Latest news for Nissin Foods Holdings (OTC:NFPDF) Stock

Nissin Foods is Japan's largest instant noodle manufacturer and was the first in the world to invent and launch instant noodles. It also invented the first instant noodle product in cup containers. Cup Noodles is its global brand, marketed in Asia, the Americas, and Europe. Instant noodles account for more than three fourths of group sales and 80% of operating profits, while Japan remains the key contributor, representing roughly 75% of group sales and 85% of profits. Other products include frozen/chilled noodles, confectionery, and lactic acid drinks.

NFPDF

Key Takeaways:


	Nissin Foods reported its revenue fell 7.1% in the first quarter, even as its profit rose by a similar 7.31% due to falling raw material costs
	The company acquired sister firm Nissin Vietnam last year, hoping to boost its slow growth by expanding from its home China base to Vietnam


By Ken Lo

Nissin Foods Serves Up Profit Gains Even As Revenue Declines

Asia

Earnings

News

Penny Stocks

Markets

TCYMF

UNPSF

Key takeaways：


	Nomura says Nissin Foods is profiting from recent panic buying in Hong Kong, adding it sees more than 30% potential upside to its stock
	The instant noodle maker is valued higher than its peers, suggesting the market thinks it is better positioned to succeed in the vast mainland market


By Jony Ho

One Man&#39;s Loss Is Nissin Foods&#39; Gain in Hong Kong Outbreak

Analyst Color

Long Ideas

Emerging Markets

Analyst Ratings

Trading Ideas

DQJCF

IMHDF

KAJMY

KIKOF

MEJHF

NPEGF

NPSHY

TISCY

TOSBF

TSUKF

YAHOF

YAHOY

22 Stocks Shielded From Most Greek And Chinese Risk

NISSIN FOOD PRODUCTS by Nissin Food Products

Nissin Foods Holdings Co Ltd

Despite Limp Sales, Nissin Tastes Growing Profits On Falling Costs, Price Hike

Quality stocks that would outperform in 2024 - UBS

Nissin Foods Holdings Co (JP:2897) has released an update. Nissin Foods Holdings Co., Ltd. has completed a share buyback, purchasing 1,333,300 of i...

Nissin Foods Completes Major Share Buyback

ACGL

ACWI

AMZN

ANPDY

BYDDF

CHGCF

CONIF

FCNCA

MGDDF

PCCYF

REGN

SHZHY

TTNDY

Nissin Foods Holdings

<h4>Key Takeaways:</h4>

<ul>
	<li>Nissin Foods reported its revenue fell 7.1% in the first quarter, even as its profit rose by a similar 7.31% due to falling raw material costs</li>
	<li>The company acquired sister firm Nissin Vietnam last year, hoping to boost its slow growth by expanding from its home China base to Vietnam</li>
</ul>

By Ken Lo

Instant noodles are serious business in China, where the country&rsquo;s top three Hong Kong-listed players are differentiated not only by their flavors but also their business approaches.

Among the trio,&nbsp;Nissin Foods Co. Ltd.&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/NFPDF#OTC">NFPDF</a>) is less aggressive than competitors&nbsp;Tingyi&nbsp;and&nbsp;Uni-President China, both in terms of product and business expansion strategies. Nissin has drawn on its Japanese roots to cultivate a more upscale image for its Cup Noodle brand, recently introducing high-end bag-sized instant noodles as it tries to recover market share lost to its two more mainstream rivals that harken from Taiwan.&nbsp;

Nissin is also exploring new growth opportunities outside its core markets of Mainland China and Hong Kong, including an ongoing foray in Vietnam.

Despite its efforts, Nissin&rsquo;s broader near-term trends were somewhat lukewarm, based on its&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0513/2024051300170.pdf">latest financial results</a>&nbsp;released last week that showed last year&rsquo;s declining revenue and rising profit trends continuing into this year&rsquo;s first quarter. Its revenue for the period fell 7.1% year-on-year to HK$963 million ($123 million). But its profit grew 7.31% to HK$118 million and its net profit margin also rose to 12.3%, as it benefited from lower flour costs.

