CNBC

HONG KONG, China’s Tingyi (Cayman Islands) Holding Corp , a maker of drinks and instant noodles, said fourth-quarter profit slid 75 percent as consumers shied away from its Japanese-style packaging and marketing amid a territorial row between the two countries.

Tingyi, which has a broad-ranging partnership with PepsiCo Inc and sells noodles under the Master Kong brand in China, said its net profit was $14.9 million for the three months ended in December, down from $59.9 million in the same period a year earlier.

That compared with a consensus forecast of $45.37 mln, according to Thomson Reuters Starmine SmartEstimate.

Japanese-style noodle restaurant chain operator Ajisen (China) Holdings Ltd posted a fall of almost 56 percent in 2012 profit as its sales were also hit by anti-Japanese sentiment.

Although anti-Japanese sentiment has been calmed down somewhat since the worst of the protests last year, the problem still hangs over relations between the two countries. Toyota Motor Corp said combined January-February sales for China were down 13 percent from the same period a year earlier.

Hong Kong-listed Tingyi is more than 33 percent controlled by Ting Hsin (Cayman Islands) Holding Corporation.

Tingyi said its profit for 2012 rose 8.5 percent to its $455.2 million, its second-highest annual result ever. But that lagged market expectations of $485.65 million, according to Thomson Reuters Starmine SmartEstimate.

By contrast, rival Want Want China Holdings Ltd , the country’s top food and beverage maker and distributor by market value and which did not have to deal with anti-Japan sentiment, this month posted a 32 percent rise in 2012 net profit to a record $553.8 million, largely due to softer raw material prices.

Tingyi, which also competes with smaller rival Uni-President China Holdings Ltd , said its turnover was $9.21 billion for 2012, up from $7.87 billion a year ago. Its gross margin was 29.9 percent, compared with 26.54 percent a year earlier.

Tingyi, which commands just over half of China’s $8.8 billion instant noodle market, has benefited as demand for consumer staples climbed, raw material costs fell and greater production efficiency at its bottling plants.

Tingyi’s bond yields have halved since their issue in June 2012, giving it a relatively strong credit position with not much debt to refinance. Credit analysts expect steady EBITDA margins at 35 percent with only small net debt at the year-end. Gross leverage is seen around 1.5 times.

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