[ET Net News Agency, 6 January 2021] UBS Global Research lowered its target price for
Uni-President China (UPC) (00220) to HK$8.3 from HK$8.9 and maintained its "neutral"
rating.
The research house noted that UPC recorded 18% net profit growth in 9-month 2020 to
Rmb1,683m. However, UBS believes the growth was mainly driven by temporary operating
expense savings and the benefits of "stay-at-home" demand for instant noodles.
UBS believes earnings growth looks unsustainable, as (1) it expects almost flat revenue
growth due to potential market share loss; and (2) raw material cost has been on an
uptrend since 2H 2020, which is likely to continue.
It raised its earnings estimates by 12%/7%/4% in 2020/21/22. (KL)