Master Kong drinks and instant noodle gross profit rate decline "Kang Bai" still awaits approval

Yesterday, Master Kong (0322. HK), which was awaiting the approval of the “Kangbai Case” by the Ministry of Commerce, handed over the 2011 transcripts, showing a net profit of 419.5 million U.S. dollars, but it still fell 12.01% year-on-year. It is worth noting that the company’s gross margins for beverages and instant noodles have also fallen, highlighting cost pressures.

Yesterday, Master Kong’s annual report showed that total sales last year increased by 17.74% over the same period of the previous year, and recorded US$7.867 billion. Turnover of instant noodles, beverages and convenience food increased by 22.54%, 13.22% and 24.82% respectively over the same period of last year. Among them, the increase in instant noodles and convenience food sales led the turnover in the fourth quarter to increase by more than 10% compared to the same period last year and recorded a record of $1.52 billion.

However, the gross profit margin is still "falling". Last year, Master Kong’s overall gross profit margin decreased by 1.89% from the previous year to 26.54%, while gross profit margin increased by 9.93% year-on-year. The gross profit rate of instant noodles business dropped by 1.59% year-on-year to 27.24%. Master Kong said that due to the high price of PET pellets and sugar, the main raw material for beverages, the gross profit margin of the beverage business dropped by 2.81% year-on-year to 25.67%.

For the "Kangbai" Alliance, yesterday the company said that the settlement is still pending the approval of China's regulatory authorities. Some securities companies quoted Wei Yingzhou, who had earlier met with analysts in Hong Kong, and said that it would take 3 to 5 years to improve the profitability of the Pepsi China business.