[ET Net News Agency, 28 November 2019] Morgan Stanley initiated coverage on Vitasoy
International Holdings (00345) with an "equal-weight" rating and a target price of
HK$26.5.
The research house likes Vitasoy for its ample growth potential in national expansion
given currently low penetration outside Guangdong, which still accounts for about 60% of
its mainland China sales, with its high-quality products and strong position in the niche
but fast-growing beverage categories. Further, soy milk penetration is still quite low in
mainland China vs Hong Kong.
Morgan also thinks Vitasoy's plans for a more proactive national expansion than before
and its investments for long-term growth is a strategic positive. However, Morgan sees
near-term margin risk during this aggressive national expansion as investment returns in
other markets outside its home market is lower, and it will take time to educate customers
on its product portfolio and for the company to build its distribution network. (KL)