Equity Analysis /

CN : M&G Stationery Inc - Strong new business development

    Lei Yang
    Lei Yang

    Research Analyst

    30 August 2021
    Published byCGS-CIMB

    MG delivered strong sales growth of 61% yoy to Rmb7.7bn in 1H21; net profit was up by 43% yoy to Rmb666, in line with expectations, driven by full school resumption and strong growth in new business. Owing to a high base in 2H20 and Covid volatility in 3Q21F, we expect MG’s sales to grow 3% yoy in 2H21, with net profit up by 10% yoy. Considering the Company’s strong penetration in the office stationery B2B direct sales market, and solid market position in its traditional core business, with over 80,000 retail points, we expect its sales to grow by 22% yoy in FY22F and 20% yoy in FY23F. Reiterate Add with a slightly higher DCF-based TP of Rmb103.