Investment Rating - The investment rating for the company is "Buy" (maintained) [2][11] Core Views - The company has shown resilience in its external sales, with a notable recovery in overseas markets, while domestic sales are expected to stabilize [8] - The company's revenue for FY26H1 was HKD 8.045 billion, a year-on-year decrease of 3.1%, but the decline has narrowed significantly compared to previous periods [7] - The gross profit margin improved by 0.9 percentage points to 40.4%, benefiting from cost control and operational efficiency [7][8] Revenue and Profitability - The company's revenue forecast for the upcoming years is as follows: - 2024A: HKD 18.411 billion - 2025A: HKD 16.903 billion - 2026E: HKD 16.953 billion - 2027E: HKD 17.631 billion - 2028E: HKD 18.513 billion - The year-on-year growth rates for revenue are projected to be -8% for 2025A, 0% for 2026E, 4% for 2027E, and 5% for 2028E [2] - The net profit attributable to the parent company is forecasted as follows: - 2024A: HKD 2.302 billion - 2025A: HKD 2.063 billion - 2026E: HKD 2.193 billion - 2027E: HKD 2.321 billion - 2028E: HKD 2.433 billion - The year-on-year growth rates for net profit are projected to be -10% for 2025A, 6% for 2026E, 6% for 2027E, and 5% for 2028E [2] Market Performance - Domestic sales in the Chinese market for FY26H1 were HKD 4.203 billion, a year-on-year decrease of 6.5%, but the decline has significantly narrowed compared to FY25H2 [7] - Online sales showed strong performance with a year-on-year increase of 13.6%, while offline sales decreased by 12.3% [7] - The North American market revenue for FY26H1 was HKD 2.161 billion, a slight increase of 0.3%, demonstrating strong resilience amid rising international trade barriers [5] - Revenue from Europe and other markets for FY26H1 was HKD 0.765 billion, a year-on-year increase of 4.3% [5] Cost and Margin Analysis - The overall gross profit margin increased to 40.4%, benefiting from a decrease in average unit costs of key raw materials such as leather, chemicals, and steel [8] - However, the company faced increased tariff costs for exports to the United States, which rose from HKD 6.65 million to HKD 78.83 million year-on-year [8]

Core Viewpoint - CICC maintains the earnings forecast for Minhua Holdings (01999) at HKD 21.24 billion for FY2026 and HKD 22.48 billion for FY2027, with the current stock price corresponding to a P/E ratio of 9x for both fiscal years, indicating a 27% upside potential to the target price of HKD 6.5, which corresponds to a P/E of 12x for FY2026 and 11x for FY2027 [1]. Group 1: Financial Performance - For 1HFY26, the company achieved a revenue of HKD 80.45 billion, a decrease of 3.1% year-on-year, and a net profit of HKD 11.46 billion, an increase of 0.6% year-on-year, aligning with CICC's expectations [2]. - The company plans to distribute a dividend of HKD 0.15 per share, resulting in a payout ratio of 50.8% [2]. Group 2: Sales Performance - Domestic sales revenue decreased by 6% to HKD 46.75 billion, while online sales showed a growth of 13.6% to HKD 11.44 billion, indicating a shift towards online channels [3]. - In the overseas market, revenue from North America, Europe, and other regions increased by 0.3%, 4.3%, and 2.2% respectively, demonstrating stable growth despite tariff disruptions [3]. Group 3: Profitability Metrics - The gross margin improved by 0.9 percentage points to 40.4%, with gross margins in China, overseas, and other regions increasing by 0.8, 1.1, and 0.3 percentage points respectively [4]. - The net profit margin also increased by 0.5 percentage points to 14.2%, driven by improved operational efficiency and cost control [4]. Group 4: Strategic Initiatives - The company reduced its number of stores by 327 to 7,040, with a corresponding revenue decline of 12.3% in physical stores, but anticipates improved operational efficiency from ongoing store optimization [5]. - The company is focusing on multi-channel strategies domestically and enhancing brand building while expanding internationally through global capacity collaboration and participation in international exhibitions [5].

