According to the report released by JPMorgan, they maintained a 'neutral' rating for Want Want China (00151) and predicted that the revenue and profit of FY2025 would increase by 1.7% and 9% respectively due to the fall of raw milk and milk powder prices. The compound annual growth rate from 2025 to 2027 is expected to reach 2.6% in revenue and 1% in profit, lower than the industry's expected performance. The target price has been slightly reduced from HKD 5.2 to HKD 5.1.
According to the report, the company announced its annual performance as of the end of March, with a year-on-year revenue increase of 2.9% and a net profit increase of 18.4%, which meets market expectations. The final dividend is 3.3 US cents per share, compared with a dividend ratio of 77% for the whole year, lower than last year's 83%, which is unexpected and led to a 5% rise in its stock price yesterday as there was no interim dividend.
The bank predicts that with Want Want China's cash in hand of about RMB 10.7 billion and free cash flow of about RMB 4.7 billion for the whole year of 2020, there is further room for the dividend payout ratio to rise. Moreover, Want Want China has solid fundamentals, attractive valuations, and the prospect of providing even more shareholder returns.