Sales were in line with Dbe while NP was 7% lower

Jahwa reported RMB 6.3 b revenue in FY2017 compared to RMB 5.3 b in 2016,representing 20% yoy growth. The high yoy growth benefits form the low baseeffect in 2016.

Net profit increased by 79% to RMB 386m compared to RMB 216m reported NPin FY2016. To recap, Jahwa acquired Tommee Tippee, a high-end babycare brand,in June 2017. Therefore, on a like-for-like basis, RMB 386m reported NP wouldbe 93% yoy growth compared with RMB 2m adjusted NP in FY2016.

The company is due to announce its FY17 results on 21 March.

Deutsche Bank view

Our forecasts budget an additional RMB20m in finance costs per year from 2017as we assumed the payment for the TT deal would be settled by a loan. Asthe company paid the acquisition by cash, the DB estimated NP would increaseto RMB 434m or 12% higher than actual FY2017 NP if this financial cost iseliminated.

Given the fact that 2017 was a year of restructuring, we believe investor focuswill be on 2018's top line growth post restructuring and management change.Although the move to a new manufacturing plant in 2018 might affect itsprofitability and margin, we believe the key share price driver will be its abilityto grow sale, especially for its Herborist brand. We believe the shares are fairlyvalued. Hold.

更多精彩大盘资讯敬请期待！