SINGAPORE
Company Report
MITA No. 033/06/2006
Hsu Fu Chi Int’l Ltd
24 January 2007
Undiscovered gem
Initiating Coverage
BUY
Strong sales force. Hsu Fu Chi International Ltd's (HFCI) success can be
mainly attributed to their strong sales network, with 63 sales offices
strategically located throughout parts of China. HFCI's 4,000 strong sales
force is used to better manage the range and types of products and the
distribution channels, and also gather market feedback on their products.
This in turn enables HFCI to better understand its customer tastes and to
vary its product recipe accordingly. The high infiltration rate of its sales
force also gives HFCI a strong competitive edge in this fragmented industry,
which gives them the opportunities to have more control over products
pricing.
S$1.14
Fair Value:
S$1.37
Stock Code:
Reuters:
Bloomberg:
HSFU.SI
HFCI SP
Event:
Initiate Coverage
Constant product innovation. HFCI is dedicated to product improvement
and development. This is reflected in their commitment to seek improvement
on their 400 products after each season through feedbacks received from
its sales network. This market information in turn allows HFCI to identify
consumer trends earlier than its competitors and allows HFCI to strengthen
its market leadership position.
General Data
Issued Capital (m)
Mkt Cap (S$m/US$m)
Major Shareholder
795
906/589
Hsu Chen
State of the art manufacturing facilities. HFCI utilizes state of the art
equipment imported from countries such as Germany and Japan at its
production facilities. Some of the equipments are custom-made to the
Group's specification and as such are not easily duplicated by competitors.
This gives HFCI an additional competitive advantage.
(16.9%)
Free Float (%)
15.7
NTA per share (SGD)
0.24
Daily Vol 3-mth (‘000)
-
52Wk High (S$)
1.250
52Wk Low (S$)
0.850
Untapped potential. Export revenue is less than 5% of HFCI's total FY06
revenue. However, HFCI has the potential to penetrate markets well beyond
its shores. This includes undeveloped markets/countries where low price
would be a competitive advantage. We see Vietnam as a potential new
market for HFCI. There are also opportunities for HFCI to tap into the health
conscious and more affluent PRC market. HFCI can also look toward to
having their own distribution channels such as proprietary stores or selling
through vending machines. Mergers and acquisitions, particularly in the
Sachima segment, are also highly probable given their leadership and
financial capabilities.
Initiate with BUY rating. Aided by healthy growth strategies laid out in
the business plan, vast untapped potential as well as strong economic
indicators in China, we believe there is significant growth potential for HFCI.
Using the DCF methodology (9% WACC and 3% terminal growth rate), we
arrive at a fair value of S$1.37, indicating a 20% potential upside. Hence,
we initiate coverage on HFCI with a BUY recommendation.
Rachel Ng
(65) 6531 9810
e-mail: rachel@ocbc-research.com
Year to
30 Jun
Turnover
(RMB m)
EBITDA
(RMB m)
Net Profit
(RMB m)
EPS
(RMB cents)
EPS Growth
(%)
PER
(x)
FY 05
FY 06
FY 07F
FY 08F
1,809.4
2,056.3
2,279.1
2,485.6
282.4
357.6
418.7
465.1
161.7
211.4
256.6
292.6
0.2
0.3
0.4
0.4
33.3
14.9
12.8
24.0
18.0
15.7
13.9
Please refer to the important disclosures at the back of this document.
Hsu Fu Chi Int’l Ltd
Company Background
Hsu Fu Chi International Ltd (HFCI) founded in 1992, is a manufacturer of a
diverse range confectionery products in the People’s Republic of China
(PRC). It key strength lies in its extensive sales network and strong brand
name.
HFCI’s product portfolio can be grouped into 3 major categories: candy
products, cake and cookie products and Sachima products. HFCI adopts a
multi-product strategy under which its products are sold under four primary
brands namely;
(Hsu Fu Chi), DoDo, Chaobii and Mo Bao. HFCI
diverse product range enables it to cater to the varying tastes of consumers
in the PRC which varies regionally as well as seasonally.
Strengths
Strong sales force. One of the key strength of HFCI is its extensive sales
network and as such has mostly done away with the middleman and sells
directly to major retailers. Presently it has 63 sales offices which spans
across China and has more than 4,000 personnel. Each of HFCI’s sales
office has geographical area responsibility and manages the sales and
distribution of products within that area. HFCI’s sales force has multiple
roles, besides managing customers and the range and types of products
sold, the sales force also gathers information and feedbacks on products.