Core Viewpoint - The company's performance in 1HFY26 met expectations, with a slight decline in revenue but a modest increase in net profit, indicating stable operational efficiency and strategic positioning in both domestic and international markets [1][2]. Group 1: Financial Performance - In 1HFY26, the company achieved revenue of HKD 8.045 billion, a year-on-year decrease of 3.1%, and a net profit of HKD 1.146 billion, a year-on-year increase of 0.6% [1]. - The company plans to distribute a dividend of HKD 0.15 per share, resulting in a payout ratio of 50.8% [1]. Group 2: Sales Trends - Domestic sales showed a decline of 6% to HKD 4.675 billion, while online sales grew by 13.6% to HKD 1.144 billion, indicating a shift in consumer purchasing behavior [2]. - International sales in North America and Europe increased by 0.3% and 4.3%, respectively, demonstrating resilience in overseas markets despite tariff disruptions [2]. Group 3: Profitability and Efficiency - The gross margin improved by 0.9 percentage points to 40.4%, with net margin increasing by 0.5 percentage points to 14.2%, reflecting enhanced operational efficiency and cost control [2]. - The company reduced its number of stores by 327 to 7,040, resulting in a 12.3% decrease in store revenue, but anticipates improved efficiency from ongoing store optimization [2]. Group 4: Strategic Outlook - The company is focusing on multi-channel strategies in the domestic market and enhancing brand presence while expanding internationally through global capacity coordination and participation in international exhibitions [2]. - The earnings forecast for FY2026 and FY2027 remains unchanged at HKD 2.124 billion and HKD 2.248 billion, respectively, with a target price of HKD 6.5, indicating a potential upside of 27% from the current stock price [3].

Core Viewpoint - The company reported a slight decline in revenue but a modest increase in net profit, indicating resilience in its operations despite challenging market conditions [1][2] Financial Performance - The company’s FY26H1 revenue was HKD 8.04 billion, a year-on-year decrease of 3.1% - Net profit attributable to shareholders was HKD 1.146 billion, reflecting a year-on-year increase of 0.6% - Gross margin stood at 40.4%, up by 0.9 percentage points year-on-year - Net profit margin was 14.2%, an increase of 0.5 percentage points year-on-year [1] Domestic Sales - Domestic sales revenue reached HKD 4.67 billion, down 6.0% year-on-year, but the decline was narrowing - Gross margin for domestic sales improved to 41.0%, up by 0.8 percentage points year-on-year, benefiting from lower raw material prices - E-commerce sales grew by 13.6% to HKD 1.14 billion, while offline sales fell by 12.3% to HKD 3.059 billion - The company reduced its store count to 7,040, a net decrease of 327 stores [1] Product Performance - Sofa sales slightly outperformed bed products, with domestic sofa revenue at HKD 3.084 billion (down 6.1%) and bed revenue at HKD 1.119 billion (down 7.4%) - Sofa sales volume increased by 0.1%, while prices decreased by 6.2%, primarily due to a higher proportion of online sales [1] International Sales - Revenue from North America and Europe grew to HKD 2.16 billion and HKD 0.765 billion, respectively, with year-on-year increases of 0.3% and 4.3% - The gross margin for international sales was 39.3%, up by 1.1 percentage points year-on-year, driven by lower raw material costs and improved operational efficiency [1] Expenses - Sales expense ratio increased to 19.13%, up by 0.9 percentage points year-on-year, primarily due to tariffs imposed by the U.S. on Vietnam and increased e-commerce promotion costs - Tariff expenses rose from HKD 6.65 million to HKD 78.83 million, accounting for a year-on-year increase of 0.9 percentage points in revenue proportion [2] Investment Outlook - The domestic penetration rate for functional sofas is expected to continue rising, projected at 12.2% by 2024, an increase of 2.5 percentage points year-on-year - The company’s transformation of distributors and stores is anticipated to gradually improve performance - The company maintains a stable dividend payout ratio above 50%, with a TTM dividend yield of 5.19% and an interim dividend of HKD 0.15 per share, highlighting its investment value - Projected net profits for FY26-28 are HKD 2.23 billion, HKD 2.403 billion, and HKD 2.584 billion, respectively, with a "buy" rating maintained [2]

Core Viewpoint - Citi has raised the target price for Minhua Holdings (01999) to HKD 5.58, citing improved visibility on shareholder returns despite competitive pressures in domestic and international markets [1] Financial Performance - For the first half of the fiscal year 2026, Minhua Holdings reported a net profit increase of 0.6% year-on-year, with interim dividends remaining stable [1] - The gross profit margin in overseas markets increased by 1.1 percentage points to 39.3%, attributed to ongoing efficiency improvements and a decrease in raw material costs [1] Management Strategy - Minhua's management has indicated that capacity investment has peaked, and the focus for the coming years will be on maintaining stable dividends [1] - The commitment to shareholder returns is expected to support market sentiment in the short term, alongside anticipated stable revenue growth in fiscal year 2027, which may present medium-term upside potential [1]

