Natural Food International's profit rose 46.0% in the first half of 2026. Its shares closed at HK$1.395 on October 20, 17% below their close on August 27, when the results came out. Cash after debt is HK$1.31 billion, 43% of the company's total market value. The founder has bought shares, and the company plans to buy back up to 36 million.
Zhang Zejun founded Natural Food International and still runs it. Between June and July 2026, his family trust bought the company's shares on the open market, the last batch at an average of HK$1.6878. The stock closed at HK$1.395 on October 20, 2026, 17% below that price.
On August 27, the company reported profit up 46.0%.
The shares fell 7.1% the next day.
Nothing in the company's filings explains the fall.
What Natural Food International Does
Natural Food International (1837.HK) is listed on the main board of the Hong Kong stock exchange. It sells grain and nutrition powders in China under the Wugu Mofang brand. The powders use ingredients that Chinese tradition treats as both food and medicine. The best-known product, a walnut, black soy and sesame powder, has been on sale for nearly two decades.
Sales go through three doors. Counters inside supermarkets brought in RMB 530.2 million in the first half of 2026, up 12.3%. Shelves in membership stores such as Sam's Club brought in RMB 344.8 million, up 65.2%. Online shops, including WeChat member stores, brought in RMB 574.7 million, up 26.6%.
Revenue went from RMB 1,610 million in 2021 to RMB 2,526 million in 2025. Profit tripled, from RMB 86.5 million to RMB 265.7 million.
On June 30, the company held RMB 1,112.7 million more in cash than in debt, or HK$1,307 million. The stock market values the whole company at HK$3,053 million.
| 2025 Revenue | RMB 2.53B +22.6% |
| H1 2026 Revenue | RMB 1.45B +27.8% |
| H1 2026 Profit to Owners | RMB 155.9M +46.0% |
| Gross Margin, H1 2026 | 63.6% 65.5% a year earlier |
| Selling Costs / Sales | 48.3% 51.5% a year earlier |
| H1 2026 Operating Cash Flow | RMB 190.8M |
| Net Cash, June 30, 2026 | RMB 1,112.7M HK$1,307M |
| 2025 Final Dividend | HK$0.069 4.9% yield |
| Market Value / Price | HK$3.05B / 1.395 |
| Ximai Foods (oat cereals, 002956.SZ) | 24.0× |
| Yanker Shop (snacks, 002847.SZ) | 14.5× |
| Natural Food International (1837.HK) | 8.2× |
Source: Natural Food International 2025 annual report and H1 2026 interim results · peer P/E from press reports dated Oct 13 and Oct 19, 2026, not checked against filings. Both peers list in Shenzhen. No HKEX-listed company sells the same product, so this is a loose comparison.
Why Natural Food International's Stock Fell After Strong Results
The shares closed at HK$1.68 on August 27. The next day they closed at HK$1.56, on five times the previous day's volume. By October 20 they were at HK$1.395.
Other China consumer stocks do not explain it. Since August 27, Ximai Foods moved +12.8%, Yanker Shop -1.6% and Three Squirrels -1.1%. The Hang Seng index lost 5.4%. Natural Food International lost 17.0%. Its first-half sales growth also beat all three: Ximai Foods grew 22.0%, Yanker Shop 4.4%, and Three Squirrels lost 3.6%.
The accounts show one weaker line. Gross margin, the share of each sale left after the cost of making the product, slipped to 63.6% from 65.5%. Cost of sales grew 34.9% while sales grew 27.8%. The results give no margin by channel, so the cause is not proven. A shift toward shelves in membership stores is a likely one.
Cash held in China is worth less to a Hong Kong shareholder than cash that can leave the country. This company has shown it can send cash out. The 2025 final dividend was raised 72.5% to HK$0.069 and took 50% of the year's profit. The article Cheap Is a Question, Not an Answer asks of any low price whether the owners actually receive the cash. In June, they did.
The filings that matter next are about who is buying the shares.
What the Buyers Did: Three Signals
- 01The founder's family trust bought on the open market. Natural Capital, owned through a trust set up by Zhang Zejun, announced purchases on June 25, July 2 and July 23. The last batch was 2.264 million shares at an average HK$1.6878, paid from its own funds. In that batch its stake rose from 42.65% to 42.76%. The company says it does not rule out more buying. That July batch cost about HK$3.8 million, or 0.1% of the company, so it is a signal and a small one. At today's price it has lost 17%.
- 02The company announced a buyback on October 19. It may buy up to 36 million shares, 1.6% of the total, between October 20, 2026 and January 31, 2027. The shares will be cancelled and the cash comes from the company's own resources. The board states that the share price does not fully reflect the value of the business. At HK$1.395, the maximum spend is about HK$50 million. That is 3.8% of net cash and about a third of the June dividend. It is also roughly 5% of the shares held outside the two big holders. The filing gives no assurance on timing, quantity or price, and no purchase has been reported yet.
- 03PepsiCo is still on the register. PepsiCo, Inc. held 566.5 million shares, 25.88% of the company, in the interim report dated June 30, 2026. The founder's trust and PepsiCo together hold 68.6%. Roughly 31% is left for all other holders. A sale by either big holder would hurt most, and none is on record in that register.
What Natural Food International Is Actually Worth
At HK$1.395, the market values the whole company at HK$3,053 million. Take out HK$1,307 million of net cash and the operating business is priced at HK$1,746 million. Last year's operating profit was HK$383 million (RMB 326.2 million). Dividing the first number by the second gives EV/EBIT of 4.56: about four and a half years of last year's operating profit buys the business.
