Morningstar

Morningstar, Inc.

Equity Bottom-Up

Narrow-moat Nissin Foods’ fourth-quarter profits came in significantly below our expectations and fell short of the initial full-year guidance by 8% excluding the impact of a JPY 9.6 billion impairment loss. Management has guided a somewhat conservative outlook for 2019 with 3% growth in the top line and a 12% growth in profits excluding the impact of impairment loss. Moreover, it has revised down its 2020 mid-term sales and profit targets by 13% and 10%, respectively, to reflect overseas…

Narrow-moat Nissin’s third-quarter core profits (gross profits less SG&amp;A) trended slightly ahead our expectation, with sales up 2.4% (like for like 3.7%) and profits down 7.3% (LFL 6.4%). The announcement of 4%-8% price hikes on domestic Nissin instant noodles was a positive surprise as management denied the possibility at the first-half result briefing. We expect price hikes on the moaty Nissin brand will take about a year to kick in and have lifted our profit forecasts by 4-5% from fiscal…

Narrow-moat Nissin Foods' second-quarter sales and core business profits (gross profits – SG&amp;A) trended largely in line with our expectations, with sales up 1.8% and core profits down 6.5% year on year. Despite a tough comparison hurdle, the moaty domestic instant noodle business managed to maintain margins amid cost inflation while rising costs in the U.S. and Brazil along with adverse movement of the Brazilian real depressed profits. We expect profits to rebound in the second half when price…

Narrow-moat Nissin’s first-quarter sales and core business profits (gross profits minus selling, general, and administrative expenses, or SG&amp;A) fell short of our expectation, with sales up 2% and core profits down 10% year on year. While the moaty domestic instant noodle business managed to expand margins amid cost inflation, overseas weakness, specifically in the U.S. and China, has wiped out domestic profit growth. Still, gain on sale of a domestic property contributed JPY 5.2 billion profits…

Narrow-moat Nissin Foods’ second-quarter earnings slightly exceeded our expectations but seem largely in line with the company’s target. The moaty domestic instant noodle business remains a key driver. While growth and margins improved in Brazil and China, the two overseas markets most critical to Nissin’s long-term growth, we remain skeptical about the company’s aggressive top-line growth target--particularly for China, where we think a fairly saturated market and rising health awareness may…

Japan

NISSIN FOODS HOLDINGS CO.,LTD. produces instant noodle and processed food products.  The Company also develops pharmaceuticals.  NISSIN FOODS operates production facilities in overseas countries including Hong Kong, India, U.S., Singapore, and other countries.

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