SBI E2-Capital Rates Fufeng (HKG:0546) 'BUY'
Hong Kong, Dec 17, 2009 AEST (ABN Newswire) - SBI E2-Capital maintained Fufeng (HKG:0546)(PINK:FFNGY) rating at 'buy', and set its target price at 5.98 Hong Kong dollars. SBI E2-Capital estimated Fufeng will record RMB 915.3 million in 2009.
Stronger-than-expected corn price and industry consolidation will be the growth momentum of Fufeng in the following several years, which MSG price surged from RMB7,719 per tonne in September 2009 to RMB10,200 in November 2009, according to the report.
The industry-wide gross margin has reached 35%+ with the fact that there is no mass capacity expansion from major glutamic acid producers, implying MSG supply will remain at present level in coming 10 months.
Fufeng's explosive earnings growth in short-term initially due to soft raw material costs this year and the high MSG price could extend into at least 1Q FY12/10F. Also, benefited from industry consolidation, Fufeng will likely have a larger market share and less earnings fluctuation.
SBI E2-Capital predicted the FY12/11 earnings will be at RMB1,066.8m compared with FY12/10F figure at RMB1,017.5m.
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About Fufeng Group Limited
Fufeng Group (
HKG:0546) is the world's largest producer of MSG, xanthan gum and a major supplier for a series of bio-fermentation products. The main products of the Group are food additives, animal nutrition, colloid and high-end amino acids. In fiscal 2016, Fufeng generated sales of approximately RMB11.2 billion and profit attributable to shareholders of about RMB1.09 billion. For more information, please visit our website www.fufeng-group.com
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