Yihai's Subdued Demand to Weigh on Related Party Sales; Cutting Valuation by 2% to HKD 14.50

In the past decade, Yihai International has successfully leveraged Haidilao, China’s largest hot pot restaurant chain, to grow its revenue and profit in the catering and retailer channels. In the retailer channel, Yihai sells its products under the Haidilao brand as Yihai is allowed to use Haidilao’s trademark permanently for free. Yihai was established by Haidilao’s founder, Zhang Yong, to supply a hot pot soup base to Haidilao in 2005. The firm also expanded into adjacent categories including compound condiments and ready-to-eat food, which have gained popularity in recent years as consumer preferences diversify.