Jingu Finance News | HTSC issued research reports stating that u-presid China (00220) released its third-quarter business operations report for 24Q1-3, with a net income of 1.64 billion (+11.5% year-on-year), corresponding to a net profit of 0.67 billion in 24Q3 (+13.5% year-on-year); the company's non-GAAP net profit for 24Q1-3 increased by 35% year-on-year. On the revenue side, the overall revenue of the company in 24Q3 achieved mid-single digit growth, with the beverage business growing at a low double-digit rate, while red and green tea, ice sugar pear, and sea salt achieved double-digit growth; the food business grew at a mid-to-low single-digit rate, with the instant noodle business achieving a mid-to-high single-digit growth. It is expected to achieve steady growth driven by new product launches and upgrades of old products. The company's gross margin in 24Q3 was 34%, up more than 2 percentage points year-on-year, with a slight increase in the gross margin of the food business mainly due to the impact of rising palm oil prices, but a year-on-year decline in flour prices; the beverage business saw a significant increase in gross margin due to lower raw material prices for sugar, powdered milk, and paper boxes.
Looking ahead, the company's revenue has resilience, with continuous reductions, stable competitive landscape, and effective operational management, the company's profit margin is expected to continue to increase, making the dividend yield attractive.
Considering the trend of profit margin improvement under fluctuations in raw material costs and operational efficiency improvements, the bank has slightly adjusted its profit forecasts. It is expected to have an EPS of 0.43/0.46/0.50 yuan for 24-26 (previously 0.42/0.46/0.49 yuan), with a reference to comparable companies' average PE of 18x in 25 (Wind consensus expectations). Giving it a 25-year 18x PE, corresponding to a target price of 8.90 Hong Kong dollars (previously 8.22 Hong Kong dollars, corresponding to 24 years 18x), maintaining a "buy" rating.
