Yankershop Food's 2Q revenue was in line but net profit missed expectations; BUY maintained despite target price cut

Overview

This report evaluates Yankershop Food's 1H26 and 2Q26 operating performance, channel changes, margin pressures, and recovery drivers for the second half. BofA believes revenue was broadly in line with expectations, but second-quarter net profit missed expectations due to expense and cost pressures. Despite lowering the valuation multiple and target price, it maintains its BUY rating based on expectations for fundamental improvement in the second half.

Core views

2Q26 revenue was broadly in line with BofA's prior preview. Sales increased 6% YoY, accelerating from 2.9% growth in 1Q26, mainly driven by egg products and seafood snacks, which grew 51.2% and 55.7% YoY, respectively. 1H26 sales increased 4.4% YoY. By category, sales of konjac products, seafood snacks, egg products, bakery products, dried fruits and jelly, and soy products increased 11.3%, 55.7%, 51.2%, declined 3.5%, declined 17.4%, and increased 2.6% YoY, respectively, indicating continued material divergence between high-growth and pressured categories. At the channel level, new channels such as membership stores and discount snack stores continued to serve as the main growth drivers, while traditional wholesale and e-commerce channels remained under internal adjustment. The report believes the changing channel mix affects not only revenue growth but also margins. A lower e-commerce sales mix, an improved product mix, and lower konjac flour costs supported gross margin, but rising prices for other raw materials and higher-than-expected selling and administrative expenses offset a considerable portion of the benefit. 2Q26 gross margin increased 167bp YoY to 32.6%, but selling and administrative expenses as a percentage of revenue rose 163bp YoY to 16.3%, mainly due to higher marketing expenses. Consequently, operating profit increased only 5.5% YoY, while operating margin declined 8bp to 15.4%. The effective tax rate in the second quarter fell from 18.0% in 2Q25 to 16.0%, but net profit after tax was still only RMB195mn, flat YoY, with net margin declining from 13.9% to 13.1%. Net profit after tax increased 14.1% YoY in the first half, while net margin rose 118bp to 13.9%; therefore, cumulative first-half profit performance was better than the single-quarter trend. BofA expects growth to improve sequentially in 2H26 based on four factors: a lower revenue comparison base; e-commerce channel optimization expected to be completed in the fourth quarter; easing konjac flour cost pressure; and continued expansion of the discount snack channel alongside new product launches. The report judges that these factors will jointly improve revenue momentum and support margins, although the extent of the recovery will still depend on the implementation of channel adjustments, expense control, and cost movements. Regarding earnings forecasts, BofA stated that it broadly maintained its 2026/27 EPS forecasts, with only minor actual revisions: 2026E EPS was raised from RMB3.01 to RMB3.05, 2027E from RMB3.65 to RMB3.67, and 2028E from RMB4.14 to RMB4.21. Revenue forecasts were raised from RMB6.3379bn to RMB6.5302bn for 2026E, from RMB7.0024bn to RMB7.2956bn for 2027E, and from RMB7.6680bn to RMB7.9721bn for 2028E. Following the revisions, adjusted net profit is forecast at RMB837mn, RMB1.008bn, and RMB1.157bn for 2026–2028, respectively, with EPS growth of 11.8%, 20.4%, and 14.8% YoY, respectively, reflecting what the report describes as a strong earnings growth outlook for 2026–2027. The target price was cut 14% from RMB70 to RMB60, not because of a substantial reduction in earnings forecasts, but because of sector multiple compression and recent margin headwinds. The target price uses a blended valuation with DCF and P/E each weighted at 50%. The DCF valuation is RMB71.2, assuming a WACC of 10.3%, beta of 0.9, and terminal growth rate of 3.0%, all unchanged. The P/E valuation is RMB48.8, based on 16x 2026E P/E, down from 22x previously and representing a 40% discount to the company's five-year average valuation. The report notes that the 16x P/E broadly matches its three-year compound net profit after tax growth rate. The share price had declined 33% year-to-date as of the report date, underperforming the MSCI China Index by 26%. BofA believes the valuation cut reflects sector re-rating and recent margin pressure, while fundamental improvement in 2H26 should provide better support, and therefore maintains its BUY rating. Its long-term investment thesis also includes product category diversification, in-house production, R&D capabilities, value-for-money pricing advantages, and the potential to expand geographic and consumer reach through channel migration. The company has production capacity in Hunan, Jiangxi, Guangxi, and Henan. In 2025, Central China, East China, and Northwest and Southwest China contributed 32%, 21%, and 14% of total sales, respectively.

Analysis framework

The report first compares second-quarter revenue and profit with its prior preview and the same period last year, then breaks down the sources of growth by product category and sales channel, and explains the weakness in net profit through gross margin, expense ratios, operating margin, tax rate, and net margin. BofA then assesses the second-half trend by considering the low comparison base, channel optimization progress, raw material costs, and new product launches, updates its revenue and EPS forecasts, and finally derives the target price using a 50/50 weighting of P/E and DCF.

