必需消費(fèi)品行業(yè)：下半年前景正面

1、Sector NoteConsumer StaplesChina, Hong KongSeptember 2, 2019China, Hong KongConsumer Staples - OverallOverweightPositive outlook for 2H19We initiate coverage on China consumer sector with an Overweight rating, supportedHighlighted companiesby a positive outlook for 2H19F.China Mengniu Dairy Our top

2、picks in the sector are Moutai, Mengniu and Tsingtao Brewery.ADD, TP HK$36.80, HK$31.10 close Premium Baijiu companies reported strong earnings growth for 1H19, and we expectMengniu, as one of China largest diarythem to continue to report solid growth during the high season in Q3 2019. producer, has

3、 strong mix upgrade capacity The dairy sector enjoyed robust demand growth in 1H19; we expect both Mengniu and high quality raw milk resources. With newand Yili to achieve low- to mid-teen top-line growth in FY19F.managements strong execution ability, we Although volume growth for the beer sector re

4、mained flattish YoY in 1H19, both expectitsoperationeffectivenessandTsingtao and CRB achieved strong margin expansion due to mix upgrades. efficiency would be largely improved in thelong run and its core earnings to grow at 22%Premium Baijiu players to deliver strong growth in Q3 2019FYoY CAGR in FY

5、18-21F.Moutai and Wuliangye reported 27% and 31% earnings growth in 1H19, respectively, Kweichow Moutaisupported by solid volume growth and ASP improvement. We expect both to continue to ADD, TP Rmb1,324, Rmb1,142closedeliver strong growth in the high season in Q3 2019F. Moutai announced a connected

6、 Moutai is the king within the super-premium transaction with a parentco sales company, but it will not trigger a shareholders meeting baijiu sector in China with its strong brand for approval. We expect sales volume through this sales company to be c.3,000t in name and high collectable value. Mouta

7、i is FY19F, i.e. 9.7% of total Moutai liquor sales volume. In Q3 2019F, Moutai will facilitate currently on the progress of distribution volume growth and direct sales to improve margins. Wuliangye launched the 8thchannel reform; we expect the profit derivedgeneration of Wuliangye liquor, and the pr

8、icing system has remained quite stable.from direct sales would gradually boostMoutais net profit margin.Dairy sector enjoying strong demand growthTsingtao BreweryDairy output achieved strong growth of 7.4% YoY in 7M19. Mengniu and Yili reported ADD, TP HK$61.00, HK$52.95 closetopline growth of 15.6%

9、 and 13.6% YoY in 1H19. We expect both of them to achieve low- Tsingtao is one of the domestic largest to mid-teens top-line growth in FY19F. We have not seen any large-scale promotions so brewers with diversified product portfolio to far. Mengniu maintains its guidance of a 50bp OPM expansion in FY

10、19F. We expect Yili cope with China consumption upgrade. With to be under some margin pressure due to new business investments and R&D expenses. its ongoing product mix upgrade and efficient Raw milk price rose 45% YoY in 1H19, and will maintain at high level in 2H19F. Both improvement, we expect it

11、s sales would grow Mengniu and Yili will improve their product mix to offset the raw milk price pressure.at a 6% CAGR and its net profit will rise by an18% YoY CAGR in FY18-21F.Beer players focusing on mix upgradesSummary valuation metricsBeer players changed their focus from price competition to ma

12、rgin expansion and mix upgrades. In 1H19, Tsingtao achieved volume growth of 3.6% YoY, 2.8ppt above the industry average; its core brand, Tsingtao, grew by 6.3% YoY. Tsingtaos earnings grewCore P/E (x)Dec-19F Dec-20F Dec-21F25.4%, and ASP rose by 5.5% YoY in 1H19. CRB also achievedChina Mengniu Dair

13、y29.2623.9020.28revenue and earnings growth in 1H19, driven mainly by mix upgradKweichow Moutai33.1727.9924.09volume grew 0.3% YoY in 7M19. Both companies planTsingtao Brewery36.4832.4827.64underperforming plants in FY19F to drive up long-term efficiency anP/BV (x)Dec-19F Dec-20F Dec-21FPremiumizati

