[ET Net News Agency, 13 November 2019] Daiwa Research raised its target price for
Tingyi Cayman Islands (00322) to HK$11.5 from HK$10.9 and upgraded its rating to "hold"
from "underperform".
The research house cited Tingyi's management reiterating its revenue and net profit
growth targets of 5% and 5-10% for 2019. In 3Q, Tingyi noted a market-share recovery in
noodles and bottled water.
Given its strong operating cash flow and current net cash position, Tingyi noted that it
has the ability to undertake value creative M&A or maintain a high dividend payout ratio
(2018: 100%) in order to boost shareholder returns.
Among major business units, Pepsi has already completed its channel reform in 1H and saw
positive YoY revenue growth since. Management expects channel reform for noodles to be
completed by the end of 2019. Reform for non-carbonated drinks is ongoing and management
targets a positive outcome from these reforms in 2020.
Daiwa raised its 2020-21 EPS estimates by 4% as it expects revenue growth to improve
gradually as channel reforms are largely completed, and operating leverage emerges. (KL)