Morgan Stanley released a research report stating that it has lowered the forecast for want want china's (00151) earnings per share for the current fiscal year by 4%, and for the next fiscal year and the 2026 fiscal year by 8%. It expects that the demand for dairy products and ice cream bars will remain under pressure, and cost support will weaken. The firm has reduced the target price for the stock by 4% to HKD 4.8, with the new target price reflecting a forecast price-to-earnings ratio of 14 times for the next fiscal year, which fully reflects the company's prospects, maintaining a rating of 'in line with the market'.
The report stated that the snack department was affected by weak ice cream bar sales, resulting in consecutive year-on-year declines in sales, while the dairy product department experienced a sales decline in the first half of the fiscal year due to weak industry demand. The firm maintains a cautious outlook for the second half of the fiscal year, based on the Lunar New Year sales being potentially dampened by sluggish gifting demand.
On the other hand, the company's overseas business has seen strong growth, recording double-digit growth for both the last fiscal year and the first half of the fiscal year. The firm believes that the overseas business will be a long-term growth driver, based on a wide product portfolio meeting local demand and brand appeal to overseas Chinese. However, the revenue contribution from the overseas business remains small, only in the mid to high single digits, and has not significantly impacted the company's business in the short term.