The Zhitong Finance App learned that Morgan Stanley released a research report saying that the short-term pressure on stock prices of Yuyuan Group (00551) is expected to be limited in the first three quarters. The bank maintains a “in sync with the market” rating, with a target price of HK$12.5.

Yuyuan Group issued a profit warning. Net profit for the first three quarters of this year is expected to fall by about 50% to 55% year on year, compared with profit of nearly US$279 million for the same period in 2025. The expected decline is mainly due to the negative impact of fluctuating demand, tariffs, macro-uncertainty, rising labor costs driven by increased numbers of employees and salary increases, as well as unequal capacity utilization factors.

The bank estimates that the Group's net profit for the third quarter will be between 53 million and 67 million US dollars, which is equivalent to 47% to 59% of the bank's forecast for the second half of the year, and 45% to 57% of the market's forecast for the second half of the year; net profit for the third quarter fell 37% to 50% year-on-year, with a median decline of 44%, which is roughly in line with the bank's net profit drop of 45% and the market forecast for the second half of the year.

Considering that the third quarter's performance was in line with expectations, and the market has absorbed negative factors, Damo believes that short-term pressure on stock prices may be limited.

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