Oppenheimer Comments on Zhongpin
In a quarterly update published earlier today, Oppenheimer Holdings commented on recent reports from Zhongpin Inc. (NASDAQ: HOGS), but did not gave the stock a rating or set a price target.
Oppenheimer went on to say “HOGS's 1Q12 revenue grew 30.9% yoy to $374.1M, missing the Street estimate of $385M. EPS of $0.33 beat our/Street estimates of $0.26/$0.32, thanks to lower than expected selling expenses. Gross margin improved 56bps sequentially to 9.5%, but declined 309bps yoy. G&A expenses increased 47%, mainly because the company opened two more facilities. As pork/hog price spread continues to be healthy (Exhibit 2 in our full report, available today), we expect gross margin to improve gradually. HOGS maintained its full-year guidance for revenue, gross margin and net margin. We believe HOGS will benefit from the ongoing consolidation in meat slaughtering industry as low-quarlity companies are going away. We've lowered our 2012E revenue/EPS from $1,648M/$1.70 to $1,620M/$1.56, respectively. Barclay was appointed as an independent financial adviser and no definitive time line is given for the privatization.”
Zhongpin Inc. closed yesterday at $9.56
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Tags: Oppenheimer Holdings