Bank of China International: Channel Reform Results of Maintaining Yihai International's (01579) “Buy” Rating Company

The Zhitong Finance App learned that Bank of China International released a research report saying that Yihai International (01579) announced the 2026 semi-annual report, with impressive performance. 1H26's revenue was 3.35 billion yuan, +14.0% year on year; net profit to mother was 380 million yuan, +21.4% year over year. Benefiting from improved operating efficiency and channel reforms, the company's semi-annual report performance was outstanding, and the characteristics of high dividends and high dividend rates were remarkable. BOCI maintains its “buy” rating.

Bank of China International's main views are as follows:

1H26 related parties' demand for compound seasonings and convenient fast food increased, driving double-digit growth on the revenue side

1H26 achieved revenue of 3.35 billion yuan, of which third party and related party revenue were 2.28 billion yuan and 1.0 billion yuan respectively, with revenue growth rates of 7.8% and 15.9% respectively. Related parties accounted for 30.5% of overall revenue, an increase of 1.5 pct over the previous year. In terms of volume and price breakdown, the sales volume of the base material business precedes the tonnage price. The sales growth rates of the company's hot pot base and compound seasoning were +13.7% and +22.0% respectively, and the tonnage growth rates were +0.5% and -5.6%, respectively.

(1) Hot pot base business: The total revenue of 1H26's hot pot base business was 1.92 billion yuan, +14.3% year over year. Among them, the revenue growth rates of related parties and third parties were +6.8% and +20.5% respectively, accounting for 42.1% and 57.9% of revenue respectively. The high growth in the third-party hot pot base business is mainly related to the gradual expansion of the channel side customization business. Factors such as iterative upgrades of hot pot dipping sauce, butter, and tomato base are combined to drive revenue growth for third parties.

(2) Compound seasoning business: The total revenue of 1H26's compound seasoning business was 560 million yuan. Among them, the revenue growth rates of related parties and third parties were +142.8% and +3.0% respectively. Related parties accounted for 17.7% of the compound seasoning business, an increase of 9.3 pct over the previous year. The high increase in related-party retouching business is mainly due to an increase in demand for the Maocai soup package series products due to the expansion of takeout business by related party customers. The slow growth of the third-party retouching business is related to the intense competition in the industry and the difficulty of nurturing phenomenal single products. The company continues to explore flavors and new products, and at the same time actively adjusts the internal product structure and stops selling some low-margin products, thus affecting the performance of the retouching business.

(3) Convenience fast food business: 1H26's convenient fast food business revenue was 790 million yuan, +11.9% year-on-year. Among them, the revenue growth rates of related parties and third parties were +42.7% and +8.9% respectively. Third parties in the convenient fast food business accounted for 88.4% of revenue, a year-on-year decrease of 2.5 pcts. The relatively rapid growth of the 1H26 related party's convenient fast food business is mainly related to the increase in sales of Haidilao hot pot ingredients and casual snacks. In the first half of the year, the company introduced new products such as self-heating small hot pot and noodle products, which led to revenue growth.

Third-party direct channel business adjustments have shown results. Overseas business has entered a period of climbing capacity, and the revenue side continues to achieve high growth

(1) Looking at third-party business channels, it is mainly divided into dealer business and direct business. In the past two years, traditional supermarkets have been adjusted one after another, traffic in traditional farmers' market channels has declined, and new retail channels have shown a rapid growth trend. Therefore, the company has taken the initiative to strengthen development cooperation with KA channel customized products, while continuously improving the development model for Little B customers to provide standardized and diversified products for Little B customers to accurately match channel needs. 1H26's third-party distribution channel achieved revenue of 1.62 billion yuan, -6.1% year over year. The decline in dealer business narrowed markedly compared to 2025, showing signs of stabilization. Direct sales channels had a total revenue of 720 million yuan, benefiting from excessive incremental contributions from direct sellers. Direct sales channels accounted for 30.8% of third party business, an increase of 14.5 pct over the previous year. Looking at direct sales by channel, direct-run supermarkets have revenue of 350 million yuan, accounting for 15.1% of third party revenue. The revenue of the catering and food company was 180 million yuan, +17.6% year-on-year, which is related to the company's continued expansion of small B channels and the increase in the number of cooperative merchants. E-commerce and one-time sales activities achieved revenue of 180 million yuan (+2.8%) and 0.05 billion yuan (-1.2%) respectively.

(2) 1H26's overseas channel revenue was 280 million yuan, +46.8% year-on-year, accounting for 8.5% of the company's overall revenue. Overseas factories are gradually entering the production capacity release period. As the scope of supply coverage continues to expand, under the advantage of the supply chain, the company continues to improve the coverage of overseas channels and terminal accessibility through direct management docking models in regions such as New Matai. There is plenty of room for optimization in future overseas business in terms of capacity utilization and profitability.

Benefit from lower cost and price of raw materials and optimization of internal operations

(1) The gross margin of 1H26 was 33.6%, +4.1pct year-on-year. The year-on-year increase in gross margin is mainly related to lower raw material prices, increased production efficiency, and the company's reduced investment related to product discounts. The gross margin of 1H26's Hot Pot Seasoning/Compound Seasoning/Instant Fast Food was +4.2pct/5.6pct/2.6pct year-on-year to 35.4%/39.2%/26.6%, respectively. The gross margins of 1H26 associates/third parties were 14.3%/42.5%, respectively, and +0.6pct/+2.9pct year-on-year, respectively. The bank believes that there is little room for a further decline in the gross margin of related parties. (2) In terms of cost ratio, 1H26's sales expense ratio and management expense ratio were 13.4% and 4.3% respectively, +0.8 pct and -1.1 pct, respectively. Among them, the increase in the sales expense ratio is mainly due to an increase in marketing expenses and logistics costs. Reduced government subsidies and reduced exchange gains and losses of 1H26 companies affected profit-side performance. Overall, 1H26's net interest rate to mother increased by 0.7 pct to 11.2% year-on-year.

Risk Alerts

Macroeconomic downside risks. Demand side recovery is slow, new product promotion falls short of expectations, industry competition intensifies, and raw material costs fluctuate.