Vinda haunted by stiffer competition in 2013

But analyst predicts it will achieve its 25% sales growth target.

According to Maybank Kim Eng, it expects Vinda to achieve its FY13 sales volume growth target of 25%, and anticipate a blended ASP growth of 2% on a shift in its sales mix. 

Maybank adds that ASPs across different categories will remain largely flat, owing to stiff competition in the near term.

Here's more:

We project that Vinda’s GPM will drop slightly by 20bps YoY in FY13, as we believe the company’s 8-month low-cost wood pulp inventory to provide some insulation against pulp prices which are likely to remain volatile until new supply comes to market later in 2013. 

We expect SG&A as a whole to grow moderately this year. Poised to be a multi-brand HPC name. We regard the development of the “Babifit” baby care business as satisfactory. Management expects sales of these products to grow two-to-three-fold in FY13, on greater scale and a better product portfolio.

We expect losses at the business to narrow in FY13; it should break even in FY14. In addition, its JV soft-launched the mid- to high-end “VIA” brand of
sanitary napkins in Jan 2013.

We expect minimal startup losses given its assetlight outsourcing model. Vinda also aims to tap into incontinence products for the elderly under another brand in the near future.  

We keep our positive stance on Vinda given its solid development and strong volume growth visibility, which underpins our FY13-15F net profit CAGR of 27.3% on a top-line CAGR of 25.8%.

We believe its flat ASPs and mild increase in A&P spend amid fierce competition in FY12 revealed its strong bargaining power against customers.

Industry statistics also suggest that Vinda managed to gain 2ppts of market share in FY12 despite the tough environment.

Our new TP of HKD12.6 is equivalent to 14X FY14PER. Solid FY12. NPAT growth of 32% YoY came in line with our expectations on the back of a 26% YoY growth in sales volumes.

GPM surged by 3.6ppts YoY amid a soft wood pulp cost environment and better product mix. SG&A costs apart from option expenses and one-offs were well-controlled, as the A&P to sales ratio rose by just 0.4ppts ahead of its “Ultra Strong” series launch.

Delayed capacity  additions resulted in a slight increase in COGS and logistics costs. Its 41%-owned diaper JV recorded a HKD16m loss, in line with earlier guidance.