According to HSBC research reports, the stock price of Master Kong (00322.HK) has accumulated a 29% increase since the end of February, compared to a 8% increase in the Hang Seng Index and a 4% decrease in the industry. This is believed to be mainly due to its undervaluation, high dividends, and product price increases. The stock price performance is consistent with the bank's previous expectations, but it is believed that most of the bullish factors are already reflected in the stock price performance.
Due to slightly weaker fundamental performance than expected, the bank lowered Master Kong's 2024 instant noodle business revenue growth forecast from 3% to 1%, as the recovery rate of the instant noodle market is slower than expected. As for the beverage business, the bank pointed out that although the price increase of products may affect short-term sales, it is believed that the negative impact will gradually ease. Therefore, the expected annual growth rate of beverage business revenue in 2024 remains unchanged at 6%. Overall, HSBC research lowered the revenue forecast for Master Kong from 2024 to 2026 by 0.9%, 1.5%, and 1.8%, respectively, and the earnings per share forecast by 1.9%, 0.5%, and 0.6%, respectively, downgraded the rating to "hold", and raised the target price from 9.7 yuan to 10.4 yuan while maintaining the expectation that the net profit compound annual growth rate from 2023 to 2026 will reach 11%.
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