14、on trend continues for instant noodles7.2% and 24.1% YoYes. China beer output to continue closing d margins.Figure 1: MSCI China Index and MSCI China Consumer staples index performance9014008513008012007511007010006590060800MSCI China IndexMSCI China Consumer Staples Index (RHS)SOURCES: CGIS RESEARC

15、H, COMPANY DATA, BLOOMBERGPowered by the EFA PlatformChina Mengniu Dairy3.933.503.10Based on ACNielsen data, instant noodle sales growth was 7.9% YoY in 7M19 with theKweichow Moutai10.418.617.19sector continuing its premiumization trend, and high-end instant noodles attaining salesTsingtao Brewery3.

16、413.172.92Dividend YieldDec-19F Dec-20F Dec-21FChina Mengniu Dairy1.03%1.26%1.48%Kweichow Moutai1.56%1.85%2.15%Tsingtao Brewery0.82%0.92%4.70%growth of 10.4% YoY. The beverage sector turned more competitive, as it was negatively impacted by cooler-than-usual weather in Q2 2019. UPC reported 2.2% sal

17、es growth in 1H19, but net profit grew strongly at 39.6% YoY, driven by favourable raw material prices, mix upgrades and a VAT cut. Tingyi also benefited from a VAT cut and lower raw material prices in 1H19, but its margins were negatively impacted by its price cut.We initiate coverage with Overweig

18、ht for Chinas consumer sector We initiate coverage on Chinas consumer sector with an Overweight rating, supported by its positive outlook for 2H19. Our top sector picks are Moutai, Mengniu and Tsingtao Brewery. Re-rating catalysts include: 1) a VAT cut since Apr 1 to boost margins in 2H19F, and 2) h

19、igher ASPs, driven by mix upgrades. Downside risks include: 1) higher raw material prices, and 2) more serious price competition.AnalystsLei YangT +86 21 6162 9676E HYPERLINK mailto:leiyang.hk leiyang.hkTony LiT (852) 3698 6392E HYPERLINK mailto:tonyli.hk tonyli.hkKEY CHARTSChina baijiu sector outpe

20、rformed the market Chinas baijiu sector largely outperformed the market in 1H19, supported by premiumization and channel reforms. We expect the baijiu sector to continue to deliver strong growth in the high season in Q3 2019F.YTD 2019,SW Baijiu Index has outperformed SW F&B Index and CSI300 Index100

21、%80%60%40%20%0%-20%2018-12-27 2019-01-27 2019-02-27 2019-03-27 2019-04-27 2019-05-27 2019-06-27 2019-07-27 SW Baijiu Index SW F&B Index CSI 300 IndexDairy demand growing stronglyChinas dairy output volume achieved strong YoY growth of 7.4% in 7M19. The baijiu and beer sectors focused on mix upgrades

22、 and margin improvement.Diary output volume continually going strongly due high demand20.0015.0010.005.000.00-5.00-10.00-15.0025.00 Baijiu Beer Dairy ProductsRaw milk price increase may put some pressure on dairy playersChina domestic raw milk prices increased by 4.0% YoY in 7M19. We expect the raw

23、milk price increase to put some pressure on dairy players in 2H19F.China domestic raw milk price in the upward trend4.104.003.903.803.703.603.503.403.303.203.103.002014-08-062015-08-062016-08-062017-08-062018-08-062019-08 Raw Milk Price in China (RMB/kg)Continuing mix upgrade for instant noodles Bas

24、ed on ACNielsen data, instant noodle sales growth was 7.9% YoY in 7M19, with the sector continuing its premiumization trend. High-end instant noodles attained sales growth of 10.4% YoY.Instant noodle sector sales growth based on ACNielsen dataValue yoyOverall instant noodle High-end noodle7M197.9%10

25、.4%Jul9.4%10.9%SOURCES: CGIS RESEARCH, COMPANY DATA, AC NIELSEN,WIND, BLOOMBERGPositive outlook for 2H19Premium Baijiu players to deliver strong growth in Q3 2019FMoutai and Wuliangye reported 27% and 31% earnings growth for 1H19, respectively, supported by solid volume growth and ASP improvement. W

