Yihai Kerry Arawana Holdings (300999 CH): 3Q26: Cost Hikes Weighed on Earnings

For 9M26, Yihai Kerry Arawana's revenue/attributable net profit/recurring net profit were RMB191,809/2,826/1,841mn (+4.09/+2.83/-8.72% YoY). For 3Q26, revenue/attributable net profit/recurring net profit were RMB68,958/532/361mn (+0.54/-46.42/-42.58% YoY). Higher raw-material costs for major edible oils and insufficient price pass-through weighed on 3Q26 profitability. Excluding the RMB263mn gain from the disposal of Kellogg's equity in 1Q26, the 9M26 attributable net profit was RMB2,563mn (-6.74% YoY). We are upbeat on the company's long-term growth headroom driven by its central kitchen and broad health businesses. Maintain OVERWEIGHT. Sales channel expansion and product price hikes underpinned revenue growth, while rising raw-material costs weighed on profits across both segments. For 9M26, the blended GPM fell by 0.51pp YoY to 6.05% and the gross profit declined by 3.94% YoY to RMB11,600mn, mainly dragged by rising raw material costs; financial expenses fell by 35.65% YoY to RMB270