Master Kong Raw Material Prices Stabilized Gross Profit Pressure Are Turning - Master Kong, Beverage

May 20 hearing, according to media reports in Hong Kong

, 2010 Raw materials Prices soar and good financial results last year, food stocks, in the first quarter earnings substantially, "aliasing" column earlier tasting Unity Enterprise (220), first quarter profit sharply fell by 44%, and even the recently announced first quarter results table Master Kong (322) also rose by only 10% of the profit and gross margin also record the lowest since 2004, judging from the current raw material prices have stabilized, second quarter gross margin compression level should be improved.

First quarter results? Master Kong in the first quarter profit rose 10% to 797 million yuan, profit of 14.27 cents per share, revenue rose 23%, to 11.3 billion. Instant noodles , Beverage and bakery business revenue share, respectively, 49%, 47% and 3%, results disappointed the market. There are three main reasons? (A) the actual number of working days less in the first quarter; (b) depreciation and amortization increased; and (iii) the higher unit cost of production is one of the important reasons, the following will turn first to its two major business performance.

Business performance? Accounted for 49% of revenue instant noodles business, revenue rose 21% to 5.593 billion yuan, with an average selling price rose 7%, sales up 14%. Company performance during the run lean in the industry, further expand market share to 55.7%, high-margin products Sell Achieve rapid growth, high-end instant noodles bowl and sales revenue growth of 23%. Accounted for 47% of revenue Drinks Business, revenues grew 29%, among which is the tea, diluted fruit juice and bottled water revenue grew 40%, 33% and down 8%, gross margin declined 5.5 percentage points to 32.6%.

Margin compression? Master Kang overall gross profit margin fell 5.02 percentage points to 30.35 percent, the lowest recorded since 2004, gross profit margin. Reason is that input costs increased substantially, resulting in gross margins fell by more than expected, which Sugar Year will rise 50%, PET 35% rise in rubber prices, palm oil rose 30%, so instant noodles, beverages and cakes gross margin fell 2.5 percentage points to 5.5 percentage points. At present the main raw material prices had stabilized, I believe that second quarter gross margin compression level can be eased.

Financial situation? Master Kong financial position, because a large number of prepaid customers, the company was to improve cash flow position. Ended the first quarter, net cash by the end of the 185 million U.S. dollars 09, increased to 727 million U.S. dollars. Showed strong growth in customer orders, or suggest that sales growth this summer drinks may accelerate. As of the end of March, up 52.69 percent debt ratio, mainly due to funds not yet paid off some of the suppliers. The management expects to repay all the debts, the debt ratio could fall to below 50%.

Valuation? Reference to Bloomberg statistics, Master Kong's big firms now tracking a total of 27, 7 to "buy" rating, 16 to "neutral" rating, 4 to "sell "rating, the average target price of 18.55 yuan, forecast 2010 earnings per share were 0.081 yuan to the closing price yesterday, forecast earnings ratio of 26 times. If compared with other mainland consumer stocks, Qingdao Beer (168) 2010 predicted price-earnings ratio of 28 times, Heng International (quotes, information, reviews) (1044) forecast price-earnings ratio of 26 times.

Advantages: (A) to improve cash flow

(B) strong growth in customer orders

Risk:

(A) of the commodity price surge

by: gaga

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