Update: Synutra International Earnings

Aug.15.14 | About: Synutra International, (SYUT)

Summary

Synutra reported net revenue of $86 million for the first quarter of fiscal 2015, an increase of 4.6% from $82.2 million in the prior year period.

Net income was $17.9 million or $0.31 per basic share, a 275.7% increase from $4.8 million or $0.08 per basic share in the prior year period.

In my original article I mentioned that Synutra’s top and bottom line in 2014 could rise meaningfully as a result of China's booming baby food demand.

The company achieved 21% year-over-year increase in revenue in its core powdered formula segment, which confirms my view.

Synutra International (NASDAQ:SYUT) recently reported financial results for the first quarter of fiscal 2015 ended June 30, 2014. The company's net revenue grew 4.6% to $86 million in the first quarter of fiscal 2015, from $82.2 million in the prior year period. Net income came in at $17.9 million or $0.31 per basic share, a 275.7% increase from $4.8 million or $0.08 per basic share in the prior year period.

Synutra expects strong top line growth and greater operating leverage in fiscal 2015. The company has projected that its fiscal 2015 revenue would be at least 20% higher than fiscal 2014 revenue, or between $450 million and $500 million. It has also projected that net profit growth would be at least 60% year-over-year, or between $50 million and $60 million.

In my original article I mentioned that China's demand for baby food would continue to grow in the next five years, and production would also rise in proportion with demand. Synutra said that the initiatives the management implemented in fiscal 2013 would substantially improve its business performance. The company's fiscal 2015 first quarter financial performance has remained really impressive. When I first recommended the stock a year ago, it was trading around $5 and subsequently rose to almost $10 before correcting massively. However, I believe that the stock could be bought again at the current price around $6 with significant long-term upside.

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