26、e expect both to continue deliver strong growth in the high season in Q3 2019F. Moutai announced that a connected transaction with the parentcos sales company will not require shareholder approval. We expect sales volume through this sales company to be c.3,000t in FY19F, i.e. 9.7% of total Moutai l

27、iquor sales volume. In Q3 2019F, Moutai is expected to facilitate volume growth through direct sales to improve margins. Wuliangye launched the 8th generation of Wuliangye liquor in June and has maintained stable pricing system so far.Moutai (Add, TP: Rmb1,324)We initiate coverage on Moutai with an

28、Add rating and DCF-based TP of Rmb1,324 (WACC: 10.2%), implying 32.5x FY20F PER. Moutai is our top pick in the Chinese hard liquor sector, mainly because of its superior brand name and dominant market position, with over a 60% market share in the super-premium baijiu segment. Its distribution channe

29、l reform is a near-term catalyst; we estimate that it will boost Moutais sales CAGR 15% and net profit CAGR 18% in FY18FY21F. A downside risk is lower baijiu consumption due to a slowdown in the macro-economic environment.Moutais 1H19 sales grew 18% YoY, and earnings rose 27% YoY, driven mainly by s

30、trong sales from tailor-made MT products and margin improvement from channel optimisation. In 2H19F, we expect Moutais direct sales contribution to ramp up quickly, as Moutai recently allayed investor concerns by limiting sales to its parentco to Rmb5.6bn (around 3,000t of Moutai liquor based on our

31、 estimates). To cope with the upcoming high season in Q3 2019F, Moutai announced that it would increase its supply volume to the market to 7,400t in Q3 2019F (Q3 2018: 6500t, up 13.8% YoY).Kweichow MoutaiDec-17ADec-18ADec-19FDec-20FDec-21FRevenue (Rmbm)58,21873,63984,77598,351112,040Operating EBITDA

32、 (Rmbm)39,99252,50663,82175,53187,662Net Profit (Rmbm)27,07935,20443,18951,19859,499Core EPS (Rmb)21.6028.0734.4340.8147.41Core EPS Growth61.8%29.9%22.7%18.5%16.2%FD Core P/E (x)52.8640.6833.1727.9924.09DPS (Rmb)11.0014.5417.8421.1424.57Dividend Yield0.96%1.27%1.56%1.85%2.15%EV/EBITDA (x)34.0525.492

33、0.6517.1114.40P/FCFE (x)47.9735.2734.0727.8823.40Net Gearing-80.6%-85.7%-85.5%-86.1%-87.3%P/BV (x)15.6912.7110.418.617.19ROE33.0%34.5%34.5%33.7%32.5% Change In Core EPS EstimatesCGIS/consensus EPS (x)1.001.001.00Wuliangye (Add, TP: Rmb164)WulianWe initiate coverage on Wuliangye with an Add rating an

34、d a DCF-based TP of Rmb164 (WACC: 10%), implying 30.6x FY20F PER. The new 8th generation Wuliangye liquor has been launched in Jun 2019; and its first-tier wholesale price has stabilized at Rmb940950 per bottle. There has been strong sales feedback for the 8th generation Wuliangye liquor. We expect

35、Wuliangye to see margin improvement via a product mix upgrade in FY19F. We forecast that gye will maintain high sales growth at a 19.5% YoY CAGR in FY18F21Fand that its net profit will grow at a 23.0% YoY CAGR. A downside risk is a worse-than-expected economic slowdown reducing premium baijiu consum

36、ption.In 1H19, Wuliangye achieved excellent results, with 26.8% sales growth and 31.3% net profit growth on a YoY basis, mainly due to strong market demand for the 7th generation WLY liquor, which was withdrawn from the market in June. Wuliangye has sustained its channel reform and accelerated its s

37、ales team build-up. Its sales centre network in China has expanded from 7 territories to 21, with another 60 smaller marketing bases. GPM expanded by 1.1ppt YoY to 59.8% in 1H19, due to mix upgrade. Better operating leverage led to both S&D expenses ratio and G&A expenses ratio reduced by 0.3%pt and

