Joyoung's Second-Quarter Revenue and Profit Both Missed Expectations; Goldman Sachs Maintains Sell and Cuts Target Price

Overview

This report reviews Joyoung's second-quarter 2026 results and explains its cautious view from the perspectives of product categories, regions, margins, peer performance, and valuation. Goldman Sachs believes the company's revenue and profit were both below expectations, with broad-based contraction across core categories and domestic and overseas operations, while earnings resilience remained weaker than peers. It therefore maintains its Sell rating.

Core views

Joyoung reported weaker-than-expected second-quarter 2026 results after the market close on August 21. Total revenue was RMB3.489 billion and net profit was RMB72 million in the first half of 2026, down 12% and 42% year over year, respectively. This implies second-quarter revenue of RMB1.677 billion, down 16% year over year and 16% below Goldman Sachs' forecast; second-quarter net profit was RMB-11 million, down 152% year over year and 124% below Goldman Sachs' forecast, indicating that the company swung to a quarterly loss. Margins deteriorated in tandem. The report states that the company's gross margin and operating margin declined by 2.9% and 2.3% year over year, respectively. Goldman Sachs believes gross-margin pressure may have primarily resulted from intensifying competition and rising costs, while operating deleverage caused by lower revenue further weighed on the operating margin. This means the earnings pressure stemmed not only from shrinking sales but also from weaker unit profitability and reduced capacity to absorb expenses. By product, revenue from the two core categories, food processing appliances and cooking appliances, both declined 19% year over year in the first half of 2026. Although smaller categories achieved positive growth, the report believes this may have been primarily aided by a low base and remains insufficient to reverse the decline in the core businesses. By region, domestic revenue declined 11% year over year, while overseas revenue fell 28%. Overseas operations not only failed to offset weakness in the domestic market but recorded an even larger decline. Given the magnitude of the overseas revenue decline, Goldman Sachs remains cautious about whether the company can meet the annual related-party transaction target that it raised in May, which primarily involves transactions with SharkNinja. The traditional small-home-appliance industry has continued to face weak demand and intense competition in recent years, but Goldman Sachs emphasizes that Joyoung continues to lag Supor, Bear Electric Appliance, and Donlim in revenue growth and margin resilience. This means the company's weakness cannot be fully explained by industry conditions. With weak domestic demand, declining overseas revenue, and competition-driven margin pressure compounding one another, the report sees limited visible signs of near-term improvement. The core rationale for Goldman Sachs maintaining its Sell rating is that the current valuation does not yet fully reflect three downside risks: first, domestic demand for relatively discretionary small home appliances remains weak, potentially triggering consumer trade-down, intensifying competition, and margin pressure; second, overseas revenue growth is slowing; and third, continued competition in the domestic market is suppressing margins. Goldman Sachs uses more conservative revenue-growth and margin assumptions than market consensus and believes the current valuation remains elevated relative to net-profit growth. Based on the latest results and revised revenue and margin assumptions, Goldman Sachs cut its 2026E-2028E EPS forecasts by 12%-48%. Correspondingly, it lowered its 12-month target price from RMB4.5 to RMB4.0. The target price continues to be calculated by applying a 15x P/E multiple to 2028E EPS and discounting it back to 2027E using a 9.5% cost of equity. The valuation multiple and cost-of-equity assumptions were unchanged, and the target-price reduction was primarily driven by lower earnings forecasts.

Analysis framework

Goldman Sachs first compares the first-half 2026 and implied second-quarter results with the prior-year period and its own forecasts to identify deviations in revenue, profit, and margins. It then breaks down revenue performance by product and region and explains margin changes in the context of competition, rising costs, and operating deleverage. The report subsequently compares Joyoung with Supor, Bear Electric Appliance, and Donlim to assess whether the company's weakness is attributable solely to industry conditions. Finally, it updates its 2026E-2028E earnings forecasts and adjusts the target price using a P/E and cost-of-equity discounting framework.

