DMG - TP S$1.68
China Minzhong’s 1QFY12 reported net profit up 78% y-o-y to RMB93m
The news: China Minzhong’s (MINZ) net profit grew 78% to RMB93m on 37% revenue growth to RMB361m and 7.7ppt gross profit margin gain to 40.7%. Revenue from processed vegetables increased by 25.9% to RMB132.8m (1QFY11: RMB105.5m) due to a shift towards a higher-value processed vegetables portfolio, which increased ASP by 53.5%. Revenue from fresh vegetables produce increased by 94.0% to RMB156.6m (1QFY11: RMB80.7m), due to higher cultivation volume of 38,160 tonnes (1QFY11: 26,941 tonnes) and ASP growth of 37%. The shift towards higher value added products also lifted MINZ’s GPM.
Our thoughts: MINZ’s net profit of RMB93m (+78% y-o-y, -4% q-o-q) was ahead of our RMB80m projections mainly due to better-than-expected expenses. Although revenue of RMB361m was below our assumed RMB428m, gross profit of RMB147m was relatively in-line on a higher value product mix. We maintain BUY and TP S$1.68 for now.
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