Oppenheimer Gives Color On Feihe International Following Solid Earnings Results

Oppenheimer Gives Color On Feihe International Following Solid Earnings Results Feihe International's ADY 4Q revenue was stronger than expected, exceeding the Street's/Oppenheimer's expectations and its prior guidance. Lower GM and higher selling expense led to an EPS miss. Revenue and net income guidance for 2011 appears optimistic, above consensus/Oppenheimer's estimate. Oppenheimer believes upside is likely to come from efforts to improve sales efficiency at core retail sales points. Additionally, it estimates the company needs to raise at least $50M to fund the Sequoia repurchase. While additional financing could result in dilution, Oppenheimer believes it will also give ADY more flexibility in terms of business execution. Optimistic guidance. Management guided 2011 revenue of $290M, above the Street's $271.4M/Oppenheimer's $270.6M. Net income guidance was $22-24M. Eighty percent of total sales is expected to come from branded formula sales. Oppenheimer believes upside could come from efforts to improve sales efficiency: ADY has reduced its retail points from 100,000 to 80,000. Oppenheimer has a Perform rating on ADY ADY closed Monday at $9.68