Vinda (3331 HK, HK$3.60) – FY12/08A results beat the market expectation

The actual net profit is 20.6% ahead of market consensus (RMB137.5m) or 4.3% higher than the highest estimate (RMB159m), which might trigger a moderate re-rating in short-term. We are optimistic on the company’s performance in 2009 given: 1) demand for household paper products is relatively inelastic and should be minimally affected by the economy slowdown; 2) the steep drop in wood pulp price will reduce the company’s production cost apparently.

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Sales Post: Trading BUY on Vinda International (3331 HK)

Vinda (3331 HK) is one one of the four largest tissue paper manufacturers in China, with annual capacity of 0.3m tones as of the end of FY08. According to consensus, the company earnings are projected to surge by 74.8% YoY to HK$137.00m. The group’s earnings for FY09 are projected to be HK$238.3m. The company is trading at FY08 PE of 21.5x and FY09 PE of 12.7. The company’s counterpart, Hengan International (1044 HK) is trading at FY09 PE of 16.7x. Compared to its peer, the company’s valuation looks attractive. Trading BUY. Contributor: Andes Cheng,Vice President - Institutional Dept., SBI E2-Capital

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