Fair-Value Report — Yantai North Andre Juice (2218.HK)

Insider Signal

Verified Snapshot

Total share count is not published as one clean line item because the Company is dual-listed A+H; it is triangulated from (a) H-class % disclosed on HKEX DI forms applied to the H-shares traded, and (b) the A+H combined % disclosed for related-party shareholders Uni-President China Holdings and Ton Yi (China) Investment in the FY2025 annual report's connected-transactions note. Two independent cross-checks landed within 2% of each other (≈341–344M shares); FY2025 weighted-average EPS shares (330.345M profit ÷ RMB0.96 EPS ≈ 344.1M) corroborate. Aggregator sites (stockanalysis.com) show a total market cap figure (~HK$23.5bn) that does not cleanly reconcile with any single share-class count we could verify — a known artifact for thin, dual-class AH names — so this report derives its own figures from primary filings rather than relying on the aggregator's blended market cap.

Business

Yantai North Andre Juice is one of China's largest producers and exporters of concentrated apple juice and related fruit-juice concentrates (apple, pear, peach, strawberry) and by-products (pomace, aroma/essence), based in Yantai, Shandong. It was the first beverage-industry company to complete an A+H dual listing (A Shares on the Shanghai Stock Exchange since 2020, H Shares on HKEX since 2011). Customers span more than 30 countries; disclosed related-party customers/shareholders include Uni-President China Holdings and Ton Yi (China) Investment (each holding a combined ~18-19% A+H stake and buying concentrate under long-term framework agreements). The business is fundamentally a global commodity processor: revenue and margins move with the world apple crop (weather-driven supply swings in China, the EU and Turkey) and with USD-denominated export pricing, not with steady branded-beverage demand.

Valuation

Method: three-scenario probability-weighted DCF (primary), cross-checked against a P/S-based peer comparison (P/E is not usable for the closest peer — see below — because its earnings are near zero mid-cycle) and a reverse DCF. This is a profitable, well-capitalized operating company, but earnings are highly commodity-cyclical, so scenario weights are tilted toward the downside case given clear evidence (both company-specific and sector-wide) that the cycle is currently rolling over, not just noisy quarter-to-quarter.

Why the downside tilt: the cycle is turning, verifiably

• North Andre H1 2026: revenue RMB716.3M (-24.5% YoY), net profit RMB123M (-38.7% YoY) — company blames falling concentrate sale volumes and falling sale prices, plus smaller FX hedging gains as RMB firmed.
• China's total apple juice concentrate export volume fell ~28% YoY in 2025 (38.32万吨/383,200 tonnes) — an industry-wide, not company-specific, contraction.
• Closest direct listed peer, Guotou Zhonglu Juice (600962.SH — a pure-play apple juice concentrate producer), saw Q4 2025 revenue -34.5% YoY and net profit -56.4% YoY, and has guided H1 2026 net profit down to just RMB1.2-1.8M (essentially breakeven, down >95% YoY). North Andre's decline, while steep, is materially better than its peer's — a real relative-strength positive — but confirms the sector, not just one company, is mid-downturn.
• FY2025's 24.26% gross margin and 18.85% operating margin were themselves flattered by the 2023-2024 windfall (global apple-crop shortfall spiked concentrate prices); FY2023's 25.25% operating margin was the historical outlier, not the norm (FY2021 12.75%, FY2022 11.94%).

WACC (CAPM, first principles)

Three-Scenario DCF (RMB per share, then HKD-equivalent at FX 1 CNY = 1.17 HKD)

Common inputs: base revenue RMB1,445M (TTM to Jun-2026); 341.24M diluted shares; net cash RMB739.28M added to equity value; tax rate 1% (matches the Company's persistent effective rate of ~0.03%-0.2%, consistent with the PRC's income-tax exemption for agricultural-product primary processing — see risks); terminal growth 1.0-1.6% (capped below the 1.68% risk-free rate); reinvestment derived from ROIC (9-15% by scenario). Weights are bear-tilted (20/45/35 vs. the usual 25/50/25 default) given the accelerating, verified sector downturn described above.

Reverse DCF — what the current price implies

Holding base-case margins/WACC/terminal growth fixed and solving for the flat 10-year revenue growth rate that justifies HK$22.00 (RMB18.80-equivalent): the market is pricing in +7.68% flat revenue growth for 10 years — directly at odds with the -24.5% revenue print the Company just posted for H1 2026. Alternatively, holding the growth path fixed and solving for margin: the price implies a flat 25.65% operating margin sustained indefinitely — almost exactly the 25.25% margin the Company achieved in FY2023, which was the peak of an anomalous global apple-crop-shortfall price spike and has not been repeated since (18.85% in FY2025, likely lower in H2 2026 given the trend). In plain terms: the H-share price is currently underwriting a permanent return to the best year this cyclical business has ever had.

