Jinwu Financial News | According to the Morgan Stanley Research Report, although Baiguoyuan Group (02411) has been actively responding to industry challenges, it is expected that it will take some time for the company to achieve profit growth again. In addition to weak demand and a fall in the fruit consumer price index, competition in the industry is likely to intensify as entry barriers are lowered.
The bank expects sales to grow 6% in 2024 and 2025. Gross margin will decrease in 2024 due to margin deleveraging and increased advertising and promotion (A&P) for brands or stores.
The bank cut its earnings per share forecast for 2024 and 2025 by 37%. Earnings are expected to resume growth starting in 2025 after additional spending in 2024. In the long run, Baiguoyuan seems to be in an advantageous position in the field of fruit retail. The target price was reduced by 53.4% from HK$7.3 to HK$3.4, and the rating was downgraded from “buy” to “synchronize with the market”.