Tianli International (SEHK:1773) Net Profit Margin Rises to 18.5%, Reinforcing Bullish Growth Narrative

Tianli International Holdings (SEHK:1773) just reported its financial results for the first half of FY 2025, posting total revenue of ¥1.9 billion and basic EPS of ¥0.19. Looking at the recent pace, the company has seen revenue climb from ¥1.6 billion in the first half of FY 2024 to ¥1.9 billion in the latest period, while EPS rose from ¥0.14 to ¥0.19 over the same stretch. Investors are likely to interpret this solid topline and bottom line momentum as further evidence that Tianli’s improving profit margins are taking hold.

See our full analysis for Tianli International Holdings.

Next, we will see how these headline figures square with the predominant narratives in the market and across the Simply Wall St community. Does the story get amplified, or are there surprises beneath the surface?

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Margins Expand as Profit Outpaces Revenue

• Net profit margins lifted to 18.5% in the trailing twelve months, rising from 17.3% the prior year, driven by a net income climb to ¥664 million on ¥3.6 billion in revenue.
• The prevailing market view anchors on this profit margin expansion, noting that Tianli's momentum surpasses the broader Hong Kong market with a 15.3% earnings increase and annual earnings growth forecast at over 20%.
  • This margin trajectory heavily supports the case for high-quality, sustainable earnings, setting the company apart from peers who are not growing as quickly.
  • Analysts point to the blend of outpacing revenue and margin improvement as a potential springboard for future profit durability in the sector context.
• The company’s projections for above-market earnings and revenue growth rates, 20.41% and 21.5% per year respectively, position it as a likely outperformer in the consumer services space.
  • Bulls highlight these sustainable double-digit growth forecasts as a major differentiator, especially since industry averages are lower.
  • This narrative is reinforced by trailing margin gains and a sharp jump in net income, which both back up the growth case visibly in the recent filings.

Strong year-on-year profit margin improvement leads consensus narratives to focus on Tianli’s durable earnings expansion and forecast outperformance. Get the full consensus breakdown in the broad market view. 📊 Read the full Tianli International Holdings Consensus Narrative.

Shares Trade at a Major DCF Discount

• Tianli shares recently traded at ¥2.43, which is 83% below the DCF fair value of ¥14.29, and at a price-to-earnings ratio of 7x, lower than the Hong Kong Consumer Services industry average but higher than direct peers.
• Market observers emphasize the steep valuation gap, tying it to the company’s robust forecast growth and margin expansion while noting some hesitation linked to its debt position.
  • Critics question whether the market is fairly discounting recurring risks, but bulls counter that high quality margins and forecast-beating profitability warrant a re-rating closer to fair value.
  • This disconnect gives room for debate: Is the market overly pessimistic, or is caution around leverage and payout history justified despite positive fundamentals?

Debt Remains Above Sector Comfort Zone

• The company’s balance sheet features a high debt load and an unstable dividend record, which have been flagged as minor but persistent risks by the latest analysis.
• Recent results challenge the view that high leverage will clamp down on value creation, with profit margins and net income both rising, but ongoing monitoring is warranted in light of sector norms.
  • Bears see the leverage and dividend inconsistencies as a potential drag, arguing that capital structure could temper future valuation uplift even as current profits rise.
  • Proponents, by contrast, point out that risk signals remain moderate in the face of improving performance and low market valuation, keeping upside on the table for those actively tracking balance sheet trends.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Tianli International Holdings's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Tianli’s high debt and unstable dividend record introduce financial risks that may weigh on future value. This is the case even in light of strong profit growth and margin expansion.

If a stronger financial footing matters for your portfolio, discover companies with healthier balance sheets and more consistent stability by checking out solid balance sheet and fundamentals stocks screener (1940 results) now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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