Tag Archives: Want Want China

Tingyi Profit Plunges: Worst in Class

Tingyi Profit

Noodles and beverage seller Tingyi, 322 hk, reported a whopping 67% decline in net profit for the 1st half of 2016.  Other consumer food and beverage companies posted declines but none as extreme as Tingyi and the 2nd quarter looked even worse.

Tingyi 1st half 2nd q

Tingyi blamed the decline on overall China weakness and severe flooding.  Tingyi was expected to benefit from Shanghai Disney’s opening in June thanks to its exclusive Pepsi relationship there.  Since the opening was mid June, it’s too soon to know the impact.  However, it would take an enormous contribution to reverse the declining trends in revenue and profits from its beverage division.

Other companies concentrated in China and Hong Kong beverages and foods have seen drops in revenue and profit, but nothing as severe as Tingyi.  Swire Pacific,19 HK, with Coke manufacturing facilities in China, Hong Kong and Taiwan showed a profit decline in these areas of 14% with a combined profit decline of 37%.  As seen below, mainland China was the hardest hit.  Swire doesn’t see a turnaround in that market in the near future.

Tingyi Swire Pac 1st half

While Swire shared a major decline in beverages, Want Want, 151 HK and  Uni-President 220, hk were much less hard hit. Despite the drop in revenue in beverages, Want Want eked out a profit increase thanks to lower input costs.  90% of Want Want’s beverage business is from “Hot Kid Milk”, which had a 17% revenue decline but was helped by a decline in powdered milk.  The company stated that besides market weakness, consumers were switching to options such as room temperature yogurt drinks.

Tingyi Want Want 1st Half

Tingyi Uni Pres

Uni-President saw  a much lower decline in revenues from beverages than Tingyi and also managed a profit increase in that segment.  In total contrast to Tingyi, its noodle sales saw a revenue and profit increase.

While China consumer food and beverage stocks are reflecting demand weakness, Tingyi’s latest earnings show a much greater decline than the market warrants.  Although the stock performance has reflected this, the downward trends are flashing a strong warning sign.  Tingyi management needs to change its direction quickly.

Tingyi Stock

 

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Shanghai Comp down over 2%, Hang Seng Flat

 

shanghai hang seng

Most sectors of the Hang Seng were down with the exception of Consumer related companies including wholesaler Li and Fung, HK 494 and up 4.94% and food manufacturers Tingyi, HK 322 and Want Want China, HK 151 both up slightly over 1%.  With no specific news an these, it would be assumed they rose in response to the news of the CPI rise of 2.3%, particularly with the Food component rise of 7.3%.  This rise is most likely unwarranted, with an interesting critique of the statistics by Christopher Balding.  China Life, HK 2628, continued its precipitous slide from last week. Wharf Holdings, HK 4, tumbled after earnings as Citi, despite a target price rise from 31.7 to 34.5, kept it at Sell due to continuing weakness in high-end Hong Kong retail sales.

 

Hang Seng Movers

 

 

 

Lunar Holiday Preview: Shanghai down, Hang Seng Up

shanghai hang seng

Hang Seng – tepid trading, eked a .55% rise with 35 out of 50 members up.  Majority of sectors shared the love, particularly banks, while safety havens of utilities and telecom faltered and consumer staples, Want Want China, HK 151 and Tingyi Caymen, HK 322 fell 2% & .82% respectively despite the upcoming  Lunar New Year holiday where feasting is on the menu .  QFII expansion little perceived positive impact.

China Exchange Calendar for Next Week:

Lunar Cal 2016

Shanghai Hang Seng Weekly Recap

Shanghai Composite & Hang Seng were up today.  However, Shanghai was down 6.13% for the week while the Hang Seng finally stopped hitting new lows and posted a 3.16% change for the week.  All sectors on the Hang Seng were up with only 4 of the 50 in the red:

  • Beer distributor China Resources Beer Holdings, HK 291, market cap $3.9B;US down 2%.  Sold non-beer holdings in 2015 to concentrate on beer only. Brands include Snow & Kingway and 20 year cooperation with SABMiller.
  • Real estate developer and manager Hang Lung Properties, HK 101, market cap $8.5B US; down 1.7%. This mall operator reported a 56% drop in core earnings on Thursday and cut the dividend.  South China Morning Post
  • Real estate developer and manager Henderson Land Dev., HK 12, market cap $18.4B US; down 1.75%. Interim report issued 9/11/2015 showed 6 month revenue increase of 16% whittling down to a “reported profit” increase of just 4%.
  • Food product company Want Want China, HK 151, market cap $8.5B US. Last semi-annual report, despite improved margins thanks to lower commodity input prices, 6 month revenue declined by 1.9%; EBITDA dropped 3.3%  Bought back 64.2million shares in first half. Special note: 99% of borrowing in US$.

Index Recap

shanghai hang seng

The yuan finished down against the dollar just -.05% for the week, with China vowing to  maintain, Reuters.   Apple, AAPL and Alibaba, BABA revealed the weakness in the Chinese consumer and the roadblocks in the transformation to a consumer-oriented economy.

yuan dollar update