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Want Want China Holdings Ltd - Stock Quote 00151

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Morningstar's Want Want China Holdings Ltd Stock Analysis

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Pricing Power Key to Weather Mounting Commodity Prices for Packaged Food Firms; Our Top Pick Is Yili

Jacky Tsang Equity Analyst

Analyst Note

| Jacky Tsang |

The recent acceleration in commodity prices as a result of the Russia-Ukraine conflict has exacerbated the margin pressure on packaged food companies brought about by supply disruptions throughout 2021. Various food and beverage companies in China have engaged in price hikes since the third quarter last year to mitigate margin compression. We continue to highlight Yili as our top pick, with our fair value estimate at CNY 46 per share, as we think the premiumization trend and continued penetration of dairy products in China are unchanged. The raw milk cost curve continued to moderate in early March, which should mitigate margin pressure observed since the second half of 2021. Robust sales reported for January and February at 15% growth year on year also confirm our constructive view. We expect categories with more room to maneuver on premiumization and higher concentration of share to command stronger pricing power and face lower margin pressure in the near term.

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Want Want China Holdings Ltd's Company Profile

Business Description

Want Want is a market leader in the China packaged food and beverage space. The company was founded in 1962 in Taiwan and entered the mainland Chinese market in 1989. Its flagship products, such as Hot-Kid milk and Want Want rice crackers, are market leaders in the respective sub-segments. With a primary focus in mainland China, the company also exports to overseas markets. As at March 2021, Want Want China had 422 sales offices, 35 production bases and 81 factories on the Chinese mainland and worked with around 9,000 distributors.

132 Nathan Road, Unit 918, 9th Floor, Mira Place, Tower A
Hong Kong, Hong Kong
T +852 27307780
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Sep 30, 2017
Fiscal Year End Mar 31, 2022
Stock Type
Employees 39,970