Fufeng Group Limited (HKG:0546) In-line 1H10 With Net Profit Increased By 30%, A Piper Jaffray (NYSE:PJC) Research Report
Fufeng Group Limited (HKG:0546) (PINK:FFNGY) 1H10 net profit increased by 30% YoY to Rmb460mil, in line with our estimate. Profit margin was largely in line with our estimate, and a higher subsidy income has offset the impact of lower-than-expected fertilizer sales. Moreover, robust volume growth in core products (xanthan gum + 127%, MSG + 80%) have boosted our confidence in Fufeng's strategy in gaining market share. We reiterate OW and maintain our PT of HK$ 6.7 (7.5X FY11E EPS of HK$0.9) on an undemanding valuation of 6.2x FY11 P/E (27% discount to peers).