[ET Net News Agency, 5 September 2019] HSBC Qianhai Securities initiated coverage on
Tingyi (Cayman Islands) (00322) with a "hold" rating and a target price of HK$12.14.
The research house said Tingyi is the dominant force in what is an increasingly mature
sector. It has a market share of 47% in China's ready-to-drink (RTD) tea market and 44% in
instant noodles. The beverage business, which includes distributing PepsiCo's products in
China, accounted for 58% of revenue in 2018 and instant noodles 39%.
But growth is slowing, and the company is freshening up the business by streamlining its
huge sales and distribution network and improving its product mix to boost margins. The
stock price is up 10% year-to-date, lower than the peer average of 31%, mainly because the
consensus on 2019-20 net profit is below the industry average.
HSBC forecast that net profit will rise at an 11% CAGR over 2019-21, 4ppt slower than in
2016-18. (KL)