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Want Want China Holdings Ltd 00151

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Morningstar’s Analysis

Currency in HKD
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Want Want To Face Slower Long-Term Growth; Lowering FVE to HKD 6.50 per Share

Jacky Tsang Equity Analyst

Analyst Note

| Jacky Tsang |

We transfer coverage of Want Want China, maintaining our narrow moat rating but lowering our moat trend rating to negative from stable as we think the current portfolio and channel composition could gradually erode the company’s ROIC going forward. We lower our fair value estimate to HKD 6.50 per share, from HKD 7.00 per share, which implies a forward P/E of 14 times, below its historical average, reflecting our more muted growth assumptions. Our fair value estimate also implies an EV/EBITDA of 10 times and FCF yield of 7%, broadly in line with domestic peers. We think its share price has largely priced in any positive catalysts from the recently announced price hikes and we remain cautious on its longer-term prospects based on the current business strategies.

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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