Citigroup: Maintains "Neutral" rating on YUE YUEN IND (00551), lowers target price to HKD 15.8

Citigroup released a research report stating that it maintains a "neutral" rating on YUE YUEN IND (00551) with a target price lowered from HK$16.8 to HK$15.8. The bank mentioned that after a significant expansion in gross profit margin in YUE YUEN IND's manufacturing business last year with the support of customer replenishment, the space for further expansion in gross profit margin is limited, and the demand outlook is cautious. Therefore, the bank has lowered the profit forecast for YUE YUEN IND for the fiscal years 2025 to 2026 by 7% to 10%. Citigroup pointed out that the profit for the fiscal year 2024 of YUE YUEN IND increased by 42.8% year-on-year to US$392 million, lower than the midpoint of the profit warning previously announced at around US$433 million, mainly due to a one-time tax dispute of US$40.5 million in the Indonesian subsidiary. If this item is taken into account, the profit performance aligns with the midpoint of the guidance. As for the final dividend of HK$0.9 per share (or a annual dividend of HK$1.3 per share), it is in line with the bank's prediction.