This vital information in turn enables HFCI to vary its product mix in response
to local consumer tastes and preferences. The extensive sales and
distribution network thus gives HFCI a strong competitive advantage in a
fragmented industry over rivals.
Chart 1: Sales office in China
Regional logistic centres
Harbin
Sales Offices
Changchun
Shenyang
Xinjiang
Tangshan
Beijing
Shijiazhuang
Taiyuan
Lanzhou
Tianjin
Xian
Dalian
Qingdao
Linyi
Guannan
Jinan
Zhengzhou
Nanjing
Zigong
Chengdu
Nanchong
Xiangfan
Wuhan
Changde
Chongqing
Changsha
Suzhou
Hefei
Shanghai
Ningb
oHengzhou
Jinhua
Nanchang Wenzhou
Huangshi
Jingzhou
Fuzhou
Jinjiang
Xiamen
Qingyuan
Huizho
Shanta
Guangzhou
Fengga
Foshan
Nanning
Changan
Kaiping
Dongguan
Shenzhe
Zhanjiang
n
Zhuha
Haikou
i
Hengyang
Guiyang
Kunming
Source: Company
Page 2
24 January 2007
Hsu Fu Chi Int’l Ltd
Continual product development. HFCI is dedicated to product
improvement and development. This is reflected by their commitment to
seek improvement on their 400 products after each season through
feedbacks received from its sales network. This market information in turn
allows HFCI to identify consumer trends earlier than its competitor and
allows HFCI to stay ahead of the market hence strengthening their market
leadership position. Coming up with new products is also a strategy for
HFCI to earn higher margins as they are able to price the new products
differently and not have consumers complain about price increases.
(Hsu
Building brand name. The primary brand name of HFCI is
Fu Chi) and this name has been in use for more than a decade and is a
popular brand in the PRC. Hsu Fu Chi has received many accolades and
its popularity is especially notable during the Chinese New Year festivities.
HFCI management is fairly progressive in ensuring consumer loyalty by
marketing and promoting product awareness. In that respect HFCI efforts
seeks to maximize exposure via ensuring its products are located at prime
retail points and at specialty counters. Attractive packaging in bright colours
also ensures increased visibility of its products.
State of the art manufacturing facilities. HFCI utilizes state of the art
equipment imported from countries such as Germany and Japan at its
production facilities. Some of the equipments are custom-made to the
Group’s specification and as such are not easily duplicated by competitors
thus giving it an additional competitive advantage.
Sachima is traditionally handmade, and continues to be made by hand by
HFCI’s competitors. However through many years of R&D, HFCI has
managed to mechanize and automate this labour intensive process. Hence
HFCI is now able to produce Sachima in quantity at low cost and efficient
manner and yet maintaining quality. In a low-barriers-to-entry industry such
as the confectionary industry, an ability to ensure low cost production and
high quality definitively provides a sustainable competitive advantage to
HFCI against competitor.
Opportunities
We see numerous opportunities open to HFCI to increase its revenue and
possibly create a new market segment. Below are some areas we have
identified:
Health conscious market. Like most societies, with rising consumer
affluence there is generally a greater consciousness towards a healthier
alternative. China is no different. The key variance would be that in China
the income gap remains extremely wide between the urban and country
dwellers. So the confectionary market is fairly heterogeneous with demand
for both the original recipe and the more sophisticated healthier alternative.
In so far as HFCI is concern, this non homogeneous market opens up
opportunities to exploit a new untapped market. All HFCI needs to do is to
modify the recipe of its existing product line to come up with a new healthier
alternative. The advantage to HFCI is that its existing range of products is
already widely known and accepted so the resistance against a new product
would be much less. This strategy is widely adopted in Western markets.
Page 3
24 January 2007
Hsu Fu Chi Int’l Ltd
Proprietary distribution channels. While retailing products in
hypermarkets and supermarkets provides the exposure to a large consumer
base, there are also disadvantages. Some of these includes sale on
consignments (i.e. the products remains unsold until sold to consumers),
retailers charge for prime display locations, retailers demand very low price
squeezing margins, retailers also market equivalent own store brands to
compete against established brands.
To overcome all the issues above an alternative to the retailing via
hypermarket is to capitalise on market trends toward speciality stores.
This means manufacturers having own distribution channels/stores. Of
course the initial set up costs would be higher, but this is likely to be offset
with higher margins (after-all they no longer need to share the margins with
the hypermarket) and perceive higher brand value which eventually could
lead to greater pricing power.
