Master Kong Noodle Maker Tingyi Losing the War

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Tingyi’s first quarter earnings report continued its downward slide from 2015.  While gross revenues showed a slightly smaller decline, net profits reached a drop of over 45%.

Tingyi seg rev


Tingyi, as with most Chinese companies selling primarily on the Mainland, blames the economy. Despite the plummet in both noodle and beverages, it states that it continues to dominate the Chinese market with a Nielson market share of 52.4% of sales.

As far as the noodle segment goes, other reports have shown that this is a mature market which has reached close to full saturation.

noodle market.PNG

Even its new: Super FuManDao and Zhen LiaoDao, (plenty of fine ingredients), can’t fight the nationwide slowdown in noodle consumption.  However, a major competitor, Uni-President, HK  220 while slowing, didn’t show the dramatic drop that Tingyi did.  It’s quarterly statement gave no details on revenues but it’s annual 2015 statement showed noodle revenue dropping by 4.9% versus Tingyi’s 12.7%.  Tingyi’s larger noodle slide is most likely due to multiple scandals in 2014, with lingering repercussions through 2015, regarding the use of tainted oil in Tingyi products, particularly those sold in Taiwan. Tingyi made no mention of this in either its annual or quarterly report but only stated that it would spend more on advertising.  The annual sales drop of over twice that of Uni-President appears to reflect a continued distrust by the consumer.

On a quarterly basis, the beverage unit decline appears to be slowing.  The company blamed the weakness on economic weakness resulting in lackluster bottled water demand and a recession in family-size products.  It offers no real turnaround plan but pins its hopes on its Pepsi alliance and the Shanghai Disneyland opening in June, 2016, where Pepsi and Tingyi will be the primary beverage suppliers.  This could help Tingyi but beverage operating margins are much lower than noodles have been and they’ve been in business with Pepsi since 2012 with no obvious benefits to date.

Tingyi’s stock performance reflects its woes but still has a high p/e rating considering its performance an prospects.  It has performed much worse than its smaller rival, Uni-President, with neither showing much room for growth hopes.

Tingyi Stock







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