Methodology notes

• Valuation MethodologyPE/PEG valuation

  2026E P/E Valuation

  The report calculates a valuation of RMB48.8 using 16x 2026E P/E, down from 22x previously, and applies a 40% discount to the company's five-year average valuation to reflect a weaker growth outlook, sector multiple compression, and recent margin pressure.

• Valuation MethodologyDCF

  DCF Valuation

  The report discounts forecast cash flows and incorporates terminal value, deriving a valuation of RMB71.2 using a WACC of 10.3%, beta of 0.9, and terminal growth rate of 3.0%. These core assumptions remain unchanged.

• Corporate Fundamentals and Financial FrameworkEarnings Quality Analysis

  iQmethod Business Performance and Earnings Quality Metrics

  The report uses BofA's standardized iQmethod business performance, earnings quality, and validation metrics, together with income statement, balance sheet, and cash flow data, to maintain consistency and comparability across historical and forecast financial indicators.

Asset mapping & comparison

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

• Yankershop Food (002847)

  The report believes the company will benefit from the expansion of membership stores and discount snack stores, new product launches, e-commerce channel optimization, and easing konjac flour costs, and maintains its BUY rating.

  Strengths

  A diversified product portfolio, in-house production, R&D capabilities, value-for-money pricing, and the ability to expand geographic and consumer reach through channel migration.

  Weaknesses

  Traditional wholesale and e-commerce channels remain under adjustment, while rising marketing expenses and raw material price pressures constrain near-term profit growth.

  Comparison

  The report states that the company differentiates itself from domestic peers through diversified food offerings, in-house production, R&D, and pricing advantages. Its share price has declined 33% year-to-date, underperforming the MSCI China Index by 26%.

  Risks

  Uncertainty surrounding the development of discount snack stores, competition, commodity and raw material price volatility, weak consumption, and food safety or quality issues.

Key data

• 2Q26 Sales Growth+6% YoYAccelerated from +2.9% in 1Q26 and was broadly in line with the report's prior preview
• 2Q26 Gross Margin32.6%Increased 167bp YoY
• 2Q26 Selling and Administrative Expense Ratio16.3%Increased 163bp YoY, mainly due to higher marketing expenses
• 2Q26 Operating Profit+5.5% YoYOperating margin declined 8bp to 15.4%
• 2Q26 Net Profit After TaxRMB195mnFlat YoY, with net margin declining from 13.9% to 13.1%
• 1H26 Sales and Net Profit After Tax+4.4% / +14.1% YoYFirst-half net margin increased 118bp YoY to 13.9%
• High-Growth CategoriesEgg products +51.2%; seafood snacks +55.7%The main sources of second-quarter revenue growth
• 2026E RevenueRMB6,530.2mnPrevious forecast was RMB6,337.9mn
• 2027E RevenueRMB7,295.6mnPrevious forecast was RMB7,002.4mn
• 2028E RevenueRMB7,972.1mnPrevious forecast was RMB7,668.0mn
• 2026E/2027E/2028E EPS3.05 / 3.67 / 4.21 CNYPreviously RMB3.01, RMB3.65, and RMB4.14, respectively
• 2026E/2027E/2028E Adjusted Net ProfitRMB837mn / RMB1,008mn / RMB1,157mnCorresponding to EPS growth of 11.8%, 20.4%, and 14.8% YoY
• Target PriceRMB60.00Cut 14% from RMB70, using a blended valuation with DCF and P/E each weighted at 50%
• DCF ValuationRMB71.2Based on a 10.3% WACC, 0.9 beta, and 3.0% terminal growth rate
• P/E ValuationRMB48.8Based on 16x 2026E P/E, previously 22x
• Share Price Relative PerformanceYTD -33%Underperformed the MSCI China Index by 26%
• 2026E ROE36.4%Forecast metric in the report's stock data

Impact & implications

The report believes the current issues are mainly concentrated in e-commerce channel adjustments, elevated marketing expenses, and raw material price pressure, rather than a broad weakening of the revenue growth thesis. If e-commerce optimization is completed in the fourth quarter, konjac flour cost pressures ease, and the discount snack channel and new products continue to expand, revenue and earnings trends should improve in the second half. However, BofA has reflected lower sector valuations and recent margin headwinds by reducing the P/E multiple and target price. The BUY rating is supported by improving fundamentals, the company's product and production advantages, and the potential support following the prior material share price correction.

Risks

• The development of the discount snack store channel is subject to uncertainty.
• Intensifying market competition may affect revenue growth and margins.
• Commodity and raw material price volatility may increase cost pressures.
• Weak consumer demand may weigh on the company's sales.
• Food safety or product quality issues may impair operating performance.

What to watch

• Monitor whether revenue growth can improve sequentially from a lower comparison base in 2H26.
• Monitor whether e-commerce channel optimization can be completed in the fourth quarter as expected.
• Monitor changes in konjac flour and other raw material costs.
• Monitor the continued expansion of the discount snack channel and membership stores.
• Monitor the contribution of new product launches to sales growth.
• Monitor whether marketing spending and the selling and administrative expense ratio can decline.