Tingyi: Instant Noodle Sales Continue to Face Near-Term Pressure; HKD 12.70 Fair Value Intact

We reviewed our 2024 estimates for narrow-moat Tingyi ahead of the release of its interim results. We think the company would still face headwinds in instant noodles sales due to sluggish consumer sentiment and reduced consumption by migrant workers. However, we expect these to be offset by stronger growth in the beverage segment. As such, our 2024 revenue and profit projections are unchanged. We retain our fair value estimate at HKD 12.70 per share, which implies 20 times 2024 price/earnings, 9 times enterprise value/EBITDA, and 4.9% dividend yield. We think the current share price is undervalued, supported by an attractive dividend yield of 6.5%.