[ET Net News Agency, 5 September 2019] HSBC Qianhai Securities initiated coverage on
Want Want China Holdings (00151) with a "buy" rating and a target price of HK$7.16.
The research house said believes that Want Want is back on track. After returning to
growth in FY2018 (ended March 2019) following five years of decline, HSBC expects Want
Want's net profit to rise at a CAGR of 5% in FY2019-21, up 4ppt from the previous three
years.
It attributed the turnaround to gross margin expansion driven by product innovation and
revenue growth due to channel expansion, particularly e-commerce. With the shares trading
at 19x FY2019 PE, which is in line with the 19x historical average since listing, HSBC
thinks the current valuation is attractive. (KL)