Lyon: Master Kong Holdings (00322) maintains 2026 guidelines and reaffirms “outperform the market” target price of HK$13.7

The Zhitong Finance App learned that Lyon released a research report saying that Master Kong Holdings (00322) maintains the 2026 guidelines. It is expected that revenue will record low unit growth year over year, and the reported net profit will be at least flat year on year; the business is progressing generally according to plan. The uncertainty mainly comes from the cost of raw materials, and the visibility of raw material prices next year is limited. Maintain the “Outperform the Market” rating and target price of HK$13.7.

The bank pointed out that the year-on-year growth rate of instant noodle sales from July to August was faster than 2% in the first half of the year and increased its market share; beverage sales remained roughly flat year-on-year from July to August, slightly weaker than 0.7% in the first half of the year. The cost of palm oil has been locked in until the end of 2026. The recent price increase will not affect this year's profit margin, but it will put pressure on next year; PET is purchased from the market as needed, and higher prices will drag down profit margins in the second half of the year, but management believes that the impact has already been included in the full-year guidelines. The company has no plans to raise prices in the short term, and believes that the possibility of price increases next year is low, depending on the level of cost pressure.

In the medium to long term, the bank indicated that the company's target revenue increased by double digits in the number of units and profit over the same period last year. Management believes that the risk of withholding tax is manageable, or is considering foreign exchange cash dividends to avoid the risk of higher tax rates, and indicates that only beverage subsidiaries face this risk and the risk is minimal.