20160425-美银美林-1Q16_a_mixed_bag_Reiterating_Underperform_13页_1mb

Tsingtao Brewery Summary

核心内容

Tsingtao Brewery is the second largest beer producer in China with an 18% market share in 2015. It is a well-known brand with a strong presence in the domestic market. The company operates with around 60 brewing plants and has a total annual capacity of approximately 13 million tons. The government holds a 30.5% stake, Asahi holds 20%, and Mr. Chen holds 3.6%.

主要观点

• 财务表现：Tsingtao's 1Q16 net profit after tax (NPAT) rose by 2.5%, driven by a 50 basis point net margin expansion, despite a 5.3% drop in sales volume. This is the seventh consecutive quarterly decline in sales volume since 2H14. The principal brand's performance was particularly weak, with a 7% drop in sales volume, contributing to 54% of total sales. High-end principal brands also saw a 2% decline.

• 利润率变化：Despite falling sales volume, Tsingtao managed to expand its gross margin by 180 basis points YoY to 34%, due to a significant drop in packaging costs. SG&A expenses fell by 2.5% YoY but increased to 23.9% of sales. The tax rate rose to 32.3% due to more subsidiaries turning loss-making.

• 市场表现与估值：The company is rated as Underperform for all share classes (H, A, ADR). The price objective is set at HK$27.0 (CNY24.1) for A-shares and HK$27.0 (US$17.2) for H-shares and ADRs. The valuation is based on a blend of P/E and DCF, with the P/E ratio at 20x for A-shares and 19.5x for H-shares and ADRs. The company's P/E ratio is lower than its 10-year average, indicating potential downside risks.

• 未来展望：The analysts expect a 2.2% increase in sales volume for the remainder of the year. They highlight the importance of weather conditions, as a hotter summer could boost beer and beverage sales. They also note the risk of further slowdown in sales, rising costs, and increased competition.

关键信息

财务数据

估值数据

财务预测与现金流

资产负债表

现金流

关键比率

投资理由

Tsingtao Brewery is rated as Underperform. The risk is skewed towards the downside. The company's market share growth has paused in 2015, with profit from all regions except Shandong seen to drop YoY. Core operating metrics are deteriorating as non-core income contributed 50% of reported NP in 2015. The company is expected to deliver weaker earnings outlook compared to large-cap staple peers.

价格目标与风险

• A-shares (TSGAF): The price objective is CNY24.1, derived from a blend of P/E and DCF. It implies a 20x P/E ratio for 2016E, which is a 3% premium over H-shares.
• H-shares (TSGTF) and ADRs (TSGTY): The price objective is HK$27.0 (US$17.2), derived from a blend of P/E and DCF. It implies a 19.5x P/E ratio for 2016E, which is a 28% discount to Tsingtao's 10-year average trading multiple.

上升风险

• Tsingtao's defensive nature in a bear market if the overall stock market turns south.
• A significant M&A transaction at a reasonable price.
• A faster-than-expected decline in barley prices.
• A higher-than-expected increase in beer prices.
• Better sales mix improvement.

下降风险

• Further slowdown in beer sales.
• Rising raw material costs.
• Increasing marketing expenses.
• Severe competition.

分析师认证

• Tina Long, CFA: Certifies that the views expressed in this report accurately reflect her personal views and that no part of her compensation was related to the specific recommendations or views in this report.