Tingyi Rallies as High-End Proprietary Noodles Wins UBS Praise

The new noodles at Tingyi (Cayman Islands) Holding Corp. (322) are getting rave reviews at UBS AG.

“Tingyi’s launch of high-end proprietary steamed noodles with improved ingredients might be a major breakthrough for the industry and the company,” UBS analysts including Christine Peng wrote in a report dated today. Shares jumped 5.9 percent at 11:01 a.m. in Hong Kong, the second-biggest gain in the MSCI Emerging Markets Index, as UBS joined China International Capital Corp. in upgrading Tingyi to buy.

Both brokerages predict profitability in the noodle business will rebound and that potential acquisitions may drive further gains in the stock, which reached a one-month low yesterday on earnings that trailed analysts’ estimates. UBS said the stock may climb 16 percent in the next 12 months from yesterday’s close, while CICC estimates it will gain 28 percent by yearend.

Tingyi has climbed 8.2 percent in Hong Kong trading during the past year. The company reported 2013 net income of $408.5 million yesterday, versus the $427.2 million average estimate in a Bloomberg News survey.

Tingyi will probably accelerate product upgrades in its noodle business to combat the risk of a shrinking market, UBS said. Profit margins in noodles may climb back to 2009 highs, while overall earnings may grow 14 percent this year and 13 percent in 2015, UBS said.

“We see an inflection point ahead,” CICC analaysts led by Brad Yang wrote in a report today. “The market still remains very conservative especially since its earnings miss.”

To contact the reporter on this story: Moxy Ying in Hong Kong at yying13@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Richard Frost, Matthew Oakley

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.