Finally, on the other market extreme, if HFCI wants to tap the cheap but
easily available market segment, they could also sell their products via
vending machines. The vending machines should be strategically located
in high traffic areas and will allow busy urbanites to purchase their snacks
with ease. Since 1999 the number of vending machines has developed
rapidly in China. By 2004, vending had grown immensely in China, with
machines becoming increasingly present at many high traffic locations.
While most of the population is not yet accustomed to buying goods from
vending machines, we feel that HFCI can still capitalize on this buoyant
trend, especially as the trend towards snacking is likely to gain ground.
All in all, we see many new and exciting opportunities open to HFCI. It is
now a question of strategy which HFCI wishes to adopt to capitalise on
these potential new growth opportunities.
Developing or immature markets. As of present, export revenue is less
than 5% of HFCI’s total FY06 revenue. We see a potential for HFCI to seek
to expand their geographic coverage. However, HFCI should target only
undeveloped markets/countries where low price would be a competitive
advantage. It should avoid developed countries where the F&B sector is
mature and where domestic manufacturers has the advantage of
understanding consumer preference/taste better. Instead, HFCI should look
into exporting to developing countries with strong economic growth and
with similar tastes. Vietnam would be a worthwhile consideration given
their strong economic growth which indicates strong consumerism not unlike
the one China is experiencing.
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24 January 2007
Hsu Fu Chi Int’l Ltd
Stronger product positioning.Hsu Fu Chi is a well known brand name.
However the products sold under the brand name is usually associated
with the Chinese New Year season. If HFCI is able to overcome this demand
seasonality, there is a huge growth potential. We see a possible way to
overcome this situation is to have continual year long promotion and
marketing to re-educate the market of the acceptance of having HFCI
products all year round. There will be initial investment needed however we
see the potential return to be huge.
Consolidation trends. The confectionary market in China is largely
fragmented and this together with HFCI healthy balance sheet, we see
opportunities for consolidation. One particular segment we see potential
for M&A is in the Sachima market. HFCI’s leadership in this product and
their competitive advantage in its automated production makes HFCI an
ideal aggressor to acquire the other Sachima manufacturers in the market
to gain greater market share or possibly even to monopolize the market.
Risks
Raw materials prices. Movement in raw materials prices is one of the
major risks to HFCI. Prices for raw materials such as sugar, egg, and flour
fluctuate constantly and HFCI is at risk of margin compressions when
prices rise. Although management indicated that they are able to pass on
price increases to consumers given their strong market presence, there is
still a cap to which consumers are able to tolerate the price increases
before they move on to cheaper alternatives.
Low barriers to entry. The confectionery industry in the PRC is highly
fragmented with many small players. For HFCI to maintain its market
positioning and visibility among the numerous competitors is an uphill task.
Furthermore with the barriers of entry being low, there will continually be a
stream of new entrants. So competition is unlikely to diminish.
Seasonality in demand. Since the bulk of HFCI’s revenue comes from
the candy products and most sales are generated during the period prior to
the Chinese New Year season, HFCI is highly dependent on sales during
this time. An earlier Chinese New Year would spell potential trouble for
HFCI as it means the buying period for their candy products is shorter
which implies less revenue.
Food contamination. After many food scares in China, food contamination
is a serious risks for many F&B manufacturers. One isolated case would
be sufficient to deal a massive blow to the brand image and therefore the
sales of HFCI. However, we feel this is not a significant risk since HFCI is
widely known for its quality products as stringent quality checks are
implemented throughout the production process.
Page 5
24 January 2007
Hsu Fu Chi Int’l Ltd
Financial Review and Valuation
Financial review. Despite their preference for a more conservative approach,
HFCI has been able to deliver steady revenue growth at a CAGR of 19.4%
from FY04 to FY06. However, margins declined sharply in 2005 mainly due
to increase in raw material prices as a result of decreased supply in items
such as eggs and flour. 2006 saw the margins picking up a little and going
forward margins should look healthier as prices for eggs and flour have
stabilised in 2006.
3,000,000
2,500,000
41.0%
40.0%
2,000,000
1,500,000
1,000,000
39.0%
38.0%
37.0%
500,000
0
GP Margin (%)
Revenue (RMB '000)
Chart 2: Hsu Fu Chi Revenue and GP Margin
36.0%
2004 2005 2006 2007F 2008F
Year
Hsu Fu Chi Revenue
Hsu Fu Chi GP Margin
Source: Company, OIR estimates
Healthy capital structure. HFCI’s conservative financial management has
resulted in a low gearing level (approximately 11% in FY06) for the company.
