Vitasoy International (0345) H1 2015 earnings summary

Executive summary

• H1 FY2014-15 net sales rose 17%, gross profit 21% and profit attributable to shareholders 22%, led by soy and tea and core markets China and Hong Kong.

• Results exceeded the targeted growth trajectory; management cautioned that favorable business and commodity conditions may not recur each half-year.

Financial highlights

• Net sales increased 17% to HKD 2.7bn from HKD 2.3bn; all segments grew, with China and Hong Kong particularly strong.

• Gross profit rose 21% to HKD 1.35bn from HKD 1.1bn; gross margin improved 1.5 percentage points to 50%.

• EBITDA was HKD 412m, up 13%, with EBITDA margin maintained at 15%.

• Profit before taxation increased 18% to HKD 313m; profit attributable to shareholders rose 22% to HKD 222m, and basic EPS increased 21% to HKD 0.214.

Outlook and guidance

• Hong Kong priorities include disciplined execution of core SKUs and innovations, including warm-season promotions and new tofu offerings.

• China plans to sustain core soy and tea execution while building trial and in-store execution for premium VITASOY VITALITY.

• North America will prioritize bottom-line improvement, portfolio and category mix, and returning the mainstream business to profitability in H2.

• Singapore aims to scale the core operation, expand VITASOY-branded chilled beverages and tofu, and continue growing UNICURD.

• Management expects gearing to rise during the next expansion phase, while monitoring internally generated cash flow and borrowings to maintain a healthy financial position.