Uni-President Enterprises Co (UPE, 統一企業) shares fell by more than 3 percent in two trading sessions this week on the local bourse after the company last week released a relatively cautious outlook for this year.
Uni-President chairman Alex Lo (羅智先) on Friday last week said that the company’s sales in China might be impacted by severe price competition, as declining feedstock costs have given the company’s Chinese peers room to slash prices.
Lo said Uni-President China Holdings Ltd (統一企業中國) — the Taiwanese company’s pricipal unit in China, the shares of which are traded on the Hong Kong stock market — plans to build its brand by employing a “3M” strategy focusing on manufacturing, marketing and management, and staying away from competing through prices.
However, the strategy might require more time to generate results, analysts said.
Uni-President shares closed 2.65 percent lower at NT$51.5 on the local bourse yesterday. They have risen 2.59 percent so far this year, compared with the TAIEX’s 3.6 percent increase over the same period, Taiwan Stock Exchange data show.
“Amid an economic slowdown in China, price competition might continue to have a significant impact on Uni-President China this year,” SinoPac Securities Investment Service Co (永豐投顧) said in a research note.
However, there are some brokerages that are optimistic about Uni-President’s prospects for this year.
Saying the launch and strong sales of the company’s milk tea and pear juice offerings reinforced Uni-President’s reputation as an innovator, UBS Securities Pte Ltd predicted that the company’s beverage sales and profitability might pick up this year.
In addition, the company’s upcoming products over the next three years would help it gain market share, UBS said.
Food safety is Uni-President’s major concern in Taiwan this year, and the company plans to spend about 2 percent of its revenue on related issues.
In the first three months of the year, the company’s consolidated sales declined 2.02 percent from a year earlier to NT$104.94 billion (US$3.35 billion), stock exchange data showed.
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