Possible price hike to mitigate margin pressure
■ Want Want reported FY3/21 revenue growth of 9.5% yoy and net profit growth of 13.9% yoy, in line with our expectations.
■ In 1Q FY3/22F QTD, sales declined yoy for rice crackers, but were still better than the same period in FY3/19. Sales of Hot-Kid milk maintained strong growth.
■ To mitigate the increasing raw material prices, management said it does not rule out possible price hikes. But Want Want will not be the first mover for price increases.
■ For the next step, Want Want will expand its sales growth in SEA markets, and its Vietnam factory is expected to start operations at the end of 2021.
■ Reiterate Add with a new DCF-based TP of HK$8.0.