38、 0.7%pt YoY respectively. Its 1H19 net profit margin was up by 1.2%pt to 34.4%. Its 8th generation Wuliangye launched in Jun with ex-factory price of Rmb889 per bottle (a 13% price increase), has successfully set foot in the market with its retail selling price gradually rising to Rmb1,080 per bottl

39、e due to high market demand, and further strengthen its distributors confidence on the new products and actively replenish for upcoming high sales season in Q3 2019. For series brand, Wuliangye has set up a sales company solely in charge of its major series brands. We expect its high-end WLY brand a

40、nd its low-mid range Series brands would maintain 22% and 12% YoY sales CAGR over FY18-21F.Wuliangye YibinDec-17ADec-18ADec-19FDec-20FDec-21FRevenue (Rmbm)30,18740,03049,18758,06568,251Operating EBITDA (Rmbm)12,97918,14423,20928,26534,060Net Profit (Rmbm)9,67413,38417,14120,77224,936Core EPS (Rmb)2.

41、553.454.425.356.43Core EPS Growth42.4%35.3%28.0%21.2%20.0%FD Core P/E (x)55.4440.5232.0226.4322.02DPS (Rmb)1.331.702.182.643.17Dividend Yield0.94%1.20%1.54%1.86%2.24%EV/EBITDA (x)38.3627.6621.4117.3014.07P/FCFE (x)56.1545.3238.3228.5823.72Net Gearing-74.2%-75.2%-73.5%-74.0%-74.6%P/BV (x)10.078.657.6

42、16.645.76ROE19.3%22.9%25.3%26.8%28.0% Change In Core EPS EstimatesCGIS/consensus EPS (x)1.011.011.00Yanghe (Add, TP: Rmb127)We initiate coverage on Yanghe with an Add rating and a DCF-based TP of Rmb127 (WACC: 10.4%), implying a 18.2x FY20F PER. We like Yanghe for its strong and unique distribution

43、network and new market exploration capability. Yanghes diversified product portfolio enables the company to cope with demand from consumers during different phases of premiumization. Yanghe also has strong execution ability due to its capable management team, which enables the company to effectively

44、 control its operating leverage. We forecast that Yanghe sales will grow at a 11.5% CAGR in FY18F21F and that net profit will grow at a 13.3% CAGR. A downside risk is more competitive landscape in the premium baijiu segment in Jiangsu Province.Yanghe reported net profit grew 11.5% YoY in 1H19. Sales

45、 grew 10% YoY in 1H19, mainly supported by product mix upgrade. Yanghes high-end Blue Dream liquor maintained strong double digit growth in 1H19 to further drive up the product mix. Since Q4 2018, Yanghe has faced more competition in its home market of Jiangsu, with major competitors such as Wuliang

46、ye and Kings Lucky increasing their sales volume. The half sales derived from Jiangsu market only grew by 3% YoY in 1H19; however its non-Jiangsu market sustained strong sales growth momentum with 19% YoY in 1H19. Yanghe adjusted its marketing strategy in Q2 2019 to provide more support to its distr

47、ibutors and invest more in A&P to promote its super-premium products, i.e. the Blue Dream series. Its S&D expenses ratio expanded by 0.5%pt to 4.8% in 1H19. And its G&A expenses ratio retained stable at 6% due to effective costs control. We expect sales in its home market to improve since Q3 2019F.

48、Yanghe has established two new HYPERLINK / sales companies in Sutong and Huaian areas within Jiangsu Province.Jiangsu Yanghe BreweryDec-17ADec-18ADec-19FDec-20FDec-21FRevenue (Rmbm)19,917.9424,159.8026,765.5029,936.6633,489.98Operating EBITDA (Rmbm)9,529.5211,506.8612,774.5514,550.0616,048.36Net Pro

