Yihai Earnings: Selling Price Pressure to Linger; Reducing Fair Value Estimate by 5%

We cut no-moat Yihai's fair value estimate by 5% to HKD 14.80 per share following its disappointing 2024 results, with net profit trailing our estimate by 13% and declining 13% year on year. We lower our 2025-28 earnings forecasts by 1%-5% after reducing our volume growth projection to reflect heightened competition in Yihai's sales to the Haidilao chain. We also expect Yihai to continue lowering product prices to protect its market share in the related-party segment and expand volume in the third-party hot pot segment. Our fair value estimate implies a 2025 price/earnings ratio of 16 times and an expected dividend yield of over 5%. We see the shares as fairly valued.