international markets, with plans to expand into Southeast Asia and beyond, aiming for a revenue target exceeding 10 billion in three years [17][29]. - The management is focused on maintaining a strategic approach to pricing and competition, avoiding price wars while enhancing product quality and brand value [29][36]. Additional Insights - The company is actively analyzing customer traffic and sales trends, with a focus on improving customer experience both in-store and online [11][12]. - There is a strong emphasis on sustainability and quality control in product development, particularly in the context of expanding the vacuum-sealed product line [18][20]. This summary encapsulates the key discussions and strategic directions outlined during the conference call, providing a comprehensive overview of the company's current status and future plans.

Core Viewpoint - The company maintains its profit forecast for 2025 and introduces a net profit estimate of approximately 204 million yuan for 2026, raising the target price by 47.1% to 2.5 HKD, corresponding to P/E ratios of about 27.3 and 24.5 for 2025 and 2026 respectively, while maintaining an outperform rating in the industry [1] Group 1: Financial Projections - The company is expected to generate revenue of 2.45 billion yuan and a net profit of 98.2 million yuan in 2024, aligning with market expectations [2] - The revenue structure for 2024 is projected to be approximately 1.39 billion yuan from self-operated stores, 612 million yuan from franchised stores, 334 million yuan from online sales, and 114 million yuan from other sources [3] - The gross profit margin for 2024 is anticipated to be 56.8%, an increase of 4.4 percentage points year-on-year, with a second-half gross margin expected to rise to 58.3% [3] Group 2: Store and Channel Strategy - In 2025, the company will focus on optimizing store structure and enhancing store quality, with initiatives to boost single-store revenue through store renovations and product upgrades [4] - The company has laid the groundwork for new channel development in 2024, with expectations to gradually expand in supermarkets, convenience stores, new retail, and specialty snack channels in 2025 [4] - The company plans to explore overseas markets, starting with Southeast Asia, leveraging distributor channels to sell long-shelf-life products abroad [4]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected investment return exceeding the market benchmark by more than 15% over the next 6-12 months [4][6]. Core Insights - The company reported a total revenue of 2.451 billion yuan for 2024, a decline of 10.66% year-on-year, with a net profit attributable to shareholders of 98 million yuan, down 15.03% year-on-year. In the second half of 2024, revenue was 1.192 billion yuan, a decrease of 10.34%, but net profit increased significantly by 371.96% to 65 million yuan [1]. - The company is focusing on optimizing store efficiency by closing underperforming locations and enhancing the quality of its stores. The total number of stores at the end of 2024 was 3,031, with a net closure of 785 stores. The average revenue per store increased by 6.7% for self-operated stores and 13.7% for franchised stores [2]. - The gross profit margin improved to 56.79%, an increase of 4.37 percentage points year-on-year, primarily due to reduced raw material costs and a higher proportion of self-operated stores, which have a better gross margin [3]. - The company plans to expand into new channels, including supermarkets, membership stores, and convenience stores, with a focus on differentiated product offerings. The introduction of a proprietary beverage brand and new product lines aims to enhance consumer experience and sales [3]. Summary by Sections Financial Performance - For 2024, the company achieved a revenue of 2.451 billion yuan, with a year-on-year decline of 10.66%. The net profit attributable to shareholders was 98 million yuan, down 15.03% [1]. - The revenue breakdown shows that duck and duck-related products generated 1.956 billion yuan, down 7.79%, while other products and franchise fees saw declines of 21.34% and 5.93%, respectively [2]. Store Operations - The company closed 785 stores in 2024, focusing on improving store quality rather than quantity. The total number of self-operated and franchised stores was 1,591 and 1,440, respectively [2]. - The average revenue per self-operated store increased by 6.7%, while franchised stores saw a 13.7% increase [2]. Profitability and Cost Management - The gross profit margin for 2024 was 56.79%, an increase of 4.37 percentage points year-on-year, attributed to lower raw material costs and a higher proportion of self-operated stores [3]. - The sales expense ratio increased to 40.34%, up 4.52 percentage points, due to increased investment in high-potential self-operated stores [3]. Future Outlook - The company has adjusted its profit forecasts for 2025 and 2026, projecting net profits of 130 million yuan and 158 million yuan, respectively, reflecting a significant downward revision of 53.57% and 50.25% from previous estimates [4]. - The company aims to enhance its store performance and expand into new channels, which is expected to provide additional revenue streams [3].

