China's Anjoy Foods nine-month net income rises 20%

What happened

Anjoy Foods, a Chinese frozen food maker, reported nine-month net income attributable to shareholders up 20.27% from a year earlier. Operating income rose 18.38%, and net cash flows from operating activities grew 63.2% on higher sales and services.

Confirmed

Global impact / market context

Faster cash collection gives Anjoy more cash available to fund everyday operations and pay bills without borrowing. Because revenue grew faster than total costs, more of each sale stayed as profit, which supports the shares.

Analyst inference

Analysts rate the stock buy on average, with a median 12-month price target of CNY92.00, about 16.3% above its October 28 close of CNY79.11. It trades at 14 times next 12-month earnings, unchanged from three months ago, which means investors pay the same for expected profit.

Analyst inference

What to watch

1. The company gave no specific financial guidance for future quarters or full-year performance, so investors have no company forecast for revenue, profit or cash flow to compare with later results. Confirmed
2. Watch whether nine-month cash flow growth of 63.2% continues, since that would show Anjoy keeps collecting cash from sales quickly rather than letting unpaid customer bills build up. Proposed
3. If revenue keeps growing faster than total costs, profit per sale could stay wide and support the current 14 times earnings valuation that is unchanged from three months ago. Analyst inference

Evidence

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