We see a potential for an optimisation of its capital structure via debt. This
debt could in turn be used either to acquire to grow or as possible dividends
to return excess capital back to shareholders.
Earnings outlook. With the 2007 Chinese New Year arriving later than
usual (i.e. in mid Feb versus mid Jan in 2006), management feels that this
bodes well for FY07 earnings. Indeed, we do see strong growth in overall
sales through a combination of higher volume sold and higher ASP. While
margins are expected to improve, there might be limited upside to this due
to recent escalating sugar prices. While we understand HFCI is able to
pass on this price increase to their consumers, we see price demand
elasticity in the market.
Page 6
24 January 2007
Hsu Fu Chi Int’l Ltd
BUY Recommendation. HFCI is currently trading at a PER of
approximately 18x. While valuation is not cheap, we still see a potential
upside. Due to the longer Chinese New Year season in 2007, we see
earnings growth to be strong. Furthermore going forward we see many
opportunities in this space that HFCI can capitalize on. Using the DCF
methodology (9% WACC, 3% terminal growth rate) method, we have arrived
at a fair value of S$1.37, which indicates a 20% potential upside. We thus
initiate coverage with a BUY rating.
Industry Overview
Snacking, an emerging trend. Snacking is an emerging trend in China
as a result of economic growth and the progressive Westernization of
Chinese consumer patterns, particularly within large cities. Due to the
demand for convenient food, packaged snacks are now in high demand
especially in large expanding cities.
China’s per capita confectionary consumption is still low at 0.7kg, which is
10% of the level in developed countries and 25% of the global average. As
such, there is ample room for growth, be it in variety or geographic expansion
within the country.
Rising living standards along with robust economic development will help
push spending on confectionery. Consumers in China are also becoming
more selective and cognizant of quality confectionery products, placing
emphasis on packaging and luxury products available in stores.
Great potential in the less developed market. Competition is less
intense in the rural market, which offers great potential. As income rises in
the rural areas and the government accelerates its plan to boost rural
consumption and facilitate rural retail infrastructure, confectionery
consumption in rural areas is expected to grow.
Distribution channels. The fast expanding hypermarkets and supermarkets
are transforming the China food retail landscape. Hypermarkets and
supermarkets fast expansion into cities serve as excellent distribution
channels and provide wide exposure to large consumer base.
While these distribution channels are traditionally aimed at the urban
population, many initiatives have also been implemented to serve the rural
population. China’s Ministry of Commerce targets to build 250k new
farmhouse supermarkets targeting 70% of the counties and villages across
the PRC between 2005 and 2010. This will help tap into the unleashed
consumption needs in local rural areas.
Rise in disposable income. Annual urban household disposable income
is on the rise in China. This provides consumers with more purchasing
power which will in turn boost the snack industry. In the past food
consumption in China was mainly restricted to necessity. With the increasing
affluence and lifestyle changes, Chinese consumers would demand a greater
variety of food which includes convenient foods such as snacks.
Page 7
24 January 2007
Hsu Fu Chi Int’l Ltd
Chart 3: Urban Households Annual Income
10,000
RMB
8,000
6,000
4,000
2,000
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
Year
Urban Households Income
Source: Company, OIR estimates
Product Analysis
Candy. The bulk of HFCI’s revenues are from the sales of candy products
particularly in the months leading up to the Chinese New Year. Candy
products include jellies, peanut crisps, are very well received during the
festive season and account for the majority of group sales. Revenue from
candy products are expected to be higher in FY07 given that Chinese New
Year in 2007 will commence later than usual in mid February. This prolongs
the retail season for these New Year goodies and is expected to rake in
good growth. In terms of profitability candy products enjoy a fairly significant
gross profit margin and this is expected to increase slightly in FY07 and
FY08 as new the production capacity will help it reap economies of scale.
Going forward, we see potential to reduce seasonality in demand in the
candy products by stronger product positioning that will allow them to target
a broader group of consumers, rather than focusing mainly on the Chinese
New Year demand.
Page 8
24 January 2007
Hsu Fu Chi Int’l Ltd
Chart 4: Candy Products
Source: Company
44.0%
43.5%
43.0%
42.5%
42.0%
41.5%
41.0%
40.5%
40.0%
39.5%
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Candy GP Margins (%)
Candy Revenue (RMB '000)
Chart 5: Candy Revenue and Margins
2004 2005 2006 2007F 2008F
Year
Candy Revenue
Candy GP Margins
Source: Company, OIR estimates
Page 9
24 January 2007
Hsu Fu Chi Int’l Ltd
Cookie and Cake Products.