49、fit (Rmbm)6,627.158,115.179,101.9410,536.0811,787.68Core EPS (Rmb)4.435.416.077.027.85Core EPS Growth12.5%22.1%12.1%15.7%11.8%FD Core P/E (x)25.2620.7018.4615.9614.27DPS (Rmb)2.553.203.594.154.65Dividend Yield2.28%2.86%3.21%3.71%4.15%EV/EBITDA (x)17.5214.3512.5810.699.34P/FCFE (x)61.9629.5718.4015.9

50、114.10Net Gearing-5.9%-10.8%-21.0%-30.6%-38.9%P/BV (x)5.725.024.453.923.47ROE24.0%25.8%25.5%26.1%25.8% Change In Core EPS EstimatesCGIS/consensus EPS (x)0.970.980.98Dairy sector enjoying strong demand growthChinas dairy output volume achieved strong growth of 7.4% YoY in 7M19. Mengniu and Yili repor

51、ted topline growth of 15.6% and 13.6% YoY in 1H19. We expect both of them to achieve low- to mid-teens top-line growth in FY19F. We have not seen any large-scale promotions, except for Mengnius increased promotion of Milk Deluxe in Jun ahead of the launch of new products. Mengniu maintains its guida

52、nce of a 50bp OPM expansion in FY19F, but we expect Yili to be under some margin pressure due to its investments in new business and R&D expenses. Raw milk price rose 45% YoY in 1H19, and will maintain at high level in 2H19F. Both Mengniu and Yili will improve their product mix to offset the raw mil

53、k price pressure.Mengniu (Add, TP: HK$36.8)We initiate coverage on Mengniu with an Add rating and a DCF-based TP of HK$36.8 (WACC: 8.8%), implying 28.3x FY20F PER. We like Mengniu for its strong mix upgrade capability, distribution channel reforms, and high quality raw milk resources. In July 2019,

54、Mengniu announced that it would sell its 51% stake in Junlebao to better focus on its mid- to high-end products to improve its margins in the long run. This asset disposal will provide Mengniu with an Rmb3.4bn before-tax gain in FY19F. We forecast that Mengniu will achieve a 10% sales CAGR in FY1821

55、F and that its net profit will grow at a 22% CAGR.In 1H19, Mengniu reported 15.6% YoY topline growth, supported by 9.5% volume growth and 6.1% ASP increase driven by mix upgrade. GPM maintained YoY stable at 39.1%, while SG&A expenses ratio dropped by 0.6ppt YoY, leading to OPM expansion of 0.5ppt Y

56、oY to 6.1% in 1H19. Management maintained its guidance of low-teens topline growth and operating margin expansion of 50bp YoY in FY19F. Although Mengnius raw milk price increased by c.5% YoY in 1H19 and were up further in July/Aug, we expect Mengniu to mitigate the negative impact by product mix upg

57、rades and forecast that Mengnius core earnings will grow 26.8% YoY in FY19F.Mengniu launched couple of high-end new products in 1H19, including grapefruit, yellow peach, and oat flavor to Just Yoghurt, cheese yoghurt, fat-free fresh milk and etc. High-end UHT milk, ie Milk Deluxe, achieved 20% YoY s

58、ales growth in 1H19, and room temperature yoghurt, Just Yoghurt, also achieved 24% YoY sales growth. Mengniu also launched organic Milk Deluxe in June to further drive up its product mix. Management expects Milk Deluxe to achieve Rmb20bn sales in FY19F, accounting for 26% of total sales, and managem

59、ent expects Milk Deluxe sales to reach Rmb30bn in the next 3 years.Mengniu also speed up B2B new retail model in 1H19. By end of June, the project covered 4,000 county level cities and added 200k retail points. Mengniu will continue to expand its B2B channel going forward.China Mengniu DairyDec-17AD

60、ec-18ADec-19FDec-20FDec-21FRevenue (Rmbm)60,15668,97777,56985,49194,040Operating EBITDA (Rmbm)4,1855,1796,6647,9139,147Net Profit (Rmbm)2,0483,0433,8064,6615,491Core EPS (Rmb)0.530.770.971.191.40Core EPS Growth47.4%25.1%22.4%17.8%FD Core P/E (x)53.9436.6029.2623.9020.28DPS (Rmb)0.120.180.290.360.42D