UBS: Reiterates "Buy" rating on U-PRESID CHINA (00220) and raises target price to 9.14 Hong Kong dollars.

UBS released a research report stating that it has raised its net profit forecast for U-PRESID CHINA (00220) for the fiscal years 2024 to 2026 by 10% to 13%, and has also increased its target price from HK$8.05 to HK$9.14, maintaining a "buy" rating. The company's net profit for the first nine months of this year increased by 11.4% year-on-year, slightly below the market's general expectation of a 13% increase, but still better than the bank's expectations. UBS believes that the continued consolidation of the noodle and beverage sectors under the Uni-President group will moderately improve its research and development cost efficiency. The bank expects profit growth in the fourth quarter to be primarily driven by revenue growth. As the tax benefits from the earlier losses in the beverage sector gradually disappear, the effective tax rate may increase slightly. The report cited Uni-President management as saying that revenue growth will further accelerate in October this year, mainly due to the noodle sector. The bank believes that, given the price increases in the noodle and beverage sectors of competitor TINGYI (00322), Uni-President will further reduce sales discounts to distributors.