2009 sales grew 10.2% YoY but gross profit grew by 64.5% on the back of collapsing input prices. Despite the lower input prices, the company managed to increase ASP throughout the year 2009 due to its strong pricing power.
As a result, 2009 net income jumped 535% YoY, partly due to forex exposure. FY09 result beats consensus by a hefty 17.3% as the company reported a better than expectation 4Q09 numbers.
4Q09 usually is the slowest quarter in terms of business cyclicality; however in this time round we saw a very strong 4Q numbers as margins continue to expand. Gross margin surged up to 23% in 4Q09 due to the low corn and soybean meal prices.
The company expects a slight margin contraction in 2010 due to a recovering commodity prices. Up to this date, we have not seen any sudden movement of commodity prices and the company expects the commodity price-growth to remain stable throughout this year. Corn prices have even moved down at the beginning of this year.
Management has been able to maintain prices and would likely to do so for the remaining of the year, which means this year we can expect a stellar performance too.
Despite the stock’s well performance over the last week, CPIN is still trading cheap at 6.2x 2010 P/E.
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