FAST NEWS: Zhou Hei Ya’s Profit Plunges on Store Closures

The latest: Food processor and retailer Zhou Hei Ya International Holdings Co. Ltd. (1458.HK) said on Monday its revenue fell about 20% last year from 2.87 billion yuan ($421 million) in 2021, as its net profit plunged about 94% to 20 million yuan or more.

Looking up: Calculations using the company’s projections show it recorded revenue of about 1.1 billion yuan in the second half of last year, down only slightly from 1.2 billion yuan in the first half. That implies its business did not suffer significantly despite a peak in new Covid-control measures that hit many retailers in the fourth quarter.

Take Note: A surge in China’s Covid pandemic last year, and resulting strict control requirements, forced the company to temporarily close some of its stores, hurting its sales and profits. Rising raw material prices also led to higher costs, which weighed on its profits as well.

Digging Deeper: Established in 2006, Zhou Hei Ya is a food processing company that produces and sells cooked and marinated products and was listed in Hong Kong in November 2016. The company has expanded rapidly since its IPO, with 3,160 stores at the end of June last year, covering 297 cities throughout China. The Covid pandemic in 2020 severely disrupted the company’s business, causing its revenue and net profit to plummet by 31.5% and 62.9%, respectively, that year. Despite a rebound the following year, the company was hit again by the pandemic’s resurgence in China last year.

Market Reaction: Zhou Hei Ya’s share price fluctuated slightly on Tuesday and closed unchanged at HK$4.39 by the midday break. The stock now trades at the lower end of its 52-week price range.

Translation by Jony Ho

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