[ET Net News Agency, 12 April 2018] Daiwa Research lifted its target price for
Uni-President China (UPC)(00220) to HK$8.5 from HK$7.4, and reiterated its "outperform"
rating.
The research house attended UPC's analyst meeting yesterday. It cited management noting
that the company aims to keep distributors' inventory levels low and selling costs under
control, revenue targets will be less aggressive. Dividend payout ratio will remain high
as there is no significant capex or M&A need.
Going forward, Daiwa believes UPC can achieve a mid-single-digit revenue CAGR (2017-20)
without setting aggressive targets for new products (such as Xiaoming classmate tea,
Haizhiyen juice), hence lowering the related marketing and promotional discounts.
It also expects UPC's gross margin to expand by 0.5pp-0.7pp per year over 2018-20, and
similar operating margin expansion thanks to higher product ASPs and continuous
improvement of product mix, in particular for its noodles segment. (KL)