BOC International released a research report stating that it maintains the “neutral” rating of H&H International Holdings (01112), with a target price of HK$10.4. The company's stock price performance was relatively strong, mainly due to strong sales of nutritional supplements in the first nine months of 2023. However, preliminary full-year results lacked quantifiable data, so it was impossible to assess the fourth quarter's growth trend, and previous guidance meant that growth in the fourth quarter would normalize. The decline in cash balances is also the focus of investors' attention.
The report said that sales growth in 2023 was in line with expectations, driven by strong growth in nutritional supplements, but was offset by continued weakness in infant formula. The infant nutrition and care (BNC) business faced greater difficulties in the fourth quarter than expected, mainly due to increased competition during the transition to the new national standard, which led to a drop of about 15% in infant formula sales. Net profit and cash balance for 2023 were lower than expected, and there is still a need for refinancing in the first half of 2024, and interest rates are expected to be higher.