Vitasoy International 0345

[winston]

not vested

VITASOY INT`L(345)

Analysis：
As one of the famous HK brands, Vitasoy's financial performance has always showed satisfied results year by year.

The growth prospects of China market has been in spotlight.

Last financial year (1/4/2017-31/3/2018) , the company's revenue was HK$6465million, up 20%. Excluding the one-off gain of the North American divestiture, it achieved an increase of 21%.

Its China business achieved 39% growth in revenue. It accelerated growth across all regions and the e-commerce channel.

The company has announced the development of new production facility in Dongguan City. The production is expected to commence by April 2021.

The company's gross profit margin sustained at 53% last year. Although commodity prices particularly sugar, milk powder and paper carton were unfavourable, improved manufacturing efficiency resulting from increase d sales volume enable it to maintain the GPM.

Profit attributed to equity shareholders of the company was HK$586 million, representing a decrease of 5%y.o.y

Excluding the one-off gain of North American divestiture, profit attributable to equity shareholders increased by 14%, with a final dividend of HK$31.4 cents per share, together with interim dividend becoming HK$35.2 cents. In last fiscal year, the dividend was HK$35.1 cents.

Strategy：
Buy-in Price: $27.00, Target Price: $30.00, Cut Loss Price: $23.00

Source: Phillips

[winston]

not vested

Vitasoy defies short-seller attack to rise 5.6pc

by Avery Chen

Shares of local drinks manufacturer Vitasoy International (0345) rose 5.6 percent to HK$29.25 despite facing short-seller attacks.

Short-seller Valiant Varriors said in its report yesterday that Vitasoy has been overstating its Chinese and Australian profits and capital expenditures, inflating its margins while underplaying the impact of rising costs on its bottom line.

It also questioned Vitasoy's capital expenditures, pointing out the big discrepancy between its reported numbers and filings to the State Administration for Industry and Commerce.

Valiant Varriors believed Vitasoy's shares are only worth HK$10 apiece, representing a 65 percent downside from current prices.

Vitasoy said yesterday that the report contained certain factual errors, misleading statements and unfounded allegations which may lead to unusual price movements.

It said it will post further announcements to clarify and address the allegations and that it reserves its right to take legal action against the short-seller.

Vitasoy's net profit increased by 2.99 percent year-on-year to HK$533.21 million for the first half last year.

Revenue during the period grew 5.33 percent from a year before to HK$4.68 billion. 70 percent of its revenue comes from the mainland market.

Shares of Vitasoy have fallen 38.1 percent from its peak of HK$47.25 last June.

The report was Valiant Varriors' first to target Hong Kong-listed companies. The institution, formed by a group of activist investors, has issued 15 reports so far, mainly targeting public companies in Singapore and South Korea.

More short-seller reports have been published in the local stock market, but with less impact on targeted companies, according to accounting and consulting firm Grant Thorton's report issued last October.

Short-sellers prefer to target big companies, especially those that have a market capitalization of over HK$5 billion as it could be due to the cost of stock borrowing, said Barry Tong, national head and joint APAC head of transaction advisory services.

Source: The Standard

https://www.thestandard.com.hk/section- ... rise-5.6pc

[winston]

not vested

Short attack on Vitasoy proves to be a damp squib

by Ivan Tong

Last week, an obscure short seller issued two reports on Vitasoy International (0345) on consecutive days starting Thursday, declaring that the Hong Kong drink maker's shares were only worth HK$10 apiece.

But the attack fizzled as Vitasoy's shares closed 5.6 percent higher after falling 5 percent in morning trade on the first day.

The roller-coaster performance left the short seller red-faced while also reflecting the troubles faced by these institutions in recent years.

The short seller goes by the name of Valiant Varriors with the latter word seemingly a pun on "warriors." Perhaps the founders wanted a clever alliteration using the letter "V" but it sounds rather odd to me.

The ambush on Vitasoy was Valiant Varriors' first attack on a Hong Kong-listed company.

On its website, Valiant Varriors claims to be a "truth seeker in incorrectly priced businesses" and says it was formed by a group of activist investors to unravel and assess the real value of listed companies by going deep into the books and beyond standard regulatory disclosures.

The short-selling report on Vitasoy appears foolhardy, as it drove Vitasoy's share price higher. Hyperbolically speaking, the short-selling report became a long-buying report and valiant warriors could perish in battle due to their wrong tactics.

As a matter of fact, the short-seller made at least two technical errors. Firstly, the report was issued at a time when Hong Kong stocks had risen for seven consecutive weeks. So unless the data in the short-selling report was correct and able to hit home, the chances of a win were pretty slim.

Secondly, Vitasoy's shares had risen to a peak of HK$47.25 last June from HK$3.5 a decade ago but had since fallen back to a lower level of HK$29.8 as of yesterday.

So the chances of success were slimmer compared with targeting the company when its share price was high.

Vitasoy is an 80-year-old homegrown brand that has become a household name in the city.

In recent years, Vitasoy expanded into the mainland and became one of the hottest brands in a market with over 1.4 billion people, propelled by funny internet memes declaring that drinking Vitasoy lemon tea is "cooler than smoking marijuana."

Valiant Varriors accuses Vitasoy of overstating its Chinese and Australian profits as well as capital expenditures and says its cash flow is poor.

