Summary of Yihai International Conference Call Company Overview - **Company**: Yihai International - **Industry**: Food and Seasoning Products Key Points B-end Business Performance - In the first half of 2025, Yihai International's B-end revenue grew over 130% year-on-year to 160 million RMB, driven by the newly established small B team which has opened over 1,000 clients contributing over 10 million RMB in revenue [2][6][7] - The company expects B-end business revenue to double for the full year of 2025 and maintain high growth rates in the following years [2][7] - The small B team's gross margin is over 30%, which is beneficial for overall profitability [6] Overseas Market Performance - Yihai International's overseas market revenue reached 260 million RMB in the first half of 2025, with third-party revenue accounting for approximately 73%, reflecting a nearly 50% year-on-year growth [2][9] - The company anticipates a 30% growth in overseas business for the full year, with a sustainable annual growth rate of 20%-30% in the coming years [2][11][10] C-end Market Performance - The C-end market performance was relatively flat, although market share for hot pot beef tallow and dipping sauces increased [2][17] - The company launched cost-effective instant products to penetrate lower-tier markets, which impacted gross margins [2][18] Strategic Initiatives - Yihai International is reducing reliance on distributor channels and focusing on building its own small B team to better match end-user demands [2][8] - The company is implementing a direct distribution model to reduce channel profit payments, aiming to optimize logistics and improve product matching [4][23] Cost and Profitability - Sales expense ratio increased in the first half of 2025 due to the establishment of the small B team and logistics costs, but is expected to stabilize in the second half [4][33] - The gross margin for related parties decreased year-on-year but remained stable quarter-on-quarter, with expectations for stability moving forward [4][24] Future Outlook - The company does not have specific KPIs for overseas market share but sees significant potential in the B-end market, which is larger than the C-end market [15][27] - Yihai International plans to maintain a high dividend payout ratio and has no current plans for stock buybacks [34][36] Competitive Advantages - Yihai International's competitive advantages in the small B market include lower prices compared to competitors and guaranteed product quality, supported by its status as a core supplier for Haidilao [9] - The company is leveraging advanced technologies to enhance production efficiency and product quality [9] Challenges and Market Dynamics - The Thai factory's capacity utilization is currently low due to licensing delays and product acceptance issues, but the company is working to improve collaboration with B-end clients in Thailand and Malaysia [2][12] - The overall market remains fragmented with low concentration, primarily due to overcapacity, but Yihai International maintains competitiveness through its production capabilities [28][30] New Product Strategies - The company is focusing on high-cost performance products in the instant food sector, targeting specific regions for promotion rather than a nationwide rollout [18][20] - New product promotion strategies have shifted towards direct collaboration with key accounts, improving product-market fit and reducing promotional costs [21][22] This summary encapsulates the key insights from Yihai International's conference call, highlighting its performance, strategic initiatives, and market outlook.

Investment Rating - The investment rating for the company is "Outperform the Market" [6][4][17] Core Views - The company reported a total revenue of 2.927 billion CNY for the first half of 2025, a slight decrease of 0.25% year-on-year, while the net profit attributable to shareholders was 309 million CNY, reflecting a growth of 0.39% year-on-year [9][4] - The performance of third-party sales remained robust, with third-party revenue reaching 2.06 billion CNY, an increase of 6.5% year-on-year, while related party revenue decreased by 12.7% [2][11] - The company plans to continue its mid-term dividend policy, proposing a dividend of 0.3107 HKD per share, totaling 293 million CNY, which corresponds to a dividend payout ratio of 95% [15][3] Summary by Sections Financial Performance - In the first half of 2025, the company achieved a gross margin of 29.5%, down 0.5 percentage points year-on-year, primarily due to the decline in gross margin from related party operations [3][12] - The company’s net profit margin for the first half of 2025 was 10.6%, remaining stable year-on-year, supported by government subsidies and foreign exchange gains [3][12] Revenue Breakdown - For the first half of 2025, related party revenue was 860 million CNY, down 12.7% year-on-year, while third-party revenue was 2.06 billion CNY, up 6.5% year-on-year [2][11] - The third-party segment saw significant growth in specific product categories, with revenue from beef oil base, dipping sauce, and fish seasoning increasing by 20.5%, 12.6%, and 15.1% respectively [2][11] Future Outlook - The company has adjusted its revenue forecasts for 2025-2027, now expecting total revenues of 6.87 billion CNY, 7.41 billion CNY, and 7.89 billion CNY respectively, reflecting a year-on-year growth of 5.0%, 7.9%, and 6.5% [4][16] - The earnings per share (EPS) are projected to be 0.75 CNY, 0.83 CNY, and 0.90 CNY for 2025, 2026, and 2027 respectively [4][16]

