China Essence: FY11 results. Revenue +20% yoy to Rmb 999m, net profit +22% to Rmb167m. Gross margins improved slightly to 37.7% from 34.5% on the back of higher ASP for all products. In particular, ASP for potato starch increased by 39.7% from the previous year, negating the 16% decrease in sales volume for the item. Animal feed ASP was up 286% with a 54.6% surge in volume...
Co is now in a net cash position following a 35% increase in cash to Rmb 583m and repayment of Rmb 80m of short term bank borrowings. Co recommends HK$0.02 final dividend per share...
Mgt positive on outlook, with China’s levy on imported starch products to benefit local producers such as China Essence. Debt restructuring which is to conclude by Sept 2011 will strengthen their balance sheet as well.
Stock currently trades at 3.6X P/E.
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