If the first-quarter revenue trends continue, the company could register annual revenue this year on par with last year&rsquo;s HK$3.83 billion. But its profit and related profit margin could both improve significantly from last year&rsquo;s HK$330 million and 8.61%, as it benefits from lower flour costs following initial volatility at the opening of the Russia-Ukraine war. Its net profit margin last year was the best in the past five years, outpacing figures typically in the 7% to 8% range.&nbsp;

The three Hong Kong-listed noodle makers have used a traditional playbook of trying to boost their performance by improving the taste and packaging of existing products, and through introduction of higher-margin new products. But as the upgrade strategy delivers diminishing returns, Nissin turned to a price hike in 2022 after flour prices spiked at the start of the Russia-Ukraine war. While such hikes bring in more revenue per unit, manufacturers try to avoid them because they also scare off some customers.

<h3>Revenue Hit</h3>

Nissin&rsquo;s price hike for its two star products, Cup Noodles and Nissin Demae Itcho, in early 2022 was its first such adjustment on the Mainland since 2011. At the time, Tingyi and Uni-President, both with higher market share than Nissin, didn&rsquo;t follow with similar moves. Nissin was sarcastically praised at the time by consumers for its &ldquo;courage&rdquo; to jack up prices. But it had to take the action as its profit margin got squeezed by rising flour prices.

That strategy ultimately worked, at least from a profitability standpoint. Last year Tingyi and Uni-President reported net profit margins of just 3.9% and 5.8%, respectively, while Nissin was comfortably ahead. Nissin gets most of its money from noodles, whereas its two main rivals derive more revenue from beverages than their food offerings, mostly noodles. That distinction has helped to prop up Tingyi&rsquo;s and Uni-President&rsquo;s profitability in the past, since beverages normally carry margins that are around 10 percentage points higher than foods.&nbsp;

Thus, Uni-President&rsquo;s overall profit margin actually masks a much thinner 0.6% net margin for its food sales last year, while its 10.9% margin for beverage sales helped to bring up the overall figure. That shows just how cutthroat the instant noodle market has become, making it extremely difficult for anyone to make significant profits.

To maintain its higher profit margin, Nissin had to endure lower revenue growth last year. Tingyi&rsquo;s revenue for 2023 totaled 80.4 billion yuan ($11.2 billion), including instant noodle-related revenue of 28.8 billion yuan. Uni-President China&rsquo;s revenue of 28.6 billion yuan last year included 9.59 billion yuan from instant noodle sales, both significantly higher than Nissin&rsquo;s HK$3.83 billion.

Despite raising its prices in 2022, Nissin still managed to report revenue growth of 5.2% that year to HK $4.07 billion. But sputtering consumer sentiment on the Mainland due to economic uncertainty has caused the instant noodle market to slow significantly, with Nissin&rsquo;s revenue down 5.8% last year. Despite that, its profit continued to grow on lingering benefits from the 2022 price hikes.

<h3>Dash To Vietnam</h3>

With Nissin&rsquo;s two main markets on the Chinese Mainland and in Hong Kong going nowhere fast, the company acquired 66% of sister company Nissin Vietnam last June, beginning an expansion beyond its traditional home in Greater China. In the first quarter of this year, the company&rsquo;s revenue from Hong Kong and other Asian markets dropped by 3.4% year-on-year.&nbsp;

The company&rsquo;s Vietnam sales actually rose as it reaped rewards from expansion of its local sales channels over the past year. But that growth was offset by lost business in Hong Kong as local consumers crossed the Mainland border in search of cheaper goods in the boomtown of Shenzhen, reflecting shifting consumption patterns. Nissin&rsquo;s Mainland revenue fell by a relatively large 9.1% in the first quarter as consumers reined in their spending.

The factors dragging down Nissin&rsquo;s growth are here to stay, at least in the short term, meaning prospects for its stock this year don&rsquo;t look particularly strong. The shares now trade at a trailing price-to-earnings (P/E) ratio of 16.4 times, roughly the same as 16.6 times and 17 times for Tingyi and Uni-President China. Those relatively high multiples for such low-growth companies make all three stocks look relatively expensive at current levels. In terms of dividends, Nissin&rsquo;s current yield of 3.04% is similar Tingyi&rsquo;s and lower than Uni-President&rsquo;s 5.95%. That means there&rsquo;s no strong catalyst to lift Nissin&rsquo;s shares at the moment.&nbsp;
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

Key takeaways：

<ul>
	<li>Nomura says Nissin Foods is profiting from recent panic buying in Hong Kong, adding it sees more than 30% potential upside to its stock</li>
	<li>The instant noodle maker is valued higher than its peers, suggesting the market thinks it is better positioned to succeed in the vast mainland market</li>
</ul>

By Jony Ho

Who would have imagined? Hong Kong, an international financial center known for its wheeling-and-dealing cool ways, has suddenly been plunged into chaos as it struggles with a major Covid wave. The storm has left a trail of empty supermarket shelves in its wake, &ldquo;plundered&rdquo; by the city&rsquo;s panicked residents.

