JP Morgan: Maintains "overweight" rating on U-PRESID CHINA (00220), raises target price to HK$10

J.P. Morgan released a research report stating that it maintains a "overweight" rating on Uni-President China Holdings Ltd (00220), with the target price raised from HK$8 to HK$10. The bank believes that in a challenging economic environment, the company's stable business nature, favorable cost trends this year, and high dividend payout ratio will be favored by the market. J.P. Morgan pointed out that Uni-President's sales and profits increased by 6.1% and 10.9% respectively last year. Excluding the disposal gain from assets in 2023, adjusted profits increased by 31.8% year-on-year, meeting market expectations. In the first two months of this year, Uni-President's sales of beverages and noodles both achieved double-digit growth, with channel inventory levels improving. This indicates strong retail sales and a continuously increasing acceptance of the company's products by consumers, highlighting the company's strong food innovation capabilities. The bank stated that the company has no plans to follow major competitors in raising instant noodle prices, but will decrease discount levels and change product mix. The bank predicts that sales and profits this year will increase by 7.7% and 15.5% year-on-year, benefiting from a 70 basis point increase in gross profit margins.