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On Friday, Citi analysts downgraded Yihai International Holding Ltd. (1579:HK) (OTC: YNNHF) stock rating to Neutral from Buy, adjusting the price target to HK$13.70 from the previous HK$16.40. The revision follows a weaker than expected earnings outlook for the company.
According to Citi, the downgrade was prompted by flat sales in the first quarter of 2025, which were attributed to a calendar shift and a delayed start of the crayfish season caused by adverse weather conditions. Despite management’s targets for double-digit growth in third-party sales by 2025 through to-B business, overseas market expansion, and new convenience food products, the recent performance did not meet expectations.
The analysts expressed concerns over the anticipated impact of an unfavorable sales mix change and price competition on the company’s third-party gross profit margin (GPM). Additionally, they foresee limited scope for sales and distribution improvements.
In response to these factors, Citi has reduced its earnings estimates for Yihai International for the years 2025 and 2026 by 16% and 19%, respectively. The revised price target of HK$13.70 reflects this lowered earnings forecast and the challenges faced by the company in achieving its sales growth objectives.
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