Ge Long Hui·2025-11-25 02:41Core Viewpoint - UBS reports that China Wangwang's revenue for the first half of the fiscal year 2026 (ending September) increased by 2.1% year-on-year to 11.1 billion yuan, while net profit decreased by 7.8% to 1.7 billion yuan, indicating a mixed performance with revenue meeting expectations but profit falling short [1] Financial Performance - Revenue for the first half of fiscal year 2026 reached 11.1 billion yuan, reflecting a year-on-year growth of 2.1% [1] - Net profit for the same period was 1.7 billion yuan, down 7.8% year-on-year [1] - Gross margin decreased by 1.1 percentage points to 46.2%, and net profit margin fell by 1.7 percentage points to 15.5% [1] Operational Insights - Operating expenses increased by 10.6% year-on-year, primarily due to higher advertising and promotional costs [1] - Management indicated that sales performance in October and November was weaker compared to last year, attributed to the later timing of the 2026 Lunar New Year [1] Future Outlook - Management expects gross margin to remain stable in the second half of the fiscal year compared to the first half, with potential improvement next year as imported milk powder costs gradually decline [1] - Long-term, the ratio of advertising and promotional expenses is anticipated to remain at 3-4% [1] Adjustments and Ratings - UBS has lowered its net profit forecasts for China Wangwang for fiscal years 2026 and 2027 by 9% and 8%, respectively [1] - For fiscal year 2026, revenue and net profit are expected to grow by 2% and decline by 9% year-on-year, respectively, with the second half projected to see a 2% revenue increase and a 10% net profit decrease [1] - Target price has been reduced from 6 HKD to 5.6 HKD, while maintaining a "Buy" rating [1]