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Uni-President to benefit from China consumption growth: Goldman Sachs

2011/07/22 19:30:43

Taipei, July 22 (CNA) Goldman Sachs said Friday that Uni-President Enterprises Co. Ltd., one of Taiwan's leading food makers, will benefit from strong consumption growth in the China market.

In a research note, Goldman said robust sales growth in the mainland market is expected to boost Uni-President's earnings, while stable supply in raw materials in China, such as sugar and wheat, will likely lower the company's operating costs.

The brokerage said the food company could see its operating margin in China reach as much as 5.2 percent in 2011.

Uni-President is one of the so called "China concept" stocks that have established close business ties with the mainland by operating a broad production base there.

In addition, Goldman said Uni-President's profitability will be further boosted by the earnings contribution made by its profitable subsidiaries, including President Chain Store Corp., which runs the 7-Eleven convenient store chain in Taiwan, tin plate and tin can supplier Ton Yi Industrial Corp., and biotech firm ScinoPharm Taiwan, Ltd.

The brokerage expects Uni-President to post an earnings per share of NT$2.42 (US$0.08) in 2011, NT$2.98 in 2012 and NT$3.47 in 2013, compared with NT$2.55 recorded in 2010.

Goldman said it has raised its recommendation on Uni-President shares to "buy" from "neutral," while hiking the target price on the stock to NT$58 from NT$36.

Uni-President closed up 2.19 percent at NT$49.00 on the Taiwan Stock Exchange Friday.

(By Lo Hsiu-wen and Frances Huang)