Per share, HK$0.60 is cash. The other HK$0.80 buys a business that earned HK$0.17 a share over the last twelve months.
| Multiple of last year's operating profit | Value per share | Versus HK$1.395 |
|---|---|---|
| 4.6× (today) | HK$1.395 | |
| 6× | HK$1.65 | +18% |
| 8× | HK$2.00 | +43% |
| 10× | HK$2.35 | +68% |
The 6, 8 and 10 times figures are assumptions. Peer EV/EBIT multiples have not been verified, so none is shown. The cross-check available is trailing P/E, the share price divided by twelve months of earnings. Natural Food International trades at 8.2, Ximai Foods at 24.0 and Yanker Shop at 14.5. Both peers list on the mainland, which often prices consumer stocks higher than Hong Kong does.
Two analysts cover the shares. CICC, a Chinese investment bank, rates them outperform with a HK$2.20 target. The two-analyst average is HK$2.39.
At 8 times last year's operating profit, the operating business alone comes to HK$1.40 a share. That is today's whole price, with the HK$0.60 of cash on top.
Two Ways This Could Be Wrong
Risk 1: the growth leans on lower-margin shelves and a bigger advertising bill
Gross margin fell 1.9 points in a half where shelf sales rose 65.2%. Shelves went from 18.4% to 23.8% of sales. Selling costs still take 76% of gross profit, against 79% a year earlier, and the company says the rise came mainly from online advertising. The accounts record a sale when goods are transferred, so a retailer's stocking order counts like a shopper's purchase. The thesis breaks if second-half gross margin falls below 62% or selling costs return above 51% of sales. It also breaks if second-half revenue, the full year minus the first half, grows less than 15%. That means under about RMB 1,600 million, against RMB 1,390.9 million a year earlier. That is a harder test than the first half. The first half of 2025 grew 14.3%, so the 27.8% came on an easy base. The second half of 2025 grew 30.2%, from RMB 1,068.0 million.
Risk 2: the buyers may not follow through
The buyback is a limit on what the company may spend, and the filing guarantees no purchase. A window that closes on January 31, 2027 with nothing bought would weaken the case. The founder's trust has said it may buy more, but its July batch was small. PepsiCo's intentions are unknown, and its 25.88% is the June 30 figure. A filed sale by either holder would break the thesis.
One operational point sits beside both. Sales and cash are in yuan while the shares trade in Hong Kong dollars, so a weaker yuan lowers the Hong Kong dollar value of both.
Related: a clinic operator that spent its own cash on its own shares while profit grew. GUSHENGTANG (2273.HK): The Company Spent HK$360M Buying Its Own Stock in Six Months. Profit Is Up 44%.
The Decision
Written at HK$1.395 on October 20, 2026.
Natural Food International sold more, earned more and held more cash than a year ago. Its shares are 17% lower since the results, while the Hang Seng index fell 5.4%. The founder paid an average HK$1.6878 in July, and the company has authorized a buyback that has not started.
No part of this is a call to buy or sell. It marks the prices and the dates at which the argument gets tested. The three price levels below come from structure lines on the daily chart.
| Scenario | Signal | What It Would Mean |
|---|---|---|
| Bull | Second-half revenue growth stays above 15%, gross margin holds at 62% or higher, and buyback reports show shares bought | Close above HK$1.439 opens the path toward HK$2.00. Thesis intact |
| Neutral | Buyback is quiet and the shares trade between the support and ceiling lines | Range HK$1.298 to HK$1.439 until full-year results in late March 2027. Thesis unresolved |
| Bear | Second-half growth under 15%, gross margin under 62%, selling costs back above 51% of sales, or a filed sale by PepsiCo or the founder's trust | Any one breaks the thesis. A close below HK$1.163 confirms it on the chart |
The founder paid HK$1.6878 in July. The board says today's price is too low. March 2027 shows whether the second half agrees.
Sources
- Natural Food International Holding: Interim Results Announcement for the six months ended June 30, 2026, HKEXnews, August 27, 2026
- Natural Food International Holding: Interim Report 2026, HKEXnews, September 28, 2026 (shareholder register as at June 30, 2026)
- Natural Food International Holding: Annual Report 2025, HKEXnews, April 24, 2026 (dividend, five-year revenue and profit)
- Natural Food International Holding: Voluntary Announcement, Increase in Shareholding by the Controlling Shareholder, HKEXnews, July 23, 2026 (earlier purchases announced June 25 and July 2, 2026)
- Natural Food International Holding: Voluntary Announcement, Share Repurchase Plan, HKEXnews, October 19, 2026
- Price history and quotes: daily closes for 1837.HK, Ximai Foods, Yanker Shop, Three Squirrels and the Hang Seng index, August 27 to October 20, 2026, Yahoo Finance; 1837.HK closes cross-checked against the Trading852 price database
- Peer first-half 2026 results: Three Squirrels (revenue -3.6%), Yanker Shop (revenue +4.4%), Ximai Foods (revenue +22.0%, press summary of the interim report, not checked against the filing)
- Peer trailing P/E: Ximai Foods 24.0x, October 19, 2026; Yanker Shop 14.5x, October 13, 2026
- Analyst targets: Stockopedia, Tiger Brokers news (CICC HK$2.20), October 2026
- Own calculations: market value from 2,188 million shares at HK$1.395; net cash RMB 1,112.7 million (cash RMB 1,118.7 million less borrowings RMB 5.9 million, excluding RMB 150.8 million of time deposits) at 1 RMB = 1.1742 HKD; EV/EBIT on 2025 operating profit RMB 326.2 million; trailing 12-month earnings per share RMB 0.145 (2025 less H1 2025 plus H1 2026); share counts from the July 23, 2026 filing