Peer Cross-Check (P/S primary — P/E is not usable this cycle)

*Guotou Zhonglu's P/E is distorted by FY2025 net profit of only RMB40.9M (2.1% margin) and a guided H1 2026 profit of just RMB1.2-1.8M — the peer is at or near cyclical breakeven, which is itself the clearest evidence this is an industry-wide trough, not company-specific noise. On P/S, North Andre trades at a ~57% premium to its direct peer, which its far higher margin (17.5% vs 2.1%) arguably justifies — this is the one lens where North Andre does not look expensive. On P/E, North Andre (25.1x TTM) trades roughly in line with Vitasoy (24.9x), a stable branded staple — a cyclical commodity processor with declining trailing earnings arguably deserves a discount to, not parity with, a staple. The peer read is mixed: not alarming on P/S, but not cheap on P/E, and the DCF and reverse-DCF above are the more decisive signals given how thin (one true direct peer) this comparison set is.

Conclusion — Hold

The insider signal itself is genuine: a controlling shareholder and executive director bought H shares on-exchange over two consecutive days with a disclosed, non-boilerplate rationale, and left the door open to buying more. That clears the bar for a real, positive signal — this is not a placing, pledge, control-default, concert-party reshuffle, ESOP, or broker/nominee artifact.

But the price does not currently offer a margin of safety to act on that signal. The Company is mid an accelerating, industry-wide cyclical downturn (H1 2026 revenue -24.5%, net profit -38.7%; China sector export volumes -28% in 2025; the closest listed peer near breakeven), and both the base-case DCF (RMB13.01, HK$15.22) and the probability-weighted fair value (RMB12.95, HK$15.15, bear-tilted 20/45/35) sit roughly 31% below the current HK$22.00 quote — even the bull case (HK$21.05) is a touch below spot. The reverse DCF shows the market is effectively underwriting a permanent return to the Company's best-ever, cycle-peak margin (25.65% implied vs. 25.25% actually achieved once, in FY2023).

The balance sheet is a genuine offset: zero interest-bearing debt and RMB739M net cash provide real downside protection, and the insider's continued buying is a credible tell that management does not see existential risk here. This supports patient holding, not urgent selling — but it is not, at HK$22.00, a compelling new entry. A better entry would be closer to the RMB13-15 (HK$15-18) base-case range, or confirmation via H2 2026/FY2026 results that the volume/price cycle has bottomed.

Key Risks

• Commodity cyclicality: revenue and margins are tied to the global apple crop and USD concentrate pricing; H1 2026 already shows a -24.5%/-38.7% revenue/profit swing, and the trough may not be over.
• US tariff exposure: the FY2025 annual report explicitly cites "high tariffs in the US market" as a headwind; the US remains a major destination for Chinese apple-juice-concentrate exports even as the industry diversifies toward Belt & Road markets.
• Customer/related-party concentration: Uni-President China Holdings and Ton Yi (China) Investment are both substantial shareholders (each ~18-19% combined A+H) and buyers of the Company's concentrate under continuing connected-transaction agreements — a structural related-party concentration on both the cap table and the customer list.
• Tax-exemption policy risk: the Company's effective tax rate has run near 0% for at least the last two fiscal years (consistent with China's income-tax exemption for agricultural-product primary processing). Any narrowing of that exemption would fall straight to the bottom line — this DCF already assumes a de minimis 1% rate, but a shift toward the 25% statutory rate is a real, underappreciated tail risk not offset by any modeled buffer.
• Persistent AH discount, no clear catalyst: H shares trade at roughly a 77% discount to the A shares of the same company, reflecting thin H-float and limited channels for H/A arbitrage. There is no evident near-term catalyst to close this gap, so H-holders should not expect convergence toward the A-share price as a source of return.
• Modest signal size: the ~HK$13.9M insider purchase is small relative to the Company's scale; it is informative of sentiment but should not be read as a large capital commitment.
• Micro-cap / data limits: genuine listed peers in the pure-play apple-juice-concentrate sub-sector are scarce (effectively one — Guotou Zhonglu); the peer cross-check here is thinner than ideal and the DCF should be weighted more heavily than usual as a result.

Sources

• HKEX Disclosure of Interests filings, stock code 02218 (filings CS20260923E00423, DA20260923E00432, CS20260901E00263, CS20260901E00118) — di.hkex.com.hk
• Yantai North Andre Juice Co., Ltd. 2025 Annual Results Announcement / Annual Report, filed 27 March 2026 — hkexnews.hk
• TipRanks / company announcement coverage of the Hongan/Wang Meng H-share purchases — tipranks.com; minichart.com.sg
• Sina Finance (新浪财经) coverage of H1 2026 interim results (营业收入716,301,520元, 同比-24.45%; 归母净利润约1.23亿元, 同比-38.71%) — finance.sina.com.cn
• stockanalysis.com — 2218.HK price, financials, balance sheet (cross-reference; total-market-cap figure not used directly, see note above)
• Guotou Zhonglu Juice (600962.SH) 2025 annual report and public coverage — sina/eastmoney/xueqiu, via web search
• Vitasoy International Holdings (0345.HK) — investing.com / wisesheets.io
• China 10-year government bond yield — tradingeconomics.com, Sept 2026
• Aswath Damodaran, Equity Risk Premiums by Country, July 2026 update — pages.stern.nyu.edu/~adamodar

This report is for informational purposes only and is not investment advice. It was produced by an automated research process based on publicly available filings and third-party data as of the dates stated above; all figures should be independently verified before acting on them. The author holds no position in 2218.HK, 605198.SH, or any company mentioned.