It also questions Vitasoy's margins, given that its main competitors such as Uni-President China (0220) and Tingyi (0322) are all reporting lower margins due to higher costs.

The short seller says Vitasoy's margin of over 50 percent is too good to be true, as it's much higher than the industry average of around 35 percent.

Moreover, the report says though Vitasoy has established a stronghold in southern China, it has failed to make headway in the north, and that it has a poor record of launching new products.

Hence, Valiant Varriors reckons Vitasoy's current price-to-earnings ratio of 44.41 is too high, given the stiff competition.

To some degree, the decline in Vitasoy's price over the past year already reflects these problems, so it is unlikely this news will deal a fatal blow to Vitasoy.

Also, Vitasoy did not react like other listed firms which were previously attacked and suspend trading, and its price fell only over a short spell.

It appears Vitasoy was unperturbed over the report, possibly because its contents were weak.

Short sellers have found difficult to make a killing in Hong Kong in recent years.

Previously, in the worst of cases, shares under attack fluctuated for at least three days and firms had to suspend trading to prepare their responses.

But this did not happen with Vitasoy. Therefore, I don't see many retail investors being able to make a quick buck from the short attack on a beloved brand.

Source: The Standard

https://www.thestandard.com.hk/section- ... damp-squib

[winston]

not vested

Jun 17, 2021

<Result Ann>VITASOY INT'L Annual Net Profit $548M, Up 2.3%; Final Div 29 Cents

VITASOY INT'L (00345.HK) announced annual result ended March 2021.

The net profit amounted to HK$548 million, up 2.3% yearly.

EPS was HK51.5 cents.

A final dividend of HK29 cents was declared, against a dividend of HK28.4 cents in the corresponding period of the previous year.

Source: AAStocks Financial News

[winston]

not vested

Hong Kong drinks company Vitasoy faces China netizen calls for boycott

The worker's memo triggered a flood of online calls for a boycott of Vitasoy, which gets two-thirds of its revenue from mainland China.

The hashtag "#Vitasoygetoutofthemainland" had garnered almost 100 million views by Sunday.

Mainland actor Gong Jun, who previously endorsed a Vitasoy lemon-flavoured drink, announced late on Friday he was ending commercial cooperation with the company.

His announcement followed that of another mainland Chinese actor, Ren Jialun, who said he was also ceasing cooperation with Vitasoy, the newspaper added.

Source: CNA

https://www.channelnewsasia.com/news/as ... t-15152668

[winston]

not vested

Vitasoy issues two statements in a row to clarify attitude on police-stabbing employee under mounting public pressure

Source: Global Times

https://www.globaltimes.cn/page/202107/1227698.shtml

[winston]

not vested

Chinese e-commerce platform removes Vitasoy drinks amid public outrage over its condolences to police-stabbing employee

By Xu Keyue in Beijing and Qi Xijia in Shanghai

The Global Times reporter found on Sunday that all the Vitasoy drink products are not available on the Dingdong Maicai, a Shanghai-based online fresh produce and grocery vendor.

The Vitasoy drink products are still available on China's e-commerce giants JD.com and Taobao as of press time.

A Vitasoy document circulating online since Friday shows the company expressing "deepest condolences" to the family of the attacker, which sparked huge backlash for its ambiguous attitude toward the employee.

Source: Global Times

https://www.globaltimes.cn/page/202107/1227735.shtml

[winston]

not vested

Valuation

We derived our target price (TP) of HK$28.2 based on discounted cash flow (DCF) valuation which translates into an FY22 EV/EBITDA of c.20x.

Source: DBS

https://www.dbs.com.sg/treasures/aics/s ... 345_HK.xml

[winston]

not vested

Here’s why Vitasoy needs to overcome the ‘Get out of mainland China’ boycott after stock market beating

Shares plunged 10 per cent in the five days to July 9, only the sixth time they have lost by at least that much on a weekly basis in the past decade

Leaked memo seen as sympathetic to ‘lone-wolf terrorist’ triggered a boycott by consumers, celebrities in mainland China

by Bobo Chan and Cheryl Arcibal

Vitasoy generated HK$5 billion of revenue from the sales of soybean milk, tea and fruit juices in mainland China, equivalent to 67 per cent of its annual sales in the year ended March 31, 2021.

Its proportion has increased from 62 per cent a year earlier, and 43 per cent five years ago.

Source: SCMP

https://www.scmp.com/business/companies ... 0628&tc=17

[winston]

not vested

Vitasoy predicts interim loss

Vitasoy International Holdings (0345) said it may record a loss in the six months ending 30 September 2021.

The beverage company's consolidated result is expected to range between a loss of HK$50 million and a profit of HK$60 million in the period, representing a year-on-year drop of between 91 percent and 107 percent.

Vitasoy said an unauthorized internal memo containing inappropriate contents widely circulated in social media on July 2, resulted in repercussions from customers in mainland China against the company, including the removal of products from the shelves in various sales channels for July.

Although the products were gradually returning to shelves in selected outlets, the loss of sales during the summer peak season is expected to have a material impact on revenue and profitability, it added.

Vitasoy's interim results are expected to be released in November.

Source: The Standard

https://www.thestandard.com.hk/breaking ... terim-loss