HK Stock Market Move | YUE YUEN IND (00551) fell nearly 3%, net profit from overall operations in May reduced year-on-year. High oil prices will continue to put pressure on the company's gross profit margin.

YUE YUEN IND(00551) fell nearly 3%, as of the time of writing, it fell 2.83% to HK$13.75, with a trading volume of HK$185.42 million. In recent news, YUE YUEN IND announced that the company's net operating income in May was US$694 million, a decrease of 2.39% year-on-year. The company's cumulative net operating income for the five months ending May 31, 2026 was US$3.375 billion, a decrease of 0.76% year-on-year. UBS expects that despite taking measures to counter rising oil prices, such as passing on costs directly to brand customers through designated suppliers, repricing for new orders, and preparing inventory, high oil prices are still expected to put pressure on YUE YUEN IND's gross margin in the third quarter of 2026. This is because their low-cost inventory may be depleted by the end of June, and negotiations for repricing with brands are still ongoing. Additionally, the third quarter is typically a slow season, and capacity utilization will depend on whether fourth quarter orders can be brought forward. With the uncertain prospects of some brand customers, UBS believes this may be challenging.