[ET Net News Agency, 10 July 2020] Citi Research lowered its target price for China
Feihe (06186) to HK$21.2 from HK$19.2 and maintained its "buy" rating.
The research house said Feihe's 40%+ sales growth in 1H was mainly driven by the
outperformance of super-premium products including Astrobaby and Organic Zhenzhi.
More new products will be launched in 2H to strengthen the premium-segment. Management
expected sales growth in 2H to be slower than in 1H given high base, but to be within its
original target of 30%. Management expected net profit to outgrow revenue in 1H, thanks to
lower A&P cost (given a higher potion of online marketing activities & lower offline
marketing event cost due to Covid-19).
Citi raised its 2020-23 net profits forecasts by 10-13% to reflect better sales and
margin outlook. (KL)