China's Tingyi Q3 profit jumps, but margin pressure remains

[HONG KONG] Tingyi (Cayman Islands) Holding Corp, a Chinese partner of Starbucks and PepsiCo, on Monday reported a 30 per cent jump in quarterly profit but warned of margin pressure partly due to rising raw material costs.

Tingyi, owner of the Master Kong brand, said its third-quarter profit rose to 1.24 billion yuan (S$254.2 million) from a restated 952.6 million yuan a year earlier, and 266.7 million yuan in the second quarter.

Revenue rose 8.5 per cent to 19.69 billion yuan during the September quarter. Gross profit margin dropped 0.94 percentage point to 32.5 per cent year-on-year.

"The group's gross profit will remain under pressure in the short term," chairman Wei Ing Chou said in an exchange filing.

The company is facing pressure from China's changing economic development mode, rising raw material costs, industrial upgrade and fast-changing consumer demand, Mr Wei said.

For the first nine months, the company's profit rose 37.9 per cent to 1.94 billion yuan, while revenue rose 5.9 per cent to 48.25 billion yuan.

Last week, smaller rival Uni-President China posted a 24 per cent rise in nine-month profit.

Many niche domestic snack food brands have expanded their pool of millennial customers through interactive online and mobile campaigns that place a big emphasis on quality ingredients and production methods, which have helped them to outpace traditional leaders such as Tingyi.

Shares of Tingyi rose 1.9 per cent after the results, outpacing a 0.3 per cent gain in the benchmark index.

REUTERS