[ET Net News Agency, 10 November 2017] HSBC Global Research cut its target price for
Uni-President China (UPC)(00220) to HK$8.2 from HK$8.8, and maintained its "buy" rating.
The research house said UPC's 9-month results were 8% lower than its forecast but this
was mainly due to lower-than-expected government grants, which dropped from RMB90m in 2Q
to around RMB10m in 3Q.
Despite the input cost pressure, UPC managed to lower their A&P expenses and that was
more than enough to offset the decline in gross margin. UPC also indicated channel
inventory has remained healthy at around 15-20 days on the distributor side and around 60
days on the retail side, HSBC said.
UPC shares have retreated by 11% in the past month and underperformed the market by 13%.
HSBC believes the underperformance is overdone as margin expansion is still on-track and
it also thinks the market is too conservative on its margin outlook.
The research house lowered its 2017-19 earnings by 6-8% to reflect lower government
grant assumptions. (KL)
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00220 U-PRESID CHINA
Nominal 
6.000 +0.060 (+1.010%) Others
10/11/2017 17:43
[I-bank focus]HSBC cuts Uni-Presid China (00220) to HK$8.2
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