Vitasoy International (0345) H2 2018 earnings summary

Executive summary

• FY18 revenue rose 21% to HK$6.5bn; profit to shareholders increased 14%, exceeding the full-year target.

• H2 revenue grew 18% YoY and operating profit increased 26%; Mainland China remained the leading growth market.

Financial highlights

• Gross profit rose 19%; gross margin was maintained despite higher sugar, milk powder, and paper-carton costs, supported by manufacturing efficiency.

• EBITDA was ~HK$1bn, up 19%; profit before tax increased 22% to HK$803m.

• Profit to shareholders rose 14%, partly offset by higher income tax, mainly related to Mainland China.

• On a constant-currency basis, revenue increased 18% and profit to shareholders rose 11%.

Outlook and guidance

• FY19 growth is expected to be more moderate but solid.

• Brand-equity, infrastructure, and management-capability investments will increase to support sustainable growth and long-term positioning.

• Mainland China plans continued investment in VITASOY brand equity, commercial activity, and its physical presence; e-commerce remains an expanding channel.