Core Viewpoint - Despite facing competition in both domestic and international markets, Minhua Holdings (01999) achieved a 0.6% year-on-year increase in net profit for the first half of the 2026 fiscal year, maintaining its interim dividend, attributed to the company's proactive repositioning and improved operational efficiency [1] Financial Performance - The target price for Minhua Holdings has been raised from HKD 5 to HKD 5.58, with a maintained "outperform" rating, reflecting improved visibility of shareholder returns [1] - The gross profit margin in overseas markets increased by 1.1 percentage points to 39.3%, despite higher U.S. tariffs, due to ongoing efficiency improvements and a decrease in raw material costs [1] Management Strategy - Management indicated that capacity investment has peaked, and the focus for the coming years will be on maintaining stable dividends [1] - The commitment to shareholder returns is expected to support market sentiment in the short term, alongside anticipated stable revenue growth in the 2027 fiscal year, which may present mid-term upside potential [1]

Group 1 - Company Minhua Holdings (01999.HK) has seen a decline of over 5% in its stock price, currently down by 5.1% at HKD 4.84 [2] - The trading volume for Minhua Holdings reached HKD 37.7751 million [2]

Core Viewpoint - Minhua Holdings (01999) experienced a decline of over 5%, currently trading at 4.84 HKD with a transaction volume of 37.7751 million HKD following the release of its interim results for the period ending September 30 [1] Financial Performance - The company reported a revenue of approximately 8.045 billion HKD, representing a year-on-year decrease of about 3.1% [1] - Revenue from the mainland market fell by 6%, down to 4.74 billion HKD [1] - Net profit reached 1.1456 billion HKD, showing a year-on-year growth of 0.6% [1] Future Outlook - Cinda Securities indicated that the impact of tariff sharing is gradually materializing, which may affect apparent profitability, but the company is focused on cost reduction and efficiency improvement, suggesting overall stability [1] - Bank of America raised the target price for Minhua Holdings by 15% from 4.6 HKD to 5.3 HKD, maintaining a "neutral" investment rating due to the resilience of profit margins and a 6% dividend yield, which partially offsets uncertainties from tariff policies and domestic demand [1] - The bank revised its net profit forecast for the fiscal year 2026 down by 2% to reflect the tariff increase announced in October [1]

Core Viewpoint - Minhua Holdings (01999) experienced a decline of over 5% in stock price following the release of its interim results for the period ending September 30, which showed a revenue drop of approximately 3.1% year-on-year [1] Financial Performance - The company's revenue was approximately HKD 80.45 billion, reflecting a year-on-year decrease of about 3.1% [1] - Revenue from the mainland market decreased by 6%, amounting to HKD 47.4 billion [1] - Net profit reached HKD 11.456 billion, showing a slight increase of 0.6% year-on-year [1] Market Outlook - Cinda Securities indicated that the impact of tariff sharing is gradually materializing, which may affect apparent profitability, but the company is expected to maintain stability through cost reduction and efficiency improvements [1] - Bank of America raised the target price for Minhua Holdings by 15% from HKD 4.6 to HKD 5.3, maintaining a "neutral" investment rating due to the resilience of profit margins and a 6% dividend yield, which partially offsets uncertainties from tariff policies and domestic demand [1] - The bank revised its net profit forecast for the fiscal year 2026 down by 2% to reflect the tariff increase announced in October [1]

Core Viewpoint - Despite facing competition in both domestic and international markets, Minhua Holdings reported a year-on-year net profit growth of 0.6% for the first half of the fiscal year 2026, maintaining its interim dividend, attributed to the company's proactive repositioning and improved operational efficiency [1] Group 1: Financial Performance - The overseas market gross margin increased by 1.1 percentage points to 39.3% during the period, aided by continuous efficiency improvements and a decrease in raw material costs, which helped mitigate the impact of increased tariffs from the U.S. [1] - The management indicated that capacity investment has peaked, and in the coming years, the priority will be to maintain stable dividends [1] Group 2: Market Sentiment and Future Outlook - The commitment of the management to shareholder returns may support market sentiment in the short term, alongside expectations of stable revenue growth for the fiscal year 2027, which could present medium-term upside potential [1] - Based on improved visibility of shareholder returns, the target price has been raised from HKD 5 to HKD 5.58, while maintaining an "outperform" rating [1]