China Yurun Food (1068, $12.64) 12M Target $14.85 BUY
Event: Interim earnings of China Yurun Food grew 71% yoy to $672mn that was above market consensus.
Yurun reported that turnover increased 75% yoy to $6,043mn in 1H08. Interim earnings grew 71% yoy to $672mn representing 59% of our full year forecast. EPS rose 62% to $0.44. Interim dividend was $0.11.
Yurun continued to optimize its product mix, focusing on chilled pork and low temperature meat products (LTMP) which enjoyed higher gross margins. In the upstream business, turnover of chilled pork grew 119% yoy to $3,728mn, while that of frozen pork increased 29% yoy to $1,425mn. As for the downstream business, sales value of LTMP rose 65% yoy to $1,273mn, while that of high temperature meat products (HTMP) increased 20% yoy to $132mn.
Upstream sales volume was almost unchanged at 268,000 tons. Utilization rate of upstream capacity dropped from 57% in 1H07 to 56% in 1H08, indicating live hog supply was still tight. However, the company managed to increase chilled meat sales volume by 26% to 173,000 tons.
Downstream sales volume grew 15% yoy to 64,600 tons, in which LTMP increased 22.8% to 54,400 tons. Utilization rate of downstream capacity rose to 65% from 62% in 1H07.
Overall gross margin dropped from 14.8% in 1H07 to 13.6% in 1H08, due to faster growth in upstream business and a decrease of gross margin for upstream business. Gross margin of chilled meat dropped from 11.5% in 1H07 to 9.5% in 1H08, and that of frozen meat from 8.1% to 6.4%. However, gross margin of LTMP rose slightly from 27.0% in 1H07 to 27.5% in 1H08, and that of HTMP improved from 18.3% in 1H07 to 18.5% in 1H08.
Yurun has spent $10mn in 1H08 to build brand recognition throughout China, tenfold of that in 1H07. However, the company still managed to control selling and administrative expenses at 6.4% of total turnover versus 6.5% in 1H07.
By balancing upstream and downstream businesses, Yurun managed to minimize the impact of volatile live hog prices on earnings. Since chilled pork was priced mark-to-market, Yurun could enjoy robust profits from upstream business during a rise in live hog price. On the contrary, margins for LTMP will expand if hog price declines.
As an industry integrator, Yurun targeted to expand slaughter capacity to 30mn heads and processed meat capacity to 400,000 tons in 2010. We have revised our EPS forecasts for 2008-2010 at $0.79, $1.00 and $1.19 respectively implying the counter is trading at undemanding PER of 16.0x in 2008 and 12.6x in 2009.
With a conservative PEG ratio of 0.7x, we consider the fair value of Yurun at $14.85. Maintain BUY.
Nomura lifted its target price for China Yurun Food (01068) to HK$39 from HK$34, and maintained its "buy". The house expects Yurun's core earnings (excluding government subsidy) growth to remain strong (47% y-y) for FY11 on both strong volume and price growth. It believes that Yurun will benefit from consolidation of the industry in the mid to long term. Moreover, Nomura expects to see positive free cash flow (FCF) for FY11 given management's guidance. (KL) (Quelle: finanznachrichten.de)
15/12/2010 15:11 [I-bank focus] JPM says it's time to buy Yurun (01068)
JP Morgan said Yurun's (01068) share price is down 11.3% since the placement on November 4, noting rising food CPI resulted in negative sentiment for the entire food and beverage sector in China. But the house believes the recent share price weakness offers a good buying opportunity and reiterated its "overweight" rating on Yurun, with a price target of HK$38. JPM said the market may have misunderstood that rising hog prices and price intervention by the government on frozen pork are negative for Yurun. The house said Yurun aims for stable-to-higher profit per ton and a rising hog price environment is actually positive for the company to expand profit per ton with less resistance from customers. (KL)
: Aktie mit Inflationsschutz für China - aufgestockt
habe überall nachgeforscht und nichts negatives gefunden(auch keine schlechte nachrichten an der börse in HK ),seit einigen jahren steigende umsätze , gewinne und 2x im jahr z.zeit ca 1% dividenden! hohe inflation sollte an china yurun food unbemerkt bleiben, gegessen wird immer und fleisch sowieso. hat gut 25% vom hoch verloren aber bin überzeugt, daß dies nur eine korrektur ist und habe bei diesen preisen nochmals nachgelegt!
17/01/2011 10:45 [I-bank focus] CS lifts China Yurun (01068) target to HK$33
Credit Suisse raised its target price for China Yurun (01068) to HK$33 from HK$30.3, and maintained its "outperform" rating. It said Yurun is well positioned in a fast-growing segment with government's policy support. The research house believes Yurun is an inflation-hedging play. Historical data suggests that rising pig prices translate into Yurun's higher dollar profits though lower percentage margins. Credit Suisse added that Shuanghui's newly announced restructure plan implies an intense competitive environment ahead, although the house believes the China slaughtering sector overall looks more attractive. (KL)
Das sind Jahreszahlen 2010 von einem "langweiligen ,nicht trendigem, nicht High Tech oder grünem " Unternehmen der Lebensmittelindustrie. Und das geht schon seit Jahren so!Jetzt weiß ich auch woher die Kaufempfehlungen herkommen obwohl man es im Aktienkurs noch! nicht sieht. Die Zahlen kamen NACHBÖRSLICH in HK.(keine Kauf/Verkaufempfehlung).
ANNUAL RESULTS ANNOUNCEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 Financial Highlights:
2010 2009 Growth (HK$ in million) (HK$ in million) Turnover 21,473 13,870 54.8% Gross profit 3,098 2,161 43.3% Profit attributable to equity holders of the Company 2,728 1 ,745 56.3% Diluted earnings per share (HK$) 1.551 1 .074 44.4%
Yurun Food (HKG:1068) 2010 net profit $2.73B, up 56%; fin div $0.2 [Date:03-29-2011] Source: Infocast News RSS Feed
For the year ended 31 December 2010, China Yurun Food Group (HKG:1068) had a net profit of HK$2.728 billion, up 56.32% over the corresponding period in 2009. EPS were HK$1.565. A final dividend of HK$0.2 per share is declared.
Goldman Sachs reported on YURUN FOOD (01068) stating its Buy rating and target $26.6 with the following details:
We resume coverage on China Yurun (Yurun) with a Buy rating and a 12-month target price of HK$26.60. The stock?s share price has been under significant pressure in recent months due to concerns over corporate governance, food safety and a negative 2H11 outlook. We have undertaken detailed analysis to address these, focusing particularly on (1) legitimacy of government grants and (2) abnormally low utilization rates. We believe these can be reasonably linked to the company?s capacity expansion and our forecast for a strong 2012/13 recovery further strengthens our case for a rerating. As the stock is already trading at trough multiples, even our P/E valuation, which is 1SD below its historical mean, will yield 50% upside.
We expect a resurgence in live hog supplies post Chinese New Year in 2012 to be a positive catalyst for the stock. This will be driven by government incentives implemented in July 2011 and strong restocking seen in the market.
More abundant hog supply will benefit Yurun in two ways ? firstly, volume growth will accelerate as the supply bottleneck is resolved and secondly, margins will recover due to lower hog prices. We further expect Yurun?s utilization rate to improve due to a higher proportion of mature plants.
As such, we forecast strong core net profit CAGR of 28% in 2012/13 and CROCI expansion from 22.2% in 2011 to 25.6% in 2013.
Key risks (1) Food safety but largely price in, (2) longer-than-expected recovery in live hog supplies, and (3) further negative publicity on corporate governance issues. (y)