China Foods Limited (0506) AI Stock Analysis

• Market Cap: HK$11.72B
• Dividend Yield: 3.71%
• Average Volume (3M): 8.00M
• Price to Earnings (P/E): 12.5
• Beta (1Y): 0.31
• Revenue Growth: 10.05%
• EPS Growth: 9.01%
• Country: HK
• Employees: 17,533
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Beverages - Non-Alcoholic
• EPS (TTM): 0.23
• Shares Outstanding: 2,797,223,400
• 10 Day Avg. Volume: 2,983,214
• 30 Day Avg. Volume: 8,003,922
• PEG Ratio: 2.29
• Price to Book (P/B): 1.02
• Price to Sales (P/S): 0.31
• P/FCF Ratio: 3.17
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: HK$5.50 ▲(23.04% Upside)

China Foods Limited's overall stock score is driven by its strong financial performance and reasonable valuation, balanced by technical indicators suggesting overbought conditions. The company's solid profitability and low leverage risk are significant strengths, but the decline in operating cash flow and potential overvaluation warrant caution.

Positive Factors

Strong Balance Sheet

A strong balance sheet with minimal leverage risk enhances financial stability and provides flexibility for future investments and growth.

Consistent Profitability

Consistent profitability with a healthy gross profit margin indicates effective cost management and competitive pricing strategy.

Revenue Growth

Sustained revenue growth reflects strong market demand and effective sales strategies, supporting long-term business expansion.

Negative Factors

Decline in Operating Cash Flow

A decline in operating cash flow can limit the company's ability to fund operations and growth initiatives, impacting financial health.

Modest Revenue Growth Rate

A modest revenue growth rate may indicate challenges in market expansion or increased competition, potentially affecting future growth.

Cash Flow Concerns

Uncertainty in cash flow data can hinder accurate financial planning and may signal underlying operational issues that need addressing.

China Foods Limited Business Overview & Revenue Model

Company Description

China Foods Limited (0506) is a prominent player in the food and beverage industry, primarily engaged in the production and distribution of a wide range of food products. The company operates across various sectors, including the processing and sale of packaged foods, condiments, and other consumer food items. With a strong emphasis on quality and innovation, China Foods Limited aims to meet the diverse dietary needs of consumers in both domestic and international markets.

How the Company Makes Money

China Foods Limited generates revenue through multiple streams, including the sale of its branded food products, which encompass sauces, snacks, and other packaged foods. The company leverages its established distribution network to reach a broad customer base, including supermarkets, grocery stores, and food service establishments. Key revenue streams include direct sales to retailers, online sales, and partnerships with food service providers. Additionally, China Foods Limited may engage in strategic alliances with other companies to enhance its product offerings and expand its market reach, further contributing to its earnings.

China Foods Limited Financial Statement Overview

Summary

China Foods Limited exhibits strong financial health with solid profitability and a stable balance sheet. The income statement highlights consistent profitability, while the balance sheet shows low leverage risks. However, the recent decline in operating cash flow is a concern that needs addressing to maintain financial stability.

Income Statement

China Foods Limited has demonstrated consistent revenue growth over the years with a healthy gross profit margin of 37.8% and a net profit margin of 4.0% for 2024. The EBIT margin stands at 8.7%, and EBITDA margin at 12.2%, indicating operational efficiency. However, the revenue growth rate from 2023 to 2024 is modest at 0.2%, suggesting potential challenges in accelerating top-line growth.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.01, reflecting minimal leverage risk. The equity ratio is a solid 36.7%, indicating a strong equity base relative to total assets. Return on Equity (ROE) is robust at 13.3%, showcasing effective utilization of shareholder funds.

Cash Flow

Cash flow analysis shows some concerns, as operating cash flow has dropped to zero in 2024. Historical free cash flow was positive, but the absence of current data prevents a complete assessment. The company should focus on restoring operating cash flow to sustain its financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	22.43B	21.49B	21.45B	20.97B	19.78B	17.25B
Gross Profit	8.88B	8.12B	7.54B	7.50B	7.06B	6.83B
EBITDA	2.74B	2.61B	2.52B	2.19B	1.89B	1.81B
Net Income	873.15M	860.53M	832.58M	659.84M	572.41M	498.73M
Balance Sheet
Total Assets	18.75B	17.60B	16.23B	15.06B	15.17B	15.11B
Cash, Cash Equivalents and Short-Term Investments	5.06B	4.02B	2.55B	1.11B	1.68B	1.90B
Total Debt	78.34M	85.58M	79.38M	57.71M	77.23M	110.47M
Total Liabilities	8.60B	7.40B	6.54B	6.20B	6.78B	7.03B
Stockholders Equity	6.61B	6.46B	6.02B	5.52B	5.16B	4.95B
Cash Flow
Free Cash Flow	2.37B	2.07B	1.80B	259.17M	360.41M	1.65B
Operating Cash Flow	3.09B	2.85B	2.43B	1.14B	1.07B	2.21B
Investing Cash Flow	-622.86M	-560.83M	-564.43M	-851.23M	-846.64M	-374.88M
Financing Cash Flow	-1.08B	-564.93M	-609.65M	-844.13M	-496.06M	-813.82M

China Foods Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4.47
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0506, the sentiment is Positive. The current price of 4.47 is above the 20-day moving average (MA) of 4.13, above the 50-day MA of 4.18, and above the 200-day MA of 3.45, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 66.66 is Neutral, neither overbought nor oversold. The STOCH value of 80.75 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0506.

China Foods Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0506	74 Outperform	HK$11.72B	12.46	13.57%	3.71%	10.05%	9.01%
0220	71 Outperform	$36.02B	15.19	17.10%	5.83%	8.19%	23.16%
1475	67 Neutral	HK$7.25B	34.91	5.55%	1.41%	7.29%	-33.19%
9633	63 Neutral	HK$576.94B	39.60	46.45%	1.77%	4.14%	7.35%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
0345	58 Neutral	HK$7.00B	30.21	7.63%	2.15%	-3.39%	91.63%
1117	55 Neutral	HK$9.55B	-4.19	-21.76%	0.96%	-2.69%	-695.87%

China Foods Limited Corporate Events

China Foods Limited Optimizes Financial Management with New Cash Pooling Agreement

China Foods Limited has entered into a Cash Pooling Management Agreement with COFCO Finance (HK) to enhance financial management and fund utilization efficiency. This agreement, effective from November 10, 2025, for three years, involves COFCO Finance (HK) managing the company’s funds centrally, which will help reduce financing costs and risks. The arrangement is considered a continuing connected transaction under Hong Kong’s Listing Rules, requiring reporting and announcement due to its financial implications.

China Foods Limited Announces Board Changes

China Foods Limited announced the resignation of Mr. CAO Gaofeng as a non-executive director and a member of the environmental, social, and governance committee, effective October 21, 2025, due to a change in work arrangement. Mr. SONG Liang, another non-executive director, has been appointed to the committee, indicating a strategic shift in the company’s governance structure, which may impact its focus on environmental and social governance initiatives.

China Foods Limited Announces Board Composition and Governance Structure

China Foods Limited has announced the composition of its board of directors, which includes a mix of executive, non-executive, and independent non-executive directors. The board is structured to oversee various committees such as Audit, Remuneration, Nomination, Environmental, Social and Governance, and Executive Committees. This announcement highlights the company’s governance structure, which is crucial for ensuring effective oversight and strategic direction. The diverse roles and functions of the directors are designed to enhance the company’s decision-making processes and align with industry standards for corporate governance.