Fufeng Group Limited (HKG:0546) High Margin Products Will Become New Growth Driver, A China Merchants Securities (CMS)(SHA:600999) Research Report
Hong Kong, Aug 20, 2010 AEST (ABN Newswire) - Fufeng Group Limited (
HKG:0546) (PINK:FFNGY) announced 2010 interim results. Sales up 45.4% yoy to RMB2.98Bn, profit attributable to equity holders up 30% yoy to RMB460Mn. EPS reached RMB0.32. The company proposed an interim-dividend of RMB0.11 per share. The Xanthan Gum segment reached 20% of total gross profit in 1H2010 and another high margin-product Threonine will become new growth driver in the future. We maintain our EPS estimate from 2010-2012 as RMB0.66, 0.88 and 1.11 respectively. We slightly revised up our TP to HK$10, based on 10X11PE and we reiterate buy rating of the stock.
Xanthan Gum accounted for 20% of the total gross profit
In 1H2010, the Xanthan Gum sales volume increased by 128% to 19086 tons, while the ASP is decreasing 8.5% yoy due to the company's strategy of market share expansion. The company targets 60% of global market share in the future.
Glutamic acid was internally used
The company's Glutamic acid sales only accounted for 3.2% of the total sales in 1H2010, as most of the glutamic acid was used internally in 1H2010. The company promotes Uo brand in 2009 and the products currently were sold in 2000 supermarkets.
Threonine will become new growth driver in the future
The company established 5000 tons of threonine product capacity in 1H2010, with the capacity to reach 10000 tons at the end of 2010. we believe the high margin product (GM reaches 30%) will become new growth driver in the future.
Valuation and rating
We maintain our EPS estimate from 2010-2012 as RMB0.66, 0.88 and 1.11 respectively. We slightly revised up our TP to HK$10, based on 10X11PE and we reiterate buy rating of the stock.
Financials-----------------------------------------------RMB mn 2008 2009 2010E 2011E 2012E-----------------------------------------------Revenue 3585 4633 6982 9168 11062Growth (%) 47% 29% 51% 31% 21%Net income 295 928 1099 1459 1851Growth (%) 554% 215% 18.4% 33% 27%EPS(yuan) 0.18 0.56 0.66 0.88 1.11P/E(X) 27.0 8.6 7.2 5.5 4.3ROE(%) 17% 39% 34% 33% 31%-----------------------------------------------Source: Company data, CMS (HK) estimates
For the complete China Merchants Securities (SHA:600999) Fufeng Research Report, please refer to the following Link below:
http://www.abnnewswire.net/media/en/docs/63560-CMS-1008-100819.pdf
About Fufeng Group Limited
Fufeng Group (
HKG:0546) is the world's largest producer of MSG, xanthan gum and a major supplier for a series of bio-fermentation products. The main products of the Group are food additives, animal nutrition, colloid and high-end amino acids. In fiscal 2016, Fufeng generated sales of approximately RMB11.2 billion and profit attributable to shareholders of about RMB1.09 billion. For more information, please visit our website www.fufeng-group.com
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