First Read: Yue Yuen Industrial "Q126 in line with profit warning" (Buy) Wang

研报英文原文证据摘录

First Read: Yue Yuen Industrial "Q126 in line with profit warning" (Buy) Wang

ess? 12/27E 0.26 0.25 -4 0.24

A: 1) Order outlook: OEM turnover improved 6.9% YoY in April mainly due to low 12/28E 0.28 0.27 -3 0.26

base in 2025 during Indonesian holiday. While order visibility remains low, the mgmt.

Samuel Wang

expects Q2 volume YoY decline to narrow sequentially, and H2 volume could further

Analyst

improve depending on new capacity ramp-up and order flow. The company aims to samuel-za.wang@ubs.com

remain YoY stable volume in FY26 but admitted that there is downside risk. 2) Raw +86-105-832 8777

material price hike: Oil-based materials like synthetic rubber, glue, and EVA for shoe

Christine Peng, CFA

manufacturing contributes c.30% procurement cost from raw materials and saw rising

prices. Mgmt commented that Yue Yuen could pass on costs to clients in the following christine-y.peng@ubs.com

quarters, but the time gap between price and cost lifts could lower margins. 3) Tariff +852-2971 7571

sharing: Yue Yuen currently shares tariff burden with 4 brands, among which 1 brand

Molly Huang

would stop tariff sharing in August. 4) Margin outlook: The company foresees capacity Analyst

ramp-up and volatile order flow could continue to drag utilization in Q2 but no further S1460525110001

impact from uneven capacity load as severe as Q126. Despite rising material costs, tariff molly.huang@ubs.com

sharing, and utilization drag, the company expects GPM to improve sequentially in the +86-213-866 8823

following quarters through cost control, balanced orders, price lifts, and cost sharing

with suppliers.

Valuation: PT HK$17.6; Buy

Our SOTP-derived PT HK$17.6 (previously HK$20.0) according to 3-4% NI cut in 2026-

28E on lower OEM GPM and updated latest FX assumptions.