(Bloomberg) -- Want Want China Holdings Ltd. climbed the most in almost two years in Hong Kong trading after the country’s largest maker of rice cakes and flavored milk said 2009 profit rose 19 percent, beating analyst estimates.Want Want gained 11 percent to HK$5.93, the biggest gain since March 28, 2008. The stock has advanced 9 percent this year compared with a 3 percent decline in the benchmark Hang Seng Index.
The food and drinks maker, controlled by Taiwanese billionaire Tsai Eng-meng, has been expanding distribution into smaller cities in China to tap rising consumption on the mainland. Net income for 2009 grew to $312.6 million from $262.7 million on the widest profit margin in at least six years, beating all estimates in a Bloomberg survey of 12 analysts, who had a mean estimate of $289.3 million.
“We are bullish on Want Want China’s long-term prospects, given its unparalleled strong distribution network coverage, diversified product portfolio, strong balance sheet, and leading market position,” Jacqueline Ko, an analyst at Kim Eng Securities (HK) Ltd., said in a note to clients today. Ko recommends buying the stock.
The Shanghai-based company’s sales rose 10 percent to $1.71 billion, it said in a statement to Hong Kong’s stock exchange yesterday. Earnings per share rose to 2.37 cents from 2 cents. Lower costs and higher prices boosted Want Want’s profit margin to 18.3 percent, the widest since at least 2004.
Chinese retail sales rose 15.5 percent in 2009, according to government figures.
Chinese retail sales rose 15.5 percent in 2009, according to government figures.
China Brands
“The group believes the most valuable brands in the world are located in the PRC, which is the world’s largest consumer market,” the company said, referring to the People’s Republic of China.
“If Want Want beverages can capture a reasonable market share in the coming year, Want Want will secure an invincible position in the PRC food and beverage industry.”
Revenue from dairy products and beverages jumped 48.9 percent from a year earlier on recovery in demand for milk products and sales of new “pocket-convenient” drinks. Sales of its 125 milliliter tetra pack Hot-Kid milk surged 55 percent.
Sales of snack foods slid 2.8 percent and rice crackers dropped 16.6 percent as a result of “restructuring of distribution channels” in cities and the timing of the Chinese Lunar New Year in 2009, the company said. Revenue from its Want Want rice crackers fell 16 percent to $313.5 million.
“If Want Want beverages can capture a reasonable market share in the coming year, Want Want will secure an invincible position in the PRC food and beverage industry.”
Revenue from dairy products and beverages jumped 48.9 percent from a year earlier on recovery in demand for milk products and sales of new “pocket-convenient” drinks. Sales of its 125 milliliter tetra pack Hot-Kid milk surged 55 percent.
Sales of snack foods slid 2.8 percent and rice crackers dropped 16.6 percent as a result of “restructuring of distribution channels” in cities and the timing of the Chinese Lunar New Year in 2009, the company said. Revenue from its Want Want rice crackers fell 16 percent to $313.5 million.
About Want Want
Want Want China Holdings Limited is a Hong Kong-based investment holding company. The Company and its subsidiaries are engaged in the manufacturing, distribution and sale of rice crackers, dairy products and beverages, snack foods and other products.
The Company operates in four segments: manufacturing and sale of rice crackers, including sugar coated crackers, savory crackers and fried crackers; manufacturing and sale of dairy products and beverages, including flavored milk, yogurt drinks, ready-to-drink coffee, carbonated drinks, herbal tea and milk powder; manufacturing and sale of snack foods, including candies, popsicles and jellies, ball cakes and beans and nuts, and the manufacturing and sale of other products, which include mainly wine and other food products. Source
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