UBS Group released a research report and reiterated a "buy" rating for Want Want China (00151), raising its net profit forecast for fiscal years 2025 and 2026 by 3% and 1% respectively. It is expected that the average compound annual growth rate of revenue and net profit from 2024 to 2026 will be 3% and 6%. The bank believes that Want Want's stock price is attractive, with a current price-to-earnings ratio of 11 times the expected earnings for fiscal year 2025. The expected dividend yield for 2025 and 2026 is 6.7% and 6.9%, respectively, with a target price of HKD 6.5.
According to the report, the company's revenue and net profit for the fiscal year ending in March of this year increased by 2.9% and 18.4% respectively, to RMB 23.6 billion and RMB 3.9 billion, meaning that revenue and net profit in the second half of the fiscal year are expected to increase by 1.8% and 27.2% year-on-year. Due to the improvement in gross margin, the net profit exceeded the bank's and market expectations. The company announced a final dividend of RMB 2.787 billion, indicating a dividend payout ratio of 70%, which is in line with the bank's expectations. The dividend payout ratio, including repurchases, reaches 77%. The bank believes that the announcement of the final dividend can alleviate investors' concerns about management's future shareholder returns.