Goldman Sachs: Maintains "neutral" rating on Tingyi (00322) with a target price of 10.6 Hong Kong dollars.

Goldman Sachs released a research report stating that it gives TINGYI (00322) a "neutral" rating with a target price of 10.6 Hong Kong dollars. The bank cited Master Kong's management as saying that last year's sales may be affected by price increases (instant noodle prices were raised in October last year), but they estimate that last year's net profit growth target (10% to 15%) has upside potential. The bank predicts that Master Kong's fourth-quarter revenue performance last year will be better than the third quarter, with sales of carbonated drinks/instant noodles showing positive growth compared to the same period last year. Due to a quarterly and year-on-year decrease in flour prices in the fourth quarter, raw material costs have a positive impact on profit margins, offsetting the impact of rising palm oil prices. Goldman Sachs stated that Master Kong's market share for instant noodles continued to decline in the fourth quarter (although the decline was narrower than the previous quarter), while the growth in beverage sales mainly came from 500ml regular packaging, offsetting the decline in sales of 1-liter large packaging beverages due to price increases. Looking ahead to 2025, Master Kong hopes that revenue will continue to grow steadily by 2025, and net profit margins will continue to improve. The company's goal is to return to the previous peak net profit in 2025 through portfolio upgrades, the results of pricing actions in 2024, and improvements in operational efficiency (the company had a net profit of over 4 billion RMB in 2020); the management emphasizes that the long-term goal is to expand profit margins and aims to double the net profit margin.