YOFC reported its 2021 results, which were lower than we expected. Owing to reclassification of shipping costs, YOFC reported a gross margin of 19.6% in 2021, down 0.4pp yoy. Despite the lower-than-expected 2021 results, we maintain the view that YOFC is on the recovery track in terms of fundamentals. Successful diversification and internationalization will also drive YOFC’s medium-term growth. We reiterate our ADD rating, with a higher target price of HK$14.48 (based on 12x 2022F P/E). The upward revision in the target price is due to revising up our net profit forecasts.