Citi believes that the rebound in Vitasoy's operating margin is the main driver of profit growth in the medium term.
According to an announcement from Zhitong Finance APP, Citigroup released a research report stating that due to the current high valuation, it maintains a "hold" rating on Vitasoy International (00345), with the target price raised from HKD 6.9 to HKD 9.6. The firm believes that the rebound in Vitasoy's operating margin is the main driver of profit growth in the medium term.
The report mentions that Vitasoy's sales for the first half of the fiscal year ending in September increased by 2% year-on-year based on the reported standards, while sales in the mainland remained roughly stable and sales in Hong Kong increased by 3% year-on-year. Thanks to favorable declines in raw material prices and strict control of sales and distribution costs, its operating margin increased by 2.4 percentage points year-on-year. The company's goal is to achieve positive sales growth in the second half of this fiscal year, especially in the mainland, and to continue expanding its profit margin.