As unlikely as it seems, that scene has been playing out across Hong Kong during its recent outbreak, reminiscent of more limited runs on items like toilet paper seen early in some western markets early in the pandemic.

But the panic has left a handful of companies looking strangely blessed by the huge demand for their food products. One of those is&nbsp;Nissin Foods Co. Ltd.&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/NFPDF#OTC">NFPDF</a>), a premium instant noodle maker focused on the Chinese mainland and Hong Kong markets. Amid the chaos sweeping Hong Kong over the last week, investment bank Nomura raised its revenue forecast for the company due to the bump in local demand, saying it saw potential upside of 30% or more for the company&rsquo;s stock.

Nomura published a&nbsp;<a href="http://www.etnet.com.hk/www/tc/news/categorized_news_detail_eng.php?newsid=ETE320302216&amp;category=research">report</a>&nbsp;last Thursday showing that Nissin looked set to do well thanks to its 60% of Hong Kong&rsquo;s instant noodle market, as well as it local production to cater direct to the market. It raised its projected growth for Nissin&rsquo;s Hong Kong sales in the company&rsquo;s 2022 fiscal year from 1% to 6.1%. It also adjusted its target price up by 2.7% to HK$7.60, and maintained its &ldquo;overweight&rdquo; rating. Thus, Nissin&rsquo;s closing price of HK$5.68 last Friday implies the stock has a further 34% upside.

The stock has already benefited from the pandemic, even before the Hong Kong outbreak. When Covid-19 first hit the world in 2020, Nissin&rsquo;s share price soared from HK$6 to a record high of HK$9.20. But as things stabilized, the momentum faded and it gave back those gains. Until the more infectious Omicron variant struck early this year, that is, pushing its share price back up to HK$6.55 at one point.

While Nomura might be rooting for the stock, others don&rsquo;t seem quite as bullish. On the day the investment bank released the report, Nissin Foods&rsquo; stock actually dipped by around 1%.

Pandemic aside, the company has been busy improving its production efficiency and capacity as part of its ordinary operation. Last November, it&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1109/2021110900201.pdf">announced</a>&nbsp;that it had secured funding from Hong Kong&rsquo;s Innovation and Technology Commission, and that it&nbsp;<a href="http://www.aastocks.com/en/stocks/analysis/stock-aafn-con/01475/NOW.1097764/all">planned to build</a>&nbsp;new smart production lines with total investment of HK$194 million ($24.9 million) to fully automate its instant noodle production process. But that project won&rsquo;t be complete until 2023, making it too far off to help with the recent spike in demand.

So, why is panic-buying plaguing Hong Kong now after the city managed to control its local situation over the past two years? The answer lies in one word: Omicron. Two flight attendants brought the highly contagious variant to Hong Kong, leading to the current outbreak in a matter of two months. By March 4, the city was recording more than 50,000 new cases daily, and a cumulative total of more than 400,000 people infected.

To deal with the pandemic, the city&rsquo;s government is planning to roll out citywide mandatory testing. Some officials even suggested a lockdown could be coming, mimicking standard practice across the border on the Chinese mainland. Such rumors are the primary source of the latest panic, sending throngs of people to stores vying for daily necessities in case they get locked at home for days at a time.

Nissin&rsquo;s instant noodles are already popular in Hong Kong because they are cheap and easy to store. For those reasons, they have quickly sold out both in brick-and-mortar stores and online platforms during the current outbreak.

More and more Hong Kongers have been flocking to instant noodles over other foods since the pandemic began two years ago as they are forced to eat more at home due to government limits on when restaurants can open and how many people can eat at a table. The wider adoption of working from home has also boosted the trend, giving a lift to Nissin Food.

Even before the latest panic buying, the company had been growing steadily since the global pandemic began. In the&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1105/2021110500297.pdf">first nine months of last year</a>, its revenue rose 6.4% year-on-year to HK$2.86 billion, with its revenue in the mainland Chinese market surging 12.9% to HK$1.82 billion, mostly on its instant noodle sales.