Methodology notes

• Event-Driven Strategies and Behavioral FinanceExpectation Gap/Expectation Management

  Comparison of actual results with Goldman Sachs' expectations

  The report compares second-quarter revenue and net profit with Goldman Sachs' original forecasts to measure the magnitude of the earnings miss and updates its revenue, margin, and EPS assumptions accordingly.

• Corporate Fundamentals and Financial Frameworks

  Breakdown by product, region, and margin

  The report separately examines core categories, domestic and overseas revenue, gross margin, and operating margin to distinguish the effects of sales contraction, competition, rising costs, and operating deleverage on performance.

• Competition and Strategy Frameworks

  Cross-peer comparison

  The report compares Joyoung's revenue growth and margin resilience with Supor, Bear Electric Appliance, and Donlim to determine that its weakness is not solely attributable to the broader industry downturn.

• Valuation MethodologiesPE/PEG valuation

  Forward P/E and cost-of-equity discounting

  Goldman Sachs applies a 15x P/E multiple to 2028E EPS and discounts it back to 2027E using a 9.5% cost of equity, deriving a 12-month target price of RMB4.0.

Asset mapping & comparison

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

• Joyoung Co., Ltd. (002242.SZ)

  The A-share company directly covered by the report; weak demand, intensifying competition, declining overseas revenue, and operating deleverage are collectively weighing on its revenue and profit performance.

  Strengths

  Smaller product categories achieved positive revenue growth in the first half of 2026, although the report believes this may have been primarily aided by a low base.

  Weaknesses

  Revenue from both core categories declined 19%, domestic and overseas revenue both fell, second-quarter net profit swung to a loss, and both gross margin and operating margin came under pressure.

  Comparison

  The company continues to lag Supor, Bear Electric Appliance, and Donlim in revenue growth and margin resilience.

  Risks

  If small-home-appliance demand, pricing, related-party export margins, supply-chain management, or new-product performance exceed expectations, the report's Sell thesis could be weakened.

Key data

• First-Half 2026 RevenueRMB3,489 millionDown 12% year over year
• First-Half 2026 Net ProfitRMB72 millionDown 42% year over year
• Second-Quarter 2026 RevenueRMB1,677 millionDown 16% year over year and 16% below Goldman Sachs' forecast
• Second-Quarter 2026 Net ProfitRMB-11 millionDown 152% year over year and 124% below Goldman Sachs' forecast
• Change in Gross MarginDown 2.9% year over yearThe report believes competition and rising costs may have had an impact
• Change in Operating MarginDown 2.3% year over yearThe report believes operating deleverage created further pressure
• Core-Category RevenueFood processing appliances and cooking appliances both declined 19% year over yearPerformance in the first half of 2026
• Revenue by RegionDomestic revenue declined 11% year over year, while overseas revenue declined 28%Performance in the first half of 2026
• EPS Forecast RevisionCut by 12%-48%Covering 2026E-2028E
• 12-Month Target PriceRMB4.0Lowered from RMB4.5
• Target-Price Valuation Parameters15x 2028E P/E and 9.5% cost of equityDiscounted back to 2027E, with both assumptions unchanged

Impact & implications

The report believes Joyoung faces pressure across its core products, domestic market, overseas market, and margins, while its revenue growth and earnings resilience continue to lag peers. The latest results prompted Goldman Sachs to significantly cut its 2026E-2028E EPS forecasts and target price. Under its more conservative revenue and margin assumptions, the current valuation still does not fully reflect downside risks to net-profit growth and operations.

Risks

• Demand for small home appliances may exceed expectations.
• Premiumization or changes in the competitive landscape may result in better-than-expected product pricing.
• Related-party exports and supply-chain management may deliver better-than-expected margins.
• New product launches may perform better than expected.

What to watch

• Monitor whether Joyoung can meet the annual related-party transaction target that it raised in May, which primarily involves SharkNinja.