Crosby Research: Haitian International (1882 HK): Margin contraction dampened profit growth
Despite the uncertainties in both domestic and international economic and political environment as a result of Sino-US trade war, Haitian International’s (HI) still managed to register a modest growth of 6.5% YoY in revenue, achieving a historical high annual sale of Rmb10.9bn in FY18. The increase in raw material prices since end of FY17 put pressure on its margin, causing FY18 GPM edged down by 3.7ppt to 31.6%. HI’s reported net profit consequently decreased by 4.4% YoY to RMB1.9bn in FY18. Excluding the change in fair value of CB, the adjusted NP dropped by 13.7% YoY to Rmb1.8bn. With Final DPS of HK$0.19, total DPS amounted to HK$0.44, representing a YoY decline of 15.4%.