Bank of America Securities released a research report stating that it maintains a "buy" rating for U-Presid China (00220) and expects a 4% increase in earnings per share forecast for 2024/25 due to expected tax rate reductions. The company's dividend yield of 6.9% is the highest among consumer goods stocks listed in Hong Kong and can support its stock price performance in a weak market. The target price has been raised from HK$8 to HK$8.3.
In the first half of the year, U-Presid China's sales and after-tax profits both increased by 6% and 10.2% year-on-year, respectively, in line with expectations. Due to factors such as weak macroeconomic conditions, intensified market competition, and rainy weather in China in the second quarter, sales growth slowed down, and management lowered the annual sales growth guidance from 8-12% to 5-8%. However, the bank still expects U-Presid China to achieve good growth in the second half of the year, benefiting from lower base comparison, increased market share, the launch of upgraded classic instant noodle series and new beverage products, as well as favorable weather, etc.