Morningstar

China Feihe Ltd Ordinary Shares 06186

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Stock XHKG Rating as of
HK$6.35 +0.17 (2.75%)
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As of Delayed Price Closed

Company Report

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China Feihe Earnings: The Super-Premium Segment Charged Profit Growth; Maintaining Fair Value

Jacky Tsang

Narrow-moat China Feihe’s first-half revenue and net income exceeded our estimates thanks to the strong momentum of the new premium products. Management noted that channel inventory has returned to a healthy level and is optimistic about faster revenue growth in the second half. This is directionally consistent with our expectations, but we still raised our second-half sales and net income projections by 2% and 9%, respectively, to account for the better-than-expected performance of its premium lineups.

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Price vs Fair Value

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06186 is trading at a 194% premium.
Price
HK$6.35
Fair Value
HK$8.40
Uncertainty
High
1-Star Price
HK$4.34
5-Star Price
HK$5.15
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Feihe had early-mover advantage in the infant milk formula market in China, which gives the company an advantage in distribution that would take a long time for new entrants to replicate.

Bears

Any potential mishap in Feihe’s product quality would be a heavy blow to its brand reputation and revenue, with potentially long-lasting adverse impact.

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Trading Information

Previous Close Price
HK$6.18
Day Range
HK$6.10–6.39
52-Week Range
HK$3.39–6.46
Bid/Ask
HK$6.34 / HK$6.35
Market Cap
HK$57.58 Bil
Volume/Avg
20.1 Mil / 18.3 Mil

Key Statistics

Price/Earnings (Normalized)
10.41
Price/Sales
2.66
Dividend Yield (Trailing)
4.91%
Dividend Yield (Forward)
5.14%
Total Yield
4.92%

Company Profile

China Feihe is the number one infant milk formula producer in China, with a premium market positioning among domestic and foreign competing brands. The company utilizes the flagship Astrobaby lineup to promote its “more suitable for Chinese babies” proposition. It has a nationwide distributor network covering maternity stores, supermarkets and traditional retailers, as well as a direct sales network in e-commerce.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Large Value
Total Number of Employees
9,436
Website
https://www.feihe.com

Competitors

Valuation

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Metric
06186
600887
02319
Price/Earnings (Normalized)
 10.4118.7816.30
Price/Book Value
 2.093.491.72
Price/Sales
 2.661.540.81
Price/Cash Flow
 11.1410.6010.91
Price/Earnings
06186
600887
02319

Financial Strength

Metric
06186
600887
02319
Quick Ratio
 3.010.620.82
Current Ratio
 3.340.860.99
Interest Coverage
 96.295.713.30
Quick Ratio
06186
600887
02319

Profitability

Metric
06186
600887
02319
Return on Assets (Normalized)
 10.35%6.47%4.20%
Return on Equity (Normalized)
 14.83%18.38%11.69%
Return on Invested Capital (Normalized)
 12.17%7.99%5.36%
Return on Assets
06186
600887
02319

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