| Years | Mar
02 |
Mar
01 |
Mar
00 |
Mar
99 |
Mar
98 |
Mar
97 |
Mar
96 |
Mar
95 |
5-yr Annual Compound
98-02 |
3-yr Annual
Compound 00-02 |
| Sales (Millions HK$) | 2,192 | 2,012 | 1,885 | 1,836 | 1,691 | 1,524 | 1,301 | 1,252 | ||
| Sales Growth % | 9% | 7% | 3% | 9% | 11% | 17% | 4% | 9% | +8% | +6% |
| Net Profit (Millions HK$) | 103 | 128 | 126 | 106 | 121 | 114 | 31 | 122 | ||
| Earning Growth % | -20% | 2% | 19% | -13% | 6% | 272% | -75% | -51% | +1% | - |
| Net Profit Margin % | 5% | 6% | 7% | 6% | 7% | 8% | 2% | 10% | ||
| Gross Margin % | 55% | 55% | 53% | 52% | ||||||
| Return on Equity % | 11 | 11 | 12 | 12 | 4 | 14 | ||||
| Stockholders Equity | 1,189 | 1,178 | 1,161 | 1,093 | 1,035 | |||||
| Cash Flow / Debt | ||||||||||
| Operating Profit (Mln HK$) | 164 | 178 | 171 | 145 | 155 | 126 | ||||
| Operating Profit Margin % | 7% | 9% | 9% | 9% | 8% | 8% | 11% | 12% | ||
| Operating Profit Growth % | -8% | 4% | 18% | -3% | 25% | 12% | -23% | 3% | +8% | +4% |
| EPS (HK$) | 0.089 | 0.131 | 0.128 |
Source of Revenues:
| Revenues (Min HK$) | Mar 2002 | % of Total | % Change | Mar 2001 | % of Total |
| Hong Hong | 1,350 | 61% | +7% | 1,261 | 62% |
| Export | 64 | 3% | +12% | 57 | 3% |
| North America | 560 | 26% | +12% | 499 | 25% |
| China | 140 | 6% | - | 140 | 7% |
| Australia | 78 | 4% | +42% | 55 | 3% |
| Total | 2,192 | 2,012 |
Is it in a great potential market which could lead to a sizable increase
in sales for at least several years? Does it have a strong demand?
How big is the market?
1. Sales in the past 5 years has been growing 8% annually. It
was not a strong growing business.
2. Recent years, the company is aiming to expand the market to the US,
Australia and China. The US market starts to have profit and shows
a steady growth. The US market now is 26% of the total sales.
The sales in the US have an annual growth rate of 15% in the past 4 years.
Because soybean protein is believed to reduce the risk of coronary
heart disease (CHD), lower cholesterol, prevent prostate and breast cancers,
consumers in the US starts to accept soy milk as an alternative of nomal
milk. In 1999, the Food and Drug Administration (FDA) has allowed
food companies to label the heart disease fighting properties of soybean
protein.
In a national survey in 1999, 40% of the Americans are aware of specific
health benefits of soy. 24% report using soy products at least once
a week. The three soy products that ranked highest in consumer awareness
are tofu (78%), soy veggie burgers (72%) and soy milk (63%).
The US retail sales of soy milk is about US$300 million in 1999.
Therefore, the market is big enough and has a high potential for growth.
Is it a monopoly-type business?
1. In Hong Kong, it is the market leader in soy milk drinks. Despite
of tough competitions with a Coca Cola brand and other makers, consumers
have a very strong loyalty to Vitasoy. It is the similar kind of
business model as the famous Coca Cola, but in soy milk market. The
China market is growing very slowly. However due to its early presence,
once the consumers start taking soy milk as a favorite drink, Vitasoy will
be in a very good position.
In the US, there are quite a number of competitors in the market.
They include Hain-Celestial (brand: Westsoy, 32% market share) and White
Wave (brand: "Silk"). Fortunately, Vitasoy is one of the pioneers
present in the market.
2. The management is doing a good job in expanding its market.
Vitasoy was not greatly affected by Asian Financial Crisis in 1997.
During the same period, the company has been steadily setting up factories
and operations in the US, Australia and China. Because of the establishment
in the new markets, the earnings in recent years have been depressed.
Now the strategy of entering the US market is getting some return.
How does it make money?
Does the management have a determination to continue to develop products that will further increase total sales when the growth potentials of currently attractive product lines have largely been exploited?
What makes the company different from its competitors? How does the company sustain its competitive advantages?
How effective are the company's research and development efforts in relation to its size?
Does the company have an above-average sales organization?
Does the company have worthwhile profit margin?
What is the company doing to maintain or improve profit margin?
Does the company have outstanding labor and personnel relations?
Does the company have outstanding executive relations?
Does the company have depth to its management?
How good are the company's cost analysis and accounting controls?
Does the company have a short-range or long-range outlook in regard to profits?
Will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will dilute existing shares?
Does the management talk freely when things are going well, but "clam up" when troubles and disappointments occur?
Does the company have a management of unquestionable integrity?