Main points of investment
Chinese mainland business has achieved growth, and the performance is basically in line with expectations:
21H1 achieved revenue of HK $1.854 billion, + 6.8% compared with the same period last year, including HK $1.72 billion from Chinese mainland and Hong Kong, China, with revenues of HK $682 million, + 14.1% and 36.8%, respectively, and gross profit margin of-1.9% to 32%, mainly due to the increase in raw material palm oil prices and logistics and distribution costs. The net profit of returning to the mother was 171 million Hong Kong dollars,-4.2% year-on-year, and the net interest rate was-1.1% to 9.2% year-on-year, basically in line with expectations.
The Hong Kong market is stable and improving, and the cost of raw materials is still under pressure:
21H1's business revenue in Hong Kong, China, was-3.7 to HK $683 million compared with the same period last year, mainly due to the high base affected by the epidemic in the same period last year, of which Q1/Q2 revenue was HK $336 million, with a year-on-year rate of-6.3%. The decline in revenue in the second quarter has significantly narrowed, and revenue is expected to grow positively in the second half of the year on the premise that the epidemic is stable. The operating profit margin in the first half of the year was-6.1% to 7.7% compared with the same period last year, mainly due to the reduction of palm oil supply in Malaysia and the increase in palm oil procurement prices. Raw material price pressure is expected to remain in the second half of the year.
The Chinese market has maintained growth, and the operating profit margin has decreased slightly:
21H1 Chinese mainland business revenue of 1.172 billion Hong Kong dollars, year-on-year + 14.1%, at the local exchange rate, + 4.8% year-on-year, compared with last year's special period of the epidemic, consumer demand is gradually returning to normal. According to AC Nielsen data, 21H1 China instant noodle industry overall sales year-on-year-7.7%, sales-7.3% year-on-year, it is not easy for the company to achieve positive growth. Operating profit margin fell 1.5% to 12.4% year-on-year, mainly due to higher raw material costs and increased advertising.
Give a "hold" rating with a target price of HK $6.8:
This year, the company plans to use HK $120 million of internal funds to buy back shares, accounting for about 2% of the issued shares, demonstrating confidence in the company's long-term business prospects and growth potential. we are optimistic about the company's business expansion in mainland China, sound management style, and the continuous improvement of profitability under outstanding cost control, and maintain the original profit forecast. The company's EPS is expected to be HK $0.30 in 22nd, taking into account the current investment sentiment in the instant noodle market, slightly lowering the target price to HK $6.8m, which corresponds to a 22-year 20-fold PE rating.