But while its mainland revenue surged, a slowdown in demand in Hong Kong caused its revenue for the city to sink by 3.2% to HK$1.04 billion in the first nine months of last year as the virus remained under control. The nine-month period also saw its gross margin fall by 1.9 percentage points year-on-year to 31.5%, while its net profit declined by 12.3% to HK$231 million, partly due to higher raw material prices.

Gross margin&nbsp;rebound

To address its declining performance, the company in January announced it would raise its instant noodle prices from March 1 by mid-single-digit percentage amounts, representing its first price hike in 11 years. Its Japanese parent,&nbsp;Nissin Foods Holdings&nbsp;(2897.T), also announced in February that it would&nbsp;<a href="https://www.reuters.com/business/retail-consumer/student-budgets-may-be-tested-by-cup-noodle-price-hike-japan-2022-02-04/">increase the prices</a>&nbsp;of its 180 products in Japan in June by a maximum of 13% to offset rising costs associated with flour, including rising transportation costs.

The market doesn&rsquo;t think such moves will weigh on the company&rsquo;s revenue since consumers are less price sensitive towards instant noodles compared to other products, and demand has been strong during the pandemic.&nbsp;

During the first three quarters of last year, Nissin Foods&rsquo; Hong Kong revenue accounted for around 36.4% of its total. As sales surge from the latest panic buying in the city, the company can also probably expect its Hong Kong business to take up a larger share of its total revenue pie. That explains why Nomura is still upbeat about its prospects, even as its stock stumbles.

While Nissin&rsquo;s gross margin fell last year, Nomura believes it could rebound soon since 85% of its products in the Chinese market are becoming more expensive. It estimated the company&rsquo;s gross margin could rise by 0.8 percentage points to 32.3%. Coupled with the spike in demand for its products, the brokerage raised its revenue estimates for the company in 2022 and 2023 by up to 2.8% and its net profit forecast by up to 3.3%.

In addition to its popularity in Hong Kong, Nissin stands out for its Japanese background and its high-end products that are widely popular on the mainland. That premium also shows up in the company&rsquo;s valuation. Annualizing its profit for last year gives it an estimated price-to-earnings (P/E) ratio of around 20 times, higher than the 18 times of&nbsp;Tingyi Holding (OTC:<a class="ticker" href="https://www.benzinga.com/stock/TCYMF#OTC">TCYMF</a>)&nbsp;and 16 times for&nbsp;Uni-President China&nbsp;(OTC:<a class="ticker" href="https://www.benzinga.com/stock/UNPSF#OTC">UNPSF</a>).

One Man's Loss Is Nissin Foods' Gain in Hong Kong Outbreak

In a report issued earlier this week, Nomura analysts Hisao Matsuura, Masaki Motomura and Kiichi Fujita look into a few stocks with low Greece and China exposure amid this period of external instability.
<h3>
	The Context</h3>

	The Nikkei 225 Index continues to fall in July, and now stands below the 20,000 mark, as the Chinese crisis continues to impact on the Japanese equity market. As the Chinese government tries to come up with initiatives to counter the recent tumble in its stock market (until now, with no significant success), Chinese tourists continue to -- unexpectedly -- bolster inbound demand in Japan.

	&ldquo;The Greek debt crisis is also dragging on,&rdquo; the analysts add. After the Greek population decided to vote against the terms of the bailout plan proposed by the European Union, negotiations have restarted. However, &ldquo;with such a large gap between the two sides [Greece and the EU], we think a rapid compromise is unlikely,&rdquo; the experts add.

	So, amid no prospects of a rapid resolution of the Greek situation and plenty of uncertainty surrounding the Chinese crisis, Nomura lists 22 Japanese stocks that seem relatively shielded from risk deriving from both China and Greece.
<h3>
	The Stocks</h3>

	The analysts look for large Japanese stocks that are &ldquo;negatively correlated to the past 60-day yield on the 2-yr Greek bond and the Shanghai Composite Index&rdquo; (ex-forex rates). Take a look below.

	<img alt="" src="https://www.benzinga.com/files/u82070/jap_stocks.png" />

	Source: Nomura, based on Bloomberg data

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Comments

Nissin Foods Holdings

News

Latest news for Nissin Foods Holdings (OTC:NFPDF) Stock

Wednesday, May 22, 2024

Monday, March 07, 2022

Thursday, July 09, 2015