Investment Rating - The report maintains a "Buy" rating for the company [7][5] Core Views - The company reported a stable performance in 1H25 with revenue of 2.927 billion RMB, a year-on-year increase of 0.02%, and a net profit attributable to shareholders of 309 million RMB, up 0.39% year-on-year, resulting in a net profit margin of 10.6% [2] - The company is focusing on enhancing its product development capabilities and expanding its B-end and overseas markets, with a significant increase in third-party business revenue [4][2] - The company is expected to benefit from improved supply chain management and a growing share in the B-end market, which is anticipated to drive future revenue growth [4][5] Summary by Sections Financial Performance - In 1H25, the company declared a dividend of 0.3107 HKD per share, corresponding to a payout ratio of 95% [2] - Third-party business revenue reached 2.064 billion RMB, a year-on-year increase of 6.5%, accounting for 70.5% of total revenue [2] - The company’s gross profit margins for various product categories showed slight declines, with hot pot seasoning at 31.2%, compound seasoning at 33.6%, and convenient fast food at 24.0% [3] Product Development and Market Expansion - The company has established a factory in Southeast Asia, which is expected to gradually release production capacity, enhancing its overseas B-end market share [4] - The sales revenue from third-party B-end products grew by 131.7% year-on-year, indicating strong demand and market potential [4] Profitability Forecast and Valuation - The company’s net profit forecasts for 2025-2027 have been adjusted downwards by 8%, 9%, and 11% to 783 million, 860 million, and 959 million RMB respectively, with corresponding EPS of 0.76, 0.83, and 0.92 RMB [5] - The target price has been adjusted to 18.17 HKD, reflecting a 22x PE valuation for 2025 [5][8]

Core Viewpoint - The company reported stable revenue and net profit for the six months ending June 30, 2025, indicating resilience in its financial performance despite market challenges [1]. Financial Performance - Revenue for the six months was 2.927 billion RMB, maintaining stability year-on-year [1]. - Net profit attributable to shareholders was 309.5 million RMB, slightly up from 308 million RMB in the same period last year, also showing stability [1]. Product Development and Sales Strategy - The company focuses on product development driven by market demand, utilizing multi-dimensional analysis of regional consumer characteristics and competitive market performance [1]. - Continuous improvement in product quality and optimization of R&D efficiency are emphasized to enhance overall R&D capabilities [1]. Product Performance Highlights - In the hot pot seasoning category, the beef tallow hot pot base and dipping sauce showed significant growth, with revenues of 225.5 million RMB (up 20.5%) and 186 million RMB (up 12.6%) respectively [1]. - In the compound seasoning category, fish seasoning and the 24-dish series also performed well, with revenues of 59 million RMB (up 15.1%) and 32 million RMB (up 17.5%) respectively [1]. - The home-cooked series in the convenience food segment saw a substantial increase in sales from 7.9 million RMB to 37.4 million RMB [1].

Group 1 - The core revenue for the first half of 2025 is RMB 2.9274 billion, showing stability compared to RMB 2.9269 billion in the same period last year [1] - Gross profit decreased by 1.4% to RMB 865 million [1] - Net profit attributable to shareholders remained stable at RMB 309.5 million, compared to RMB 308.3 million in the previous year [1] - Basic earnings per share remained stable at RMB 0.319 [1] - The company plans to declare an interim dividend of HKD 0.3107 per share, equivalent to RMB 0.2836 [1] Group 2 - The group achieved revenue of RMB 2.0637 billion in third-party business, representing a year-on-year growth of 6.5% [2] - The growth is attributed to improved product development mechanisms and refined channel management, along with an optimized supply chain supporting B-end and overseas business expansion [2] - In product development, the company focuses on meeting market demand, with sales teams analyzing regional consumption characteristics and competitor performance [2] - The company emphasizes continuous improvement in product quality and R&D efficiency, enhancing overall R&D capabilities [2] - Notable performance in various product categories includes: - Beef hot pot base revenue of RMB 225.5 million, up 20.5% [2] - Dipping sauce revenue of RMB 185.9 million, up 12.6% [2] - Fish seasoning revenue of RMB 58.8 million, up 15.1% [2] - 24 dishes series revenue of RMB 31.7 million, up 17.5% [2] - Home-cooked series revenue increased from RMB 7.9 million to RMB 37.4 million [2]

Core Viewpoint - Shandong Shuangju Food Co., Ltd. is expanding its production scale with the support of Wucheng Rural Commercial Bank, highlighting the importance of financial backing in the food industry to meet rising consumer demands [1] Company Overview - Shandong Shuangju Food Co., Ltd. specializes in the processing of compound condiments, producing hot pot base materials, dipping sauces, and other kitchen products for restaurants across the country [1] - The company has experienced growth in operational experience and sales revenue, prompting the desire to expand its business scale [1] Financial Support - Due to issues with timely payment collection and insufficient available funds for new equipment purchases and maintenance, the company faced challenges in expansion [1] - Wucheng Rural Commercial Bank responded quickly by sending a client manager to assess the company's industry background and development potential, resulting in a tailored financing plan [1] - The bank provided a "revolving loan" of 3 million yuan within two days, significantly supporting the company's development [1] Market Context - The company’s representative noted that with the improvement in residents' living standards, there is a higher demand for quality in dining products, leading to increased product demand [1] - Wucheng Rural Commercial Bank has issued a total of 252 million yuan in "small and micro enterprise revolving loans," benefiting 156 clients, reflecting a commitment to enhancing financial service accessibility [1]