HFCI has approximately 85 cake and cookie products. The major products
under this category are
(Taiwanese style short cakes), high fibre
cookies and
(Japanese style wafer cookies). Although margins
have taken a dive since 2004, we feel that slight improvements would be
experienced in the coming years. Although cake and cookie products make
up the least of revenues, it is nonetheless important as it provides variety
for consumers.
Chart 6: Cookie and Cake Products
Source: Company
45.0%
44.0%
43.0%
42.0%
41.0%
40.0%
39.0%
38.0%
1,000,000
800,000
600,000
400,000
200,000
0
Cake & Cookie GP
Margins (%)
Cake & Cookie Revenue
(RMB '000)
Chart 7: Cake and Cookie Revenue and GP Margins
2004 2005 20062007F2008F
Year
Cake & Cookie Revenue
Cake & Cookie GP Margins
Source: Company, OIR estimates
Page 10
24 January 2007
Hsu Fu Chi Int’l Ltd
Sachima
With over 15 Sachima products, Sachima is one of the most well-known
products of HFCI, and management believes HFCI is the largest
manufacturers of Sachima in the PRC.
Chart 8: Sachima
Source: Company
600,000
27.5%
27.0%
26.5%
26.0%
25.5%
25.0%
24.5%
24.0%
23.5%
23.0%
22.5%
22.0%
500,000
400,000
300,000
200,000
100,000
0
2004
2005
Sachima GP Margins (%)
Sachima Revenue (RMB '000)
Chart 9: Sachimi Revenue and GP Margins
2006 2007F 2008F
Year
Sachima Revenue
Sachima GP Margins
Source: Company, OIR estimates
Page 11
24 January 2007
Hsu Fu Chi Int’l Ltd
Capacity expansion. HFCI’s planned productive capacity is based on the
historical and forecasted production demand during the peak season. In
FY06, HFCI operated on a 90.4% utilization rate during the peak season.
As of present, HFCI is expanding its production facilities in Dongguan.
Commercial production of the new facilities will be carried out in phases
starting 2QFY07. By FY08, the estimated production capacity will be
approximately 213k tonnes.
Production Capacity
(Tonnes)
250,000
92.0%
90.0%
88.0%
86.0%
84.0%
82.0%
80.0%
78.0%
76.0%
74.0%
72.0%
200,000
150,000
100,000
50,000
0
2004
2005
Peak Season
Utilization Rate (%)
Chart 10: Production Capacity & Utilization Rate
2006 2007F 2008F
Year
Production Capacity (Tonnes)
Peak Season Utilization Rate (5)
Source: Company, OIR estimates
Page 12
24 January 2007
Hsu Fu Chi Int’l Ltd
Background Information
Management team. HFCI relies heavily on the experienced management
team to execute the plans and strategies for the company.
Name
Position
Previous Experience
Educational Background
Hsu Chen
Executive Director Founded HFCI in 1992.
Attended Ming Hsin Institute
General Manager of Hsu Chi (Taiwan)
Foods Co. Ltd
General Manager of Taiwan An Gu Foods
General Manager of Hsu Chi (Indonesia)
Foods Co. Ltd
General Manager of Thailand Hua Tai
Liang He Company
Page 13
Hu Chia Hsun
President
Director
& Non executive director of Central Human BS from Tamkang University
Resource and Management and ITAI
Engineering & Construction
from
Andrews
Senior Consultant at Technomic MBA
Consultants
University
Hsu Hang
COO
President of Dongcheng Branch of Diploma from Institute of
Dongguan Taiwan Investment Enterprise World's Journalism
Association (1999-2001)
Sales Director of Taiwan An Gu Foods
(1981-1992)
Hsu Keng
CTO
Responsible for sales and logistics of Diploma from Institute of
Taiwan An Gu Foods Industrial Co Ltd World's Journalism
(1984-1992)
Danny Heng
Financial Controller Financial controller of JK Yaming BA Business Administration
International Holdings (2005-2006)
from Baruch College
Financial controller of Shenzhen Brightway MS from Lubin Graduate
Petrochemical (2004-2005)
School of Business
Finance Director of Nextec Applications
(2001-2004)
Financial Controller of Novena Holdings
(2000-2001)
Regional Internal Audit Manager of Philips
Electronics Singapore (1997-2000)
24 January 2007
Hsu Fu Chi Int’l Ltd
Production process. Stringent quality controls are implemented in the
course of production from the receipt of raw materials to before products
are packaged. Raw materials used in production include flour, eggs, sugar,
sugar syrup, butter oil and milk powder.
