Fufeng Group (HKG:0546) Release SWS Research Report
Hong Kong, Mar 29, 2010 AEST (ABN Newswire) - Fufeng Group (
HKG:0546) released its 2009 result. The company's 2009 result was in line with our expectation. The revenue, net profit and EPS were RMB 4632.88Mn, 928.29Mn and 0.56,while our forecast were RMB 4682.98Mn,927.99Mn and 0.56.
Starting in 2010, the company will use all of its glutamate acid to produce MSG, the company will focus on selling MSG to consumers in the future. With the expansion of MSG production capacity and high price of MSG, we expect the MSG business to bring in more revenue in the future. We forecast 2010's MSG revenue will grow 73.16% due to sales volume and price increase. As the global economy recovers,the demand for xanthan gum will pick up, resulting in fast growth of xanthan gum business. We forecast 2010's xanthan gum revenue will grow 40.29%.
The company is developing a series of new amino acid products and biomass based polymer products, we believe the new products will diversify the company's products and add future growth driver. We aslo have confidence on the company's cost control strategy, we expect the company's GPM to gradually improve over time.
We revised our EPS forecast for 2010, 2011 from RMB 0.77 and 0.82 to RMB o.66 and 0.84.The company is transforming itself from an industrial product manufacturer (glutamate acid) to a consumer product manufacturer (MSG), therefore we believe the company should enjoy a higher valuation. We gave the company a 10X 2010 PE and raised 2010 TP from HKD 6.14 to HKD 7.52, representing a 29.28% upside potential from current price HKD 5.82.We gave the company a buy rating.
About Fufeng Group Limited
Fufeng Group (
HKG:0546) is the world's largest producer of MSG, xanthan gum and a major supplier for a series of bio-fermentation products. The main products of the Group are food additives, animal nutrition, colloid and high-end amino acids. In fiscal 2016, Fufeng generated sales of approximately RMB11.2 billion and profit attributable to shareholders of about RMB1.09 billion. For more information, please visit our website www.fufeng-group.com
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