Here are two fast-growing Chinese consumer stocks that investors can consider buying now. –
Consumer products manufacturers provide essential everyday products for individuals.
Let’s have a quick look at two fast-growing consumer product manufacturers in Hong Kong and mainland China that investors can consider buying now.
Vitasoy International Holdings Ltd (SEHK: 345) is famous for its flagship Vitasoy-branded soya milk.
In the last five years, Vitasoy grew its revenue from HK$4.5 billion (US$580.6 million) in FY2014 to HK$7.5 billion in FY2019. Similarly, net profit grew from HK$306.7 million to HK$695.9 million over the same period.
This implies annualised revenue and net profit growth of 13.62% and 22.73% respectively. Vitasoy released its FY 2020 results in mid-June, reporting a 4% decline in revenue and a 23% decrease in net profits.
This setback was due to Covid-19 affecting earnings as individuals were confined to their homes due to lockdowns.
On a more positive note, management mentioned that it saw sales recovering in the second quarter in China and also forecast sales improving in its other markets in the second half.
Longer term, Vitasoy’s prospects seem bright in my opinion. This is because the plant-based nutrient market is gaining traction.
This bodes well for Vitasoy as it is well-positioned to ride this wave. Also, Vitasoy is expanding to other provinces in China and the Philippines, thereby increasing its potential customer reach.
What all this means is that Vitasoy has two tailwinds behind it and I believe it should do well looking out to the future.
Nissin Foods Co Ltd (SEHK: 1475) is a leading instant noodles manufacturer with multiple brands under its wings, such as Cup Noodles, Demae Iccho, Doll, and others.
Nissin Foods grew its revenue from HK$2.63 billion in FY2016 to HK$3.09 billion in FY2019. Net profits increased in tandem from HK$91 million to HK$251.0 million over the same period. This implies an annualised revenue and net profit growth of 5.50% and 40.3% respectively during the period.
Longer-term, Nissin is looking to strengthen and expand its position in the premium instant noodles markets in Hong Kong and mainland China.
It plans to do this with its “DNV” strategy – Discover New Value, Distinguish New Value and Distributed New Value.
This entails product innovation and development, such as introducing new flavours, improving its brand awareness and value, innovative packaging and in-store presentation. It also plans to focus on expanding its sales network and distribution channels.
Overall, Nissin has started to execute on these plans. With instant noodles being a staple in Hong Kong and mainland China, Nissin seems well-positioned to capture more market share going forward.
This leads me to believe that Nissin Foods in the longer term, like Vitasoy, has a bright future.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Saket Jhajharia doesn’t own shares in any companies mentioned.
The Motley Fool Hong Kong Limited(www.fool.hk) 2020