Goldman Sachs: Chacha Food (002557.SZ) Earnings Review: Stronger sales on nuts albeit costs remain elevated; Sell
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Following Chacha Food's 4Q25 and 1Q26 earnings, Goldman Sachs maintains its Sell rating, raising the 12-month target price to RMB 20.9, based on 14x 2026E P/E. Management reaffirmed its 2026 revenue guidance of 10%-15% year-over-year growth, driven by robust nut sales and slower growth in roasted seeds. While raw material costs for sunflower seeds fell over 10% year-over-year, prices for key nut ingredients—such as pistachios, almonds, and cashews—remain elevated, though some relief may arrive in the second half of 2026.
Management guided for a 2026 net profit margin between 8% and 10%, with a long-term target of 10% to 12%. To sustain growth, the company plans to expand through emerging channels like membership stores and snack discount shops, alongside deepening its presence in Southeast Asia and accelerating European expansion. Goldman Sachs raised its 2026-2028 net profit forecasts by approximately 6% to reflect better-than-expected 1Q26 performance, projecting 15% revenue growth and a 9.6% net profit margin for the full year.
Despite these positive adjustments, Goldman Sachs retains its Sell recommendation. The decision is rooted in ongoing volatility surrounding nut procurement costs, high fluctuations in sales and profitability, and constrained pricing power amid intense market competition. With the stock currently trading at RMB 24.26, the firm sees 13.8% downside risk to its updated target.