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Wednesday, 17 May 2017

Yihai International Holding (1579.hk)

17/5/2017
buy - ld 4.07 hkd, tp 6.90, upside 69%
sole supplier of hot pot soup flavoring products to Haidilao Group, popular steamboat chain.

metrics
  • market cap 4229.48 hkd mil (760 sgd mil)
  • last done 4.06 hkd
  • pe 16.64, pb 2.96
  • dividend yield 1%
  • 4 year: revenue cagr 36% consistent, earnings cagr 70% consistent
  • total debt to equity 0%
  • roe 26.52%, roa 18.55%
  • strong positive cash flow, spike in cash in balance sheet
operations
  • In China, the Group is the exclusive supplier of hot pot soup flavoring products to Haidilao Group, supplying customized hot pot soup flavoring products to Haidilao Group, and supplying retail products and customized condiments to Shuhai Supply Chain and Youdingyou (related parties of the Company). The Group is also a provider of cooking condiment to the family customers in China, suppliers of catering services and food companies
  • leading and rapidly growing compound condiment producer in China
  • sales of the Group covered 360 cities in China, including all tier-1 cities, 32 tier-2 cities and 324 tier-3, tier-4 and lower-tier cities
  • number of distributors of the Group reached 782
  • as of 31 December 2016, the Group introduced a total of 41 flavoring products, 9 dipping sauce products and 15 Chinese-style compound condiment products
  • expansion of e-commerce channels - Tmall and Suning E-commerce
  • As of 31 December 2016, the Group exported products of eight categories to 14 countries and regions, including Hong Kong, Macau, Burma and Malaysia
outlook
  • In 2016, the market size of China’s catering industry increased by 10.8% year-on-year to RMB3.6 trillion, while the total retail sales of consumer goods topped RMB33.0 trillion, a year-on-year increase of 10.4%
  • The market size of the PRC compound condiment is expected to reach RMB148.8 billion by 2020, representing a CAGR of 14.7% over 2015-2020 and 22.1% of the overall condiment market of China
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