Key Takeaways:
Haitong International slashed its price target for China Feihe Ltd. (06186.HK) by nearly 36 percent to HKD4.5 after the infant formula producer’s 2025 net profit fell 45.7 percent.
"After inventory destocking, fundamentals have improved, laying the groundwork for earnings recovery," Haitong International's analysts said in a research report, maintaining an "Outperform" rating on the stock.
The brokerage’s target price reduction from HKD7 came after China Feihe reported full-year net profit of RMB1.94 billion, which missed market expectations. Total revenue declined 12.7 percent year-over-year to RMB18.11 billion as the company proactively optimized channel inventory and controlled its shipment pace starting last May. Performance was also impacted by reduced government subsidies and an impairment of biological assets.
Haitong now forecasts China Feihe's net profit will recover to RMB2.41 billion in 2026 on revenue of RMB18.73 billion. The new HKD4.5 target price is based on a 15x price-to-earnings multiple on the broker's 2026 earnings per share estimate of RMB0.27. The report signals that the worst may be over after a painful destocking period. Investors will watch for confirmation of a demand recovery in the company's upcoming quarterly results.
This article is for informational purposes only and does not constitute investment advice.
