Morgan Stanley released a research report stating that it lowered the target price of Master Kong Holdings (00322) from HK$16 to HK$11 to maintain the “increase in holdings” rating, and the target price for Unified Enterprise China (00220) was lowered from HK$6.7 to HK$4.9 to reflect the reduction in profit forecasts, etc., to maintain the “reduced holdings” rating. At the same time, the bank lowered the target price of Chinese food (00506) from HK$3.6 to HK$3.4, and downgraded the rating from “increasing holdings” to “synchronizing with the market”.
The report said the beverage business growth will improve this year as travel demand recovers. Benefiting from falling raw material costs, profit margins will increase, but the year-on-year increase will be small. Compared to the unified enterprise China, they prefer Master Kong Holdings. Since this year, the unified stock price has risen 4%, while Master Kong has dropped 12% during the same period. However, it is believed that unification is facing challenges, including slow recovery in demand for noodles; if palm oil prices rise, profit margins in the noodle business will be under pressure; and there are no plans to raise prices. However, the market has fully considered Master Kong's downside risks and made conservative predictions. Furthermore, the bank indicated that the valuation of Chinese food is reasonable, and the performance of the carbonated beverage business will remain the focus of attention.