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On Sunday, Nomura/Instinet initiated coverage on NH Foods Ltd. (2282:JP) (OTC: NIPMY) with a Buy rating and set a price target of JPY6,000.00. The move reflects the firm’s positive outlook on the company’s profit growth prospects and operational improvements.
Analysts at Nomura/Instinet have expressed confidence in NH Foods Ltd.’s trajectory for profit growth over the long term. They highlighted the company’s success in the processed foods sector, particularly with the Schau Essen brand, which has seen profit growth in FY24. This was achieved by focusing management resources on the brand and exiting from low-margin products.
Nomura/Instinet anticipates a reduction in fixed costs for NH Foods beginning from FY25, as the company is expected to revamp its production setup. This strategic overhaul is seen as a key driver for future cost savings and efficiency gains.
The fresh meats business of NH Foods is also expected to contribute positively to the company’s growth. Analysts forecast an increase in chicken output, which is in higher demand, as well as improvements in pork production efficiency. Additionally, NH Foods’ partnerships with Zen-Noh and CP Foods are likely to bolster sales through enhanced procurement capabilities.
Nomura/Instinet’s coverage note also mentioned the potential for improved shareholder returns and return on equity (ROE) due to greater clarity in NH Foods’ capital policy. This aspect was seen as a significant factor in the firm’s positive assessment of the company’s financial health and future performance.
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