Core Insights - Zhou Hei Ya, a leading brand in the duck neck market, has announced its entry into the seasoning industry through a strategic partnership with Sichuan Shentang Industrial Group to develop the "Gaga Flavor" series of compound seasonings and convenient fast food products [1][2][3] Company Developments - Zhou Hei Ya has established Sichuan Zhou Hei Ya Food Technology Co., Ltd. with a registered capital of 5 million yuan, where Zhou Hei Ya holds 44% and Shentang holds 36% [2] - The partnership aims to leverage Zhou Hei Ya's strong brand recognition and extensive distribution network of over 3,000 stores to create a new product line [3][4] Market Context - Zhou Hei Ya's revenue for 2024 is reported at 2.451 billion yuan, a decline of 10.7% year-on-year, with net profit dropping to 98 million yuan, down 15% [6] - The company has been closing underperforming stores, reducing its total from 3,816 to 3,031, which has impacted short-term sales [6][7] Industry Trends - The compound seasoning market in China is projected to reach a scale of 687.1 billion yuan in 2024, growing at 16% year-on-year, with expectations of continued double-digit growth in the coming years [8] - The competitive landscape for the duck neck market is becoming increasingly challenging, with consumers showing a preference for diverse food options and price sensitivity affecting sales [7][8]

Core Insights - The core viewpoint of the articles is that Zhou Hei Ya is entering the compound seasoning market through a strategic partnership with Sichuan Shentang Industrial Group, aiming to create new growth engines amid a slowdown in the mature stage of the marinated food industry [1][2]. Company Developments - Zhou Hei Ya has signed a strategic cooperation agreement with Sichuan Shentang Industrial Group to establish a joint venture named Sichuan Zhou Hei Ya Food Technology Co., Ltd. This venture will focus on developing the "Gaga Xiang" series of compound seasonings and convenient fast food products [1]. - The company plans to launch at least 10 new products in the "Gaga Xiang" series this year, targeting not only its existing 3,000+ stores but also supermarkets, e-commerce platforms, and international markets [1][2]. Market Context - The small lobster industry has spurred the development of related products, including seasoning and feed processing, with the annual output value of lobster cooking seasonings in Hubei exceeding 1.8 billion yuan [3]. - The small lobster seasoning market is characterized by significant seasonal fluctuations, with rapid growth expected from April to July due to the lobster harvest [3]. Competitive Landscape - Zhou Hei Ya's entry into the compound seasoning market faces challenges from established competitors, as many brands are already capitalizing on the small lobster seasoning trend [3]. - Other companies in the industry, such as Ziyan Food and Juewei Food, are also exploring beverage collaborations that complement marinated food products, indicating a broader trend of diversification within the sector [4].

Core Viewpoint - The company has successfully transitioned from a focus on scale expansion to quality improvement, achieving total revenue of RMB 2.451 billion and a net profit of RMB 98.204 million in 2024, driven by optimized store strategies, innovative products, and enhanced brand marketing [1][4]. Group 1: Financial Performance - In 2024, the company reported total revenue of RMB 2.451 billion and a net profit of RMB 98.204 million, marking a significant achievement in its financial performance [1]. - The gross profit margin improved to 56.8% in 2024, up from 52.4% in 2023, indicating effective cost management and operational efficiency [4][5]. Group 2: Market Strategy - The company is focusing on enhancing the profitability of existing stores and optimizing its store structure by reallocating resources to core markets while reducing presence in low-potential markets [1][4]. - The company aims to build a comprehensive taste ecosystem, with duck and duck by-products accounting for 79.8% of total revenue, and has successfully increased active membership to over 5.5 million through digital operations [1][3]. Group 3: Product Innovation - The company is actively expanding its product offerings to meet diverse consumer demands, with the "Zhou Hei Ya Classic Flavor" series accounting for 70.3% of terminal sales, and new products like spicy chicken and dry-fried spicy chicken achieving monthly sales of over 180,000 boxes [1][2]. - The company is also venturing into the compound seasoning and convenience food sectors, launching products like seasoning packs for various ingredients in collaboration with Sam's Club [2][3]. Group 4: Brand Collaboration and Expansion - The company has engaged in brand collaborations, such as with Yanjin Puzhi and Mars, to enhance flavor IP and penetrate new market scenarios [2]. - The company is set to expand its international presence, starting with Southeast Asia, and plans to develop localized products for markets in Europe, America, Japan, and South Korea [5][6]. Group 5: Future Outlook - The company is expected to continue its growth trajectory with a focus on innovation, channel expansion, and international market entry, aiming for a revenue growth of 6.2% by 2026 and a 17% increase in net profit [6]. - Analysts have upgraded the company's rating to "highly confident outperform" with a target price increase, reflecting positive market sentiment and growth potential [6].

Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Views - In 2024, the company achieved revenue of 2.451 billion, a year-on-year decrease of 10.7%, and a net profit attributable to shareholders of 98 million, down 15.0% year-on-year [2][5]. - As of the end of December 2024, the total number of stores reached 3,031, comprising 1,591 self-operated stores and 1,440 franchised stores, covering 303 cities across 28 provinces, autonomous regions, and municipalities in China [2][5]. - The company experienced a significant decline in total sales volume, which decreased by 16.8% year-on-year, with average order consumption down 4.4% [7]. - The company closed 785 stores in 2024, with self-operated stores decreasing by 7.5% and franchised stores by 31.3% [7]. - The gross profit margin improved by approximately 4.4 percentage points to 56.8%, primarily due to a decrease in raw material costs and an increase in the proportion of direct sales [7]. Summary by Sections Financial Performance - Revenue for 2024 was 2.451 billion, a decrease of 10.7% year-on-year, while net profit was 98 million, down 15.0% year-on-year [2][5]. - The average store efficiency for self-operated stores was approximately 840,000, a decline of 9.3% year-on-year [7]. Store Operations - The company closed 785 stores in 2024, with a total of 3,031 stores remaining at the end of the year [5][7]. - The number of self-operated stores decreased by 7.5%, while franchised stores saw a decline of 31.3% [7]. Cost and Profitability - The gross profit margin increased to 56.8%, driven by lower raw material costs and a higher proportion of direct sales [7]. - Selling and distribution expenses accounted for 40.4% of revenue, an increase of 4.6 percentage points year-on-year [7]. Future Outlook - The company forecasts net profits attributable to shareholders of 168 million, 216 million, and 258 million for 2024, 2025, and 2026, respectively, with corresponding PE ratios of 26, 20, and 17 times [7].

Investment Rating - The report maintains a "Buy" rating for the company [1][11]. Core Views - The company focuses on improving store quality while experiencing a decline in average store revenue. In 2024, the total number of stores decreased to 3,031, down by 785 from the previous year, with a net reduction of 360 and 425 stores in H1 and H2 respectively [7]. - The company has made progress in vacuum products, but the franchise channel has seen a significant decline. Direct channel revenue was 1.39 billion yuan, down 5.1%, while franchise channel revenue was 610 million yuan, down 21.9% [7]. - The company’s gross margin improved in H2 2024 due to a decrease in raw material prices and enhanced production efficiency, with a gross margin of 58.3%, up 5.9 percentage points year-on-year [8]. Summary by Sections Financial Performance - In 2024, the company achieved revenue of 2.451 billion yuan, a year-on-year decline of 10.66%, and a net profit of 98 million yuan, down 15.03%. In H2 2024, revenue was 1.191 billion yuan, a decline of 10.38%, but net profit increased by 364.29% to 65 million yuan [6][7]. - The company’s average customer price was 54.39 yuan, down 4.4% year-on-year, as it expanded its mid-to-low price product offerings [7]. Future Outlook - The company aims to enhance single-store efficiency and restore revenue growth while exploring new channels such as bulk products and vacuum products. A strategic partnership was formed to develop a new line of compound seasonings [10]. - Revenue projections for 2025-2027 are set at 2.705 billion, 3.032 billion, and 3.458 billion yuan, representing growth rates of 10%, 12%, and 14% respectively. Net profit is expected to reach 129 million, 158 million, and 187 million yuan, with corresponding growth rates of 31%, 23%, and 18% [9][10].

Group 1 - International investment bank, Lyon, upgraded the rating of Zhou Hei Ya International Holdings Limited to "highly confident outperform" with a target price increase from HKD 1.70 to HKD 2.30, corresponding to a forecasted PE of 20 times for 2026, close to its historical average of 20.5 times since listing [1] - Lyon emphasized that the market previously focused too much on the speed of store closures, neglecting Zhou Hei Ya's core competitive advantage—product strength [1] - The company plans to optimize its total number of stores to 3,031 by the second half of 2024, focusing on key business districts in first and second-tier cities and high-potential areas in lower-tier cities, significantly improving single-store efficiency [1] Group 2 - Zhou Hei Ya's gross profit margin is expected to increase by 4.4 percentage points year-on-year to 56.8% in 2024, primarily due to precise cost control during a downward cycle in raw material prices and product structure optimization [1] - The company anticipates maintaining a high gross profit margin of 55.5% in 2025, with operating leverage gradually becoming apparent [1] - Lyon forecasts a revenue growth of 6.2% for Zhou Hei Ya by 2026, with a 17% upward adjustment in net profit, projecting a compound annual growth rate (CAGR) of 42% for net profit from 2024 to 2027, potentially reaching RMB 281 million by 2027 [1] Group 3 - In 2025, Zhou Hei Ya plans to implement a series of strategic transformation measures, including store adjustments, product focus, brand upgrades, and channel diversification [2] - The company aims to strengthen its core advantages in duck products while enhancing product appeal through brand upgrades, and will continue to expand into supermarkets, convenience stores, new retail, and discount snack channels, creating a unique "restaurant + retail" dual-channel combination [2] - Lyon highlighted Zhou Hei Ya's competitive moat, which lies in its unique flavor, high quality control standards, and improved decision-making efficiency following the founder's return [2]