Jinwu Financial News | According to BOC International Development Research Report, China's Feihe (06186) sales in 2023 fell 8.3% year on year, and net profit fell 31% year on year, in line with the profit warning. Sales declined 16% year over year in the second half of 2023, and increased 1% year over year in the first half. According to the bank, in terms of products, high-end strategies will offset the decline in sales; in terms of channels, digital retail networks will add “electronic fences.”
Looking ahead to 2024, sales are likely to grow in double digits, with a lower limit of 5%. Net profit is expected to be similar to the sales growth rate (that is, the profit margin is stable).
The bank continued that Feihe's performance in the second half of 2023 was disappointing, and the bank is awaiting the results of an improvement in its operations. The neutral rating was reiterated. The target price was HK$3.4, based on 7.4 times the 2024-25 average price-earnings ratio, or 5.0 times the price-earnings ratio excluding cash.