Tue, Jan 14, 2014 - Page 14 News List

Good year for Grape King Bio: analysts

NEGATIVE CONSUMER SENTIMENT:A scandal over adulterated oil last year resulted in low consumer confidence, but analysts forecast an upswing in momentum this year

By Kevin Chen  /  Staff reporter

Grape King Bio Ltd (葡萄王), a supplier of probiotics and mushroom mycelium health foods, last week reported revenue had increased 22.61 percent last year from 2012, shrugging off food safety concerns that had impacted consumer sentiment.

Analysts said the nation’s aging population and the company’s plans to expand domestic distribution channels and tap overseas markets would provide the firm with more upside momentum this year.

A scandal over adulterated edible oil in November last year spread to other edible products and damaged investor confidence in Taiwan’s overall food, health food and even drugs sectors.

At one time, the issue had caused Grape King’s share price to drop as low as NT$129 on Nov. 12, but the price has recovered since then and ended trading in Taipei yesterday at NT$137.5.

However, the company’s shares have still underperformed the benchmark TAIEX by 11.2 percent over the past month, an indication that investors found no catalyst to push the stock higher.

The 43-year-old Grape King is known for its “Come Best” tonic drink and “Granoderma King” nutritional supplement.

It also has strengthened distribution channels to market both its own-brand products and those of its 60 percent owned direct-sales subsidiary, Pro-Partner Inc (葡眾).

The company, based in Taoyuan County’s Jhongli (中壢), on Thursday last week said in a stock exchange filing that its revenue for last year increased to NT$5.65 billion (US$188 million) from NT$4.61 billion in 2012.

SinoPac Securities Investment Service (永豐投顧) forecast Grape King’s sales for this year would grow by 18.5 percent year-on-year to NT$6.5 billion, supported by its new product launches that range from health supplements to beauty and facial products, along with a continuously expanding direct sales system run by Pro-Partner.

Pro-Partner was the fourth-largest direct sales company in the nation in 2012 in terms of sales, with a 6.4 percent market share. It had about 116,000 members as of the end of last year and that number is expected to keep expanding at an annual rate of between 25 percent and 30 percent, Yuanta Securities Corp (元大證券) said.

Yuanta analyst Yvonne Tsai (蔡昀真) said in a client note that she expects Grape King’s revenue to increase by 18.7 percent this year from last year.

She maintained a “buy” rating on the stock, expecting the company to take advantage of an aging population by introducing more products that help enhance people’s immune system.

Daiwa Capital Markets analyst Christine Wang (王琦清) believes Grape King’s efforts to expand its domestic distribution channels and seek overseas expansion opportunities would help boost its earnings growth.

Grape King may tap overseas markets either through its own brand or through business partnerships, Wang said in a recent report. The company may focus on countries that have large direct sales markets and clear regulations, such as Malaysia and Thailand, she added.

During the first three quarters of last year, the company posted a net profit of NT$580 million, up 30.95 percent from the same period the previous year.

Earnings per share were NT$4.45 in the nine months to September, compared with NT$3.40 a year earlier.

SinoPac analyst Fion Chen (陳奕均) predicted that Grape King will report a net profit of NT$782 million for last year, or NT$6.01 per share, and a net profit of NT$930 million, or NT$7.15 per share, for this year.

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