Vitasoy International 0345

[winston]

Vitasoy first-half earnings dip 8pc Kathy Wang

Soy milk producer and distributor Vitasoy International (0345) yesterday reported first-half net profit dipped 8 percent due to a one-off provision for employment pay entitlement.

For the six months ended September, revenue surged 20 percent to HK$1.4 billion. Gross profit increased 16 percent to HK$170 million. Net profit, after tax and the provision of HK$26 million, dropped 8 percent to HK$97 million.

Hong Kong-based Vitasoy declared an interim dividend of 2.8 HK cents. Gross margin, its profitability before tax, dipped to 10 percent from 12 percent.

Chief executive officer Larry Eisentrager said "the company's net margin drop is mainly due to the one-off provision whereas the gross margin dip is because of the cost increase, as commodities prices were booming during the first half."

Eisentrager said gross margin is likely to be improved in the second half, as commodity prices are now falling from their peak.

Sales in the mainland, accounting for 22 percent of total turnover, jumped 60 percent. Sales in Australia and New Zealand, which account for 11 percent, picked up 23 percent. North America recorded a segment loss.

The firm acquired Singaporean soy food maker Unicurd in April to expand into that market, which made a profit contribution during the reporting period.

The soy milk maker said it has a cost tightening plan but no plan for job cuts at the moment. It had planned capital expenditure HK$170 million for the whole year and spent HK$33 million in the first half.

[winston]

Not vested.

DJ MARKET TALK: Vitasoy +1.2%; Immune To Global Fncl Crisis -ICEA

1544 [Dow Jones] Vitasoy (0345.HK) +1.2% at HK$4.09, bouncing back after stock's 2.9% fall yesterday post-result (FY results released Monday midday); FY09 net profit +3% on-year. ICEA says company "immune to global financial crisis" with over 50% of its sales coming from HK and Macau market; adds these markets have experienced steady sales.

But notes valuation unattractive, with stock trading at 18.9X FY09 earnings which is higher vs 5-year average of 17.7X. Says dividend yield of 5.4% not particularly attractive in view of slow earnings growth. House does not rate stock. Stock unlikely to re-test intraday high of HK$4.29

[winston]

MING PAO

-- Soy milk producer VitaSoy International's (0345.HK) revenue increased 3 percent to HK$217 million last year, strengthening its market position in Hong Kong and Macao.

Revenue at its mainland branches jumped 56 percent, giving the company a 20 percent market share, the newspaper reported, quoting senior director William Chi-chung Lo

[kennynah]

i long time no drink vitasoy alread.... i used to like it very much for it's unique taste... also, i noticed they haven't been advertising their products on TV ...

[winston]

DJ MARKET TALK: Vitasoy's Liquid Financial Position Supportive-TF

1436 [Dow Jones] STOCK CALL: Taifook says Vitasoy (0345.HK) appears to have benefited from last year's melamine scandal in China as total sales +15% to HK$2.8 billion for FY09 on back of spectacular 56% sales growth in China.

"Vitasoy remains in a liquid financial position with net cash of HK$431 million at end-FY09, which will continue to support its capacity and sales expansion strategies, which may include M&As."

Rates at Buy, target at HK$4.72. Stock down 1.0% at HK$4.16 midday

[winston]

DJ MARKET TALK: DBS Raises Vitasoy Target; 1H Margin Shines

1107 [Dow Jones] STOCK CALL: DBS says Vitasoy (0345.HK) 1H net profit, +46% on-year, exceeds its expectation, due to stronger gross margins (+4.4ppt to 49.6%) helped by lower raw material costs, more effective cost management.

"The margin improvement in 1H was encouraging, but further upside could be capped as raw material costs are unlikely to drop further. Hence, we expect more moderate growth ahead."

Keeps stock at Hold, raises target to HK$5.20 from HK$4.30, as house rolls over valuation to FY10, with target P/E raised to 17.2X from 16X due to rising China contribution.

Source: Dow Jones Newswire

[winston]

Soymilk-drink giant has potential to quench thirst for profit

Vitasoy International Holdings (0345) - which makes and sells food and beverages under the Vita and Vitasoy brands - has growth potential in the mainland.

Despite various challenges in the past two years, the firm had positive sales growth in its major markets.

For the six months that ended in September, net profit surged by 46 percent to HK$141 million.

In Hong Kong and Macau, total net sales grew 2 percent to HK$737 million. In the mainland, soymilk consumption kept rising with sales jumping 40 percent to HK$438 million. Lower prices of raw materials and cost management helped Vitasoy's gross profit margin rise to 50 percent.

Its share price moved between HK$3 and HK$4 when the stock market was gloomy in 2008. When market sentiment recovered last year, fund managers realized the stock should be revalued based on its mainland prospects.

Vitasoy closed at HK$5.68 on Friday. You may want to keep it in mind when it dips near HK$5.40.

http://www.thestandard.com.hk/news_deta ... 00315&fc=1

[winston]

Not vested. From Phillips:-


Risk
- Expansion plans delayed
- Price volatility of raw material
- Fierce Competition of Business Environment
- Increased Labor Cost in PRC offset the operating profit.


Valuation

The growth annual dividend is highly correlated to that of EPS as shown below. We expected that the company would start a high growth era, as China business segment would become a major strong driving engine for the company's earnings.

While, the North America business would become one of the steady source of profit for the company. Finally, low gearing ratio and sufficient cash flow of the company would guarantee the future growth without affecting dividend growth.

According to the H-model, we assume the long term and short-term growth rate of the dividend are 14.1% and 3.8% respectively, and the required return is 9.22% (from Bloomberg). 12-month target price is HK$7.11, which is equivalent to the 23.5x 2010PE. Rating Buy.

[kennynah]

several years ago.... many people used to buy Vitasoy packet drinks... me included...i thought it was quite tasty and affordable when compared to other soft drinks...

they used to advertise .. showing wholesome family members enjoying this drink...

but then after that...all of a sudden....quietened down...no more adverts...and in fact, i dont recall seeing this vitasoy drink readily available anymore...

[winston]

Not vested. From Dr. Check, The Standard HK:-

Take a peek at Vitasoy (0345), whose interim profit rose 10 percent. Despite higher material and labor costs, Vitasoy can retain a 50 percent profit margin by raising prices.

The mainland market is its growth engine despite keen competition. Revenue from the mainland grew 14 percent.

Hong Kong people on average drink 12 liters of soybean milk every year compared with only one liter for mainlanders.

But if mainland fresh milk is dogged with problems over quality, it will not be surprising for consumers to switch to soybean milk.

Vitasoy has fallen from an all- time high of HK$7.50 and closed on Friday at HK$6.74. With a 4 percent dividend yield, it is not a bad idea to buy the stock at HK$6.60.

http://thestandard.com.hk/news_detail.a ... 10214&fc=1