Key Takeaways
CICC slashed its price target for Yue Yuen Industrial Holdings (00551.HK) by 8% to HKD17.9 after the world's largest branded footwear maker reported a 53.6% plunge in first-quarter net profit.
The first-quarter results were below the broker’s expectations, mainly due to lower-than-expected gross margin in the manufacturing segment, CICC said in a report.
Yue Yuen's net profit for the quarter fell to approximately $35.18 million from a year earlier, as revenue declined 2.2% to $1.985 billion. In response, CICC lowered its 2026 and 2027 net profit forecasts for the company by 14% and 11% to $308 million and $340 million, respectively. The new price target implies a 19.5% upside from the last closing price of HK$14.98.
The downgrade reflects continued pressure on Yue Yuen's manufacturing business and concerns over margin volatility. While CICC expects performance to improve sequentially, the significant earnings miss highlights challenges in the global footwear and apparel sector.
The sharp profit decline signals that operational headwinds and weaker orders are impacting profitability more than anticipated. Investors will be closely watching the company's second-quarter results for signs of a margin recovery.
This article is for informational purposes only and does not constitute investment advice.
