20131025-DBS_Group-Food___Beverage_Cart_-_October_Episode_40页_739kb

报告摘要

Summary of DBS Group Research: Food & Beverage Sector Analysis (October 25, 2013)

Core Content

This report provides an analysis of the Chinese Food & Beverage (F&B) sector, focusing on the performance of key sub-sectors such as beer, dairy, and others. It outlines the current trends in raw material costs, the impact on margins and profitability, and provides investment recommendations for various companies.

Main Points

Dairy Sector:
- Raw milk prices in China continue to rise rapidly, with a 3.5% month-over-month increase and 7.6% year-over-year increase in October 2013.
- The recent price increase may not be fully offset by the ASP (Average Selling Price) rise of dairy producers, potentially leading to margin erosion.
- Upstream dairy stocks are preferred over downstream producers due to the potential for cost control and better long-term performance.
- Mengniu (2319 HK) is recommended for its product line restructuring efforts, Modern Dairy (1117 HK) for improving cash flow, and Tingyi (322 HK) for bottoming-out margins.
Beer Sector:
- Barley prices from Canada and Australia have been continuously declining, which could benefit the beer industry in the coming year.
- Production volume growth for the beer industry in September 2013 increased slightly, and the growth rates for Tsingtao (168 HK) and CRE (291 HK) are expected to be double-digit year-over-year in 3Q13.
- Tsingtao and CRE are highlighted as leaders in sales volume growth and margin improvement.
Noodle and Beverage Players:
- The uptrend in raw material costs for these players was halted in October 2013.
- Tsingtao and CRE are expected to continue outperforming due to their strong market positions and improving margins.
Investment Strategy:
- This month: Prefer upstream dairy names over downstream producers and favor beer stocks.
- Top 12-month picks include Mengniu, Modern Dairy, Tingyi, CRE, and Tsingtao Brewery.
- Recommend shorting China Foods (506 HK) and Yurun (1068 HK) due to their prolonged and overdue recoveries.

Key Information

HSI: 22,836
Important Disclosures: The report contains important disclosures at the end and is only for distribution to Institutional Investors, Expert Investors, or Accredited Investors as defined in the Securities and Futures Act Chapter 289 of Singapore.
Chart of the Month:
- Wild raw milk price in China
- Plunging Canadian Malting Barley Price

Investment Recommendations

Company	Code	Rating	Target Price (HK$)
Mengniu	2319 HK	BUY	36.00
Modern Dairy	1117 HK	BUY	31.00
Tingyi	322 HK	BUY	33.00
CRE	291 HK	BUY	30.00
Tsingtao	168 HK	BUY	65.00
China Foods	506 HK	FV	-
Yurun	1068 HK	FV	-

Key Financial Metrics

Company	PE 13Fx	PE 14Fx	P/Bk 13Fx	P/Bk 14Fx	ROE 13Fx	ROE 14Fx
Mengniu	24	29	1.48	2.26	10%	10%
Tingyi	33	36	0.43	0.18	5%	5%
CRE	30	28	0.45	0.07	15%	10%
Tsingtao	29	22	0.02	0.02	10%	10%
China Foods	8	14	0.01	0.02	0%	0%
Yurun	11	29	(0.05)	0.00	5%	25%

Sub-sector Performance

Beer

YTD Growth: Increased slightly in September 2013.
Key Players: Tsingtao and CRE are leading in sales volume growth and margin improvement.

Dairy

YTD Growth: Inched down in September 2013.
Raw Milk Prices: Still rising, with potential for margin erosion if not offset by ASP increases.
Consumer Behavior: More consumers in top-tier cities are turning to imported products due to rising domestic prices.

Slaughter & Meat Processing

YTD Growth: Remained weak.
Key Players: China Yurun and Sumpo Food are part of the sector, with China Yurun being a notable player.

Instant Noodle & Beverage

YTD Growth: Mixed performance, with some companies showing positive growth.
Key Players: Tingyi and Want Want are highlighted for their performance and market share gains.

Soft Drink

YTD Growth: Mixed, with some sub-sectors like carbonated drinks showing positive growth.

Sensitivity Analysis

Company	Segment	Material	% of COGS	YTD y-o-y %	YTD vs FY12	Change %	Impact to EBIT
Tingyi	Beverage	Sugar	10%	-13.5%	-12.2%	0.0%	57%
Tingyi	Beverage	PET	60%	9.1%	7.8%	7.5%	41%
Tingyi	Instant Noodle	Palm oil	14%	-22.1%	-18.5%	-18.6%	40%
Tingyi	Instant Noodle	Wheat flour	16%	11.0%	10.5%	9.4%	55%
Uni-President	Beverage	Sugar	10%	-13.5%	-12.2%	-12.2%	65%
Uni-President	Beverage	PET	55%	9.1%	7.8%	7.5%	25%
Want Want	Rice Cracker	Rice	16%	-3.7%	-3.5%	-3.4%	24%
Want Want	Beverage	Milk powder	33%	61.3%	59.8%	58.9%	52%
Want Want	Beverage	Sugar	4%	-13.5%	-12.2%	-12.2%	51%
Want Want	Beverage	Tin	50%	5.8%	5.1%	4.6%	590%
Want Want	Snacks	Milk powder	6%	61.3%	59.8%	58.9%	23%
Want Want	Snacks	Sugar	17%	-13.5%	-12.2%	-12.2%	25%
Want Want	Snacks	Film	33%	9.1%	7.8%	7.5%	25%
Mengniu	Dairy	Milk	50%	7.6%	7.1%	6.2%	100%
China Foods	Beverage	Sugar	15%	-13.5%	-12.2%	-12.2%	40%
China Foods	Beverage	Aluminum	20%	-7.7%	-7.0%	-7.0%	1.1%
China Foods	Beverage	PET	15%	9.1%	7.8%	7.5%	0%
CRE	Beer	Barley	15%	30.3%	26.1%	26.8%	22%
CRE	Beer	Rice	8%	-3.7%	-3.5%	-3.4%	0%
CRE	Beverage	PET	70%	9.1%	7.8%	7.5%	5%

Conclusion

The report emphasizes the importance of monitoring raw material cost trends and their impact on different sub-sectors within the F&B industry. It highlights the potential for margin erosion in the dairy sector due to the rapid increase in raw milk prices and recommends a preference for upstream players. In contrast, the beer industry benefits from falling barley prices, and companies like Tsingtao and CRE are expected to outperform. The analysis also includes a detailed sensitivity table showing the impact of raw material cost fluctuations on EBIT.

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