Yue Yuen Industrial (0551.HK): Trimming TP to HK$17.5 After 3Q Profit Warning

Yue Yuen announced a 9M26 profit warning that was slightly weaker than expected. We reduce 2026E earnings estimates by 13% while fine-tuning 2027-28E by 0-2%, and trim our TP slightly to HK$17.5 from HK$18 (12x target multiple unchanged). Management guides 9M26 net profit attributable to owners down 50-55% yoy to US$125-139m from US$278.7m in 9M25; with 1H26 NP of US$72.0m, implied 3Q26 NP is US$53-67m, down 37-50% yoy but up 45-83% qoq versus US$36.8m in 2Q26, i.e. a sequential improvement in profitability at a slightly slower pace than expected. The decline is attributed primarily to the MFG business on weak demand, rising wages and production-efficiency pressures, with MFG GM falling to 14.3% in 1H26 from 18.2% in FY25;