Want Want China Holdings, one of the mainland's largest snack and beverage makers, rose up to 5 per cent yesterday after reporting a better-than-expected 17 per cent jump in net profit last year.
Want Want shares, which dropped 3 per cent in the morning, rose 3.99 per cent to HK$7.82 in the afternoon trading session after the company released the annual results during the lunch break.
The company, the mainland's largest producer of rice crackers, said net profit last year rose 17 per cent to US$419.5 million. That boost came mostly from an impressive sales revenue, which increased over 31 per cent to US$2.95 billion.
The gross profit margin, however, fell 2.8 percentage points to 34.8 per cent. The company blamed the drop on the rising price of raw materials such as sugar, milk powder, potato starch, rice, palm oil and plastic packing materials, as well as a spike in labour costs.
Bank of China International said in a research note that Want Want's net profit growth beat its forecast by 6 percentage points and that raising the prices of its products had helped the snack-maker to offset rising costs.
An analyst with ICBC International, who declined to be named, said the company's gross profit margin may improve this year as the cost of raw materials is set to ease.