Jefferies has issued a research report assigning an "Underperform" rating to YUE YUEN IND (00551) and reducing its target price from HK$7.4 to HK$7. The firm maintained a "Buy" rating on Pou Sheng International (03813) but lowered its target price from HK$0.84 to HK$0.72. YUE YUEN IND and its retail subsidiary Pou Sheng International held an earnings conference call yesterday. The report noted that company management issued warnings regarding uncertainties in OEM shipment volumes, average selling prices, and gross margin for the first quarter of 2026, while also anticipating a year-on-year increase in capital expenditure. Jefferies strongly disagrees with the resilience shown by YUE YUEN IND's share price, as it expects further declines in the company's OEM business profit and free cash flow for 2026, which would pose risks to dividend payments. The firm expressed conviction that YUE YUEN IND's OEM business will fail to meet its 2026 guidance. Regarding average selling prices, Jefferies anticipates that pressure will intensify quarter by quarter. Considering profit risks and elevated capital expenditures, Jefferies continues to see risks to YUE YUEN IND's free cash flow and dividends.