Tingyi's 1Q Results Were in Line, but Beverage Market Share Loss Worsened; Shares Remain Overvalued

Tingyi (322 HK): Leveraging of Global Know-How

Tingyi Again Misses Our Estimates, Headwinds Remain

Leading Independent Investment Research, Morningstar, Inc.

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Equity Bottom-Up

Tingyi’s third-quarter earnings of $220.8 million came in ahead of our expectations, owing to better-than-expected revenue from the beverages segment, which improved from a 65% year-on-year decline in the first half to a year-on-year drop of only 1% in the third quarter. We raise Tingyi’s revenue growth and gross margin forecasts to reflect the better-than-anticipated performance. Thus, our fair value estimate increases to HKD 5.50 from HKD 4.50 per share, and our uncertainty rating changes to high from very high.However, we maintain our no-moat and stable trend ratings, given its bearish long-term outlook, and we think shares are overvalued at current levels, trading at a P/E ratio of 43 times and a dividend yield of 1.5% for 2016.Analyst: Allen Cheng

Tingyi’s third-quarter earnings of $220.8 million came in ahead of our expectations, owing to better-than-expected revenue from the beverages segment, which improved from a 65% year-on-year decline in the first half to a year-on-year drop of only 1% in the third quarter. We raise Tingyi’s revenue growth and gross margin forecasts to reflect the better-than-anticipated performance. Thus, our fair value estimate increases to HKD 5.50 from HKD 4.50 per share, and our uncertainty rating changes to high from very high.However, we maintain our no-moat and stable trend ratings, given its bearish long-term outlook, and we think shares are overvalued at current levels, trading at a P/E ratio of 43 times and a dividend yield of 1.5% for 2016.Analyst: Allen Cheng

Tingyi's Q3 Earnings Beat Our Forecast; Fair Value Estimate Raised but Shares Overvalued

Tingyi Holding

Tingyi's Q3 Earnings Beat Our Forecast; Fair Value Estimate Raised but Shares Overvalued