share_log

中金:维持康师傅控股(00322)“跑赢行业”评级 目标价12港元

CICC: Maintain TINGYI (00322) "Outperform Industry" rating with a Target Price of 12 Hong Kong dollars.

Zhitong Finance ·  Jan 6 09:54

CICC expects Master Kong's revenue in 2024 to be 80.7 billion yuan, +0.3% year-on-year, with a net income of 3.6 billion yuan, +15.5% year-on-year. Excluding one-time asset activation gains, the year-on-year growth rate of net income surpasses 20%.

According to the Zhitong Finance APP, CICC released a research report maintaining TINGYI (00322) with an "Outperform Industry" rating, essentially maintaining the profit forecast for 2024/2025, introducing 2026 revenue/profit forecasts of 8.5/4.4 billion yuan, and a Target Price of HKD 12. The company is expected to have a dividend yield of 7% in 2024. The bank expects the company's revenue in 2024 to be 80.7 billion yuan, a year-on-year increase of 0.3%, and a Net income of 3.6 billion yuan, a year-on-year increase of 15.5%. Excluding one-time asset revitalization gains, the year-on-year growth rate of Net income exceeds 20%; corresponding to a 0.1% year-on-year decrease in revenue in the second half of 2024, and a year-on-year increase of 16% in Net income; the bank predicts that the company’s performance may surpass market expectations.

CICC's main points are as follows:

Revenue performance in the second half of 2024 is expected to remain stable, and the instant noodles and beverage Business in the fourth quarter of 2024 may show signs of improvement.

According to the bank's grassroots research, the company's instant noodle Business in the second half of 2024 is expected to remain flat year-on-year. In July, the company completed upgrades and price increases for classic series products, which led to a decline in instant noodle sales and market share in the third quarter. In the fourth quarter, it is expected to recover year-on-year positive growth due to a low base. Beverage revenue was weak in the third quarter due to weather, competition, and other factors, but in the fourth quarter, it is expected to recover year-on-year positive growth. Overall, beverage revenue in the second half of 2024 may still experience a slight year-on-year decline, with tea beverages maintaining good growth, while water and juice may decline further. Carbonated drinks are expected to show signs of recovery starting from the fourth quarter of 2024 due to a low base. The bank expects the company's revenue for the full year to be basically flat year-on-year, although slightly weaker than the company's mid-year guidance, but considering that both the instant noodle and beverage businesses have raised prices and the beverage Industry is facing intensified competition, the annual revenue performance is relatively stable.

The increase in profit margins in the second half of 2024 may exceed expectations year-on-year.

Benefiting from multiple factors such as price increases, favorable costs, and improvements in product structure, the company's gross margin in the second half of 2024 is expected to improve more than anticipated year-on-year. The bank expects the gross margin for instant noodles and beverages in the second half of 2024 to increase by 2.1/2.6 percentage points year-on-year, both of which are expected to exceed the first half of the year. To maintain market share, the sales expense ratio in the second half of 2024 may show a slight year-on-year increase, while the management expense ratio is expected to remain stable year-on-year. On the statements level, the company's net margin in the second half of 2024 is expected to increase by about 0.4 percentage points year-on-year. Considering that the company recorded about 0.4 billion in one-time asset sale gains in 2023, the annual core net margin increase is expected to be close to 1 percentage point, with an estimated annual profit of 3.6 billion yuan, which is better than the mid-year guidance and market expectations.

In 2025, fluctuations in palm oil prices may be limited, focus on the company's long-term profit margin improvement plan.

Since Q4 2024, palm oil prices have shown a significant upward trend due to supply factors from Indonesia and Malaysia, with the current price rising by 30% compared to the first three quarters of 2024. The recent decline in the company’s stock price is partly due to market concerns that the upward trend in palm oil prices may disrupt the year-on-year improvement in the company’s profit margin. The firm believes this impact may be limited, as industry-wide cost increases may help alleviate industry competition and promotion intensity. Additionally, the company is expected to ease some cost pressures through product structure improvements and formula adjustments. Meanwhile, prices of cartons, PET, and white sugar are forecasted to weaken in Q4 2024, which could relieve overall cost pressures. Considering the company’s firm goal of long-term profit margin improvement, the firm expects the profit margin trend to continue its year-on-year upward trajectory in 2025, with the beverage sector's profit margin likely improving more than that of instant noodles. Overall, the company shows solid fundamentals, with significant space for year-on-year profit margin improvement, and an attractive dividend yield, which makes the firm optimistic about the company's long-term investment value.

Risks

Significant increases in raw material prices, weak demand, and intensified competition.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
    Write a comment