Analysts remain positive on Grape King Bio Ltd’s (葡萄王) business outlook for this year on the back of firm contributions from subsidiaries and an increase in capacity, which have allowed the company’s shares to recover steadily since early January.
While China has launched a campaign to crack down on illegal advertising and other contraventions, putting sales of health products under greater scrutiny, the company is expected to benefit from the stricter regulatory oversight, as it produces quality products for legitimate clients and is likely to benefit from a healthier industry environment, analysts said.
Grape King shares closed at NT$203.5 on Wednesday last week ahead of the 228 Peace Memorial Day weekend, an increase of 13.7 percent from NT$179 on Jan. 7.
With last year’s earnings per share (EPS) standing at NT$9.57, the supplier of probiotics and mycelium health foods last week announced it would distribute a cash dividend of NT$6.5 per common share, representing a payout ratio of 67.92 percent.
Last year, net profit fell 4.16 percent to NT$1.295 billion (US$42.1 million) and consolidated revenue decreased 2.18 percent to NT$9.18 billion, while gross margin was 79.81 percent and operating margin was 25.59 percent, it said.
The company, known for its Come Best tonic drink and Granoderma King nutritional supplement, counts its direct-sales subsidiary, Pro-Partner Inc (葡眾), among its major growth engines, with manufacturing and sales channel support from its Taiwan and Shanghai operations.
“We expect a better outlook for Pro-Partner in Taiwan, as it is now able to dedicate more effort to marketing to restore and revamp its brand value after the end of a major lawsuit, which was announced in January,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Tuesday. “The company expects to launch 30 new products to drive Pro-Partner’s sales up 5 to 10 percent year-on-year this year, leveraging its 210,000 members.”
As Grape King aims to grow its China sales by 50 percent annually this year and expects limited impact from the regulatory changes on retailers and health products in China, Yuanta said the company’s EPS would reach NT$10.87 this year and NT$12.17 next year, while consolidated sales would increase 11.5 percent this year and 8.4 percent next year.
A new plant in Taoyuan’s Longtan District (龍潭) is expected to begin operating in the second or third quarter to supply probiotic products to clients in China and Southeast Asia, which would provide an important long-term driver, SinoPac Securities Investment Service Corp (永豐投顧) said.
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