Jonjee Hi-Tech's 2Q26 reported NP exceeded expectations, but high-end recurring NP was broadly in line

Overview

This report is Goldman Sachs' earnings review of Jonjee Hi-Tech (600872.SS)'s 1H/2Q26 profit alert. The company expects 1H26 net profit of Rmb390mn to Rmb430mn, representing year-on-year growth of 51.8% to 67.4%; the midpoint of Rmb410mn is above Goldman Sachs' forecast. Implied 2Q26 reported NP was also above forecast, while recurring NP was relatively closer to expectations.

Core views

The core view is that near-term profit performance was strong. The reported NP beat was mainly driven by core condiments business growth, gross margin improvement, expense control, and the consolidation of Weizimei. However, recurring profit did not materially exceed expectations, and some of the performance may have included gains from land disposal. The report emphasizes that as the low-base comparison advantage fades, the sustainability of revenue growth and margin improvement still requires continued monitoring.

Analysis framework

The report derives 1H26 and 2Q26 net profit and recurring net profit from the company's profit guidance ranges and compares their midpoints with Goldman Sachs' forecasts. It also assesses profit quality and the sustainability of subsequent growth based on management's comments regarding 2Q26 condiments revenue growth, the consolidation of Weizimei, and expense control. The target price methodology applies 18x P/E to 2027E EPS and discounts it to 2026E at a 10% COE.

Methodology notes

• Valuation methodsP/E valuation

  18x P/E applied to 2027E EPS discounted to 2026E with 10% COE

  The Rmb16.0 target price is based on an 18x P/E applied to 2027E EPS and discounted to 2026E using a 10% cost of equity.

• Earnings analysisGuidance midpoint comparison

  guidance midpoint vs. GSe

  The report compares the midpoint of the company's guidance range with Goldman Sachs' forecast to measure the deviation of reported NP and recurring NP from expectations.

• Factor frameworkGS Factor Profile

  Growth, Financial Returns, Multiple, Integrated

  The Goldman Sachs Factor Profile compares the stock with its peers and the broader market across growth, financial returns, valuation multiples, and integrated percentile rankings.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Jonjee Hi-Tech (600872.SS)

  Covered company

  Strengths

  Steady growth in the core condiments business, with procurement optimization and scale effects supporting gross margin improvement, expense control generating operating leverage, and Weizimei contributing incremental growth following consolidation.

  Weaknesses

  The recurring net profit beat was limited, and part of the profit performance may have been affected by land disposal gains; 2Q26 organic growth may have been slightly below 1Q26.

  Comparison

  The 2Q26 reported NP midpoint was approximately 20% above GSe, while the recurring NP midpoint was approximately 9% below GSe, indicating that profit quality and one-off factors need to be distinguished.

  Risks

  Slower revenue growth after the low-base effect fades, pressure on margins from compound condiments investment in 2H26, weaker-than-expected recovery in consumer demand, and lower-than-expected efficiency of channel investment.

Key data

• 1H26 net profit guidanceRmb390mn to Rmb430mnYear-on-year growth of 51.8% to 67.4%, with a midpoint of Rmb410mn, approximately 6% above GSe of Rmb386mn.
• 1H26 recurring NP guidanceRmb320mn to Rmb380mnYear-on-year growth of 21.7% to 44.5%, with the high end broadly in line with GSe of Rmb386mn.
• Implied 2Q26 net profitRmb127mn to Rmb167mnMidpoint of Rmb147mn, representing 94% year-on-year growth and approximately 20% above GSe of Rmb123mn.
• Implied 2Q26 recurring NPRmb81mn to Rmb141mnMidpoint of Rmb111mn, representing 34% year-on-year growth and approximately 9% below GSe, potentially reflecting the impact of land disposal gains.
• 1Q26 condiments revenue growth+15% yoyManagement previously indicated that 2Q26 condiments revenue growth, including Weizimei, could exceed or be close to the 1Q26 level.
• Target priceRmb16.0Based on 18x 2027E P/E and discounted to 2026E at a 10% COE.

Impact & implications

In the near term, the 2Q26 reported NP beat helps validate the company's profit release capability and expense control. In the medium term, the market's focus will shift from the low base and consolidation contribution to organic growth in the core condiments business, the sustainability of gross margin improvement, and the pace of investment in compound condiments. If investment accelerates in 2H26, margins could face temporary pressure.

Risks

• Revenue growth and margin improvement may prove difficult to sustain after the low-base comparison advantage fades.
• The pace of investment in the compound condiments business in 2H26 may weigh on near-term margins.
• The recovery in consumer demand and improvement in product mix may be weaker than expected.
• Channel investment efficiency, distributor recruitment progress, and the competitive landscape in the soy sauce market may affect earnings delivery.

What to watch

• Whether 2H26 condiments revenue growth remains close to or exceeds the 1Q26 level.
• The contribution of Weizimei following consolidation to revenue, profit, and the second growth curve in compound condiments.
• Whether gross margin and expense ratio improvements from procurement optimization, scale effects, and expense control can continue.
• The impact of non-recurring factors such as land disposal gains on the difference between reported NP and recurring NP.
• The investment intensity of the compound condiments business and its impact on near-term profitability.