Candy products production process
Inspecting raw
materials
Input of raw
materials
Heating and
Melting
Filtering
Selection
Cooling
Shaping
Flavouring
Forming and
shaping of
products
Quality Checks
Cake & cookies production process
Inspecting raw
materials
Input of raw
materials
Mixing
Packaging
Quality checks
Cooling
Baking
Sachima production process
Inspecting raw
materials
Quality check
Input of raw
materials
Mixing flour
Shaping & cutting
Mixing with sugar
Fermenting
Frying
Selection &
packaging
Source: Company
Page 14
24 January 2007
Hsu Fu Chi Int’l Ltd
Hsu Fu Chi's Key Financial Data
EARNINGS FORECAST
Year Ended 30 Jun (RMB m)
Revenue
Cost of sales
Other Income
Operating Expenses
Finance costs
Profit before tax
FY05
FY06
FY07F
FY08F
1,809.4
2,056.3
2,279.1
2,485.6
-1,128.8
-1,273.3
-1,390.7
-1,508.2
6.6
32.8
10.0
10.9
-381.9
-7.3
-495.7
-7.7
-599.4
-6.8
-653.7
-5.0
184.2
241.9
292.2
329.6
Tax credit/(expenses)
-22.5
-30.6
-35.7
-37.0
Profit after tax
161.7
211.4
256.6
292.6
BALANCE SHEET
As at 30 Jun (RMB m)
FY05
FY06
FY07F
FY08F
Cash
183.9
133.3
236.8
393.6
Other current assets
584.4
618.1
676.8
738.1
Fixed assets
Non-current assets
792.5
141.7
938.3
138.8
1,087.3
138.8
1,156.8
138.8
Total assets
1,718.2
1,873.5
2,187.0
2,476.8
Current liabilities (excl. debt)
703.3
699.1
676.5
673.6
Debt
260.0
186.7
136.7
86.7
Other long term liabilities
Total liabilities
30.0
733.3
30.0
729.1
30.0
706.5
30.0
703.6
984.8
1,144.4
1,480.5
1,773.1
1,718.2
1,873.5
2,187.0
2,476.8
Shareholders equity
Total equity and liabilities
Page 15
24 January 2007
Hsu Fu Chi Int’l Ltd
CASH FLOW
Year Ended 30 Jun (RMB m)
FY05
Operating cash flow before working capital
changes
Working capital changes
Tax and net interest expenses
Other operating cash flow
Net cash from operations
FY06
FY07F
FY08F
298.7
391.8
446.7
497.8
38.4
-197.5
-8.5
-14.8
-46.2
-49.4
-44.2
-46.3
0.0
0.0
0.0
0.0
291.0
144.8
394.0
436.7
Investing cash flow
-270.7
-271.9
-293.2
-225.5
Net change in debt
-34.0
148.5
399.5
-86.7
Net cash flow
-13.7
21.5
500.3
124.6
Cash at beginning of year
124.1
110.4
131.9
632.2
Cash at end of year
110.4
131.9
632.2
756.8
24.0
18.0
15.7
13.9
Key Ratios
PER(x)
Price/Book (x)
4.7
4.0
3.1
2.6
EV/EBITDA (x)
16.5
13.0
10.7
9.2
ROE (%)
16.4
18.5
17.3
16.5
Net Cash
11.1
Net Cash
Net Cash
Net Gearing (%)
Source: Company data, OIR estimates
Page 16
24 January 2007
Hsu Fu Chi Int’l Ltd
SHAREHOLDING DECLARATION:
The analyst/analysts who wrote this report holds NIL shares in the above security.
RATINGS AND RECOMMENDATIONS:
OCBC Investment Research’s (OIR) technical comments and recommendations are short-term and trading
oriented. However, OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12month investment horizon. OIR’s Buy = More than 10% upside from the current price; Hold = Trade within +/
-10% from the current price; Sell = More than 10% downside from the current price.
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completeness, and you should not act on it without first independently verifying its contents. Any opinion or
estimate contained in this report is subject to change without notice. We have not given any consideration
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liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the recipient
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and affiliated corporations together with their respective directors and officers may have or take positions in
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For OCBC Investment Research Pte Ltd
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Page 17
Carmen Lee
Head of Research
24 January 2007