20150630-光大证券-Changshouhua_Healthier_Choice_15页_472kb

报告摘要

Changshouhua (1006 HK) Company Report Summary

Core Content

Changshouhua is the leading domestic edible corn oil producer in China with a 30% market share and a strong position in the edible oil industry. The company has evolved from an OEM provider to a well-known brand, Longevity Flower, and is actively expanding its product range and sales network to maintain competitiveness and drive growth.

Main Points

Market Position: Changshouhua holds the top position in the domestic edible corn oil market with a 30% market share.
Consumer Trends: As consumers upgrade their consumption habits and prioritize healthier options, Changshouhua is well-positioned to benefit, especially since corn oil is seen as healthier due to its lack of trans fats.
Vertical Integration: The company controls the entire production process from corn processing to packaging, ensuring product quality and minimizing risks associated with third-party suppliers.
Product Diversification: In addition to corn oil, Changshouhua is exploring new markets, including seasoning products, and is expanding its product portfolio to include sunflower seed oil, olive oil, and rice bran oil.
Sales Network Expansion: The company is expanding its direct marketing channels in first- and second-tier cities and plans to increase its number of wholesale distributors and POS to 3,000 and 1 million by 2018, respectively.
Capacity Expansion: Changshouhua has expanded production capacity with a new plant in Hangzhou and plans to add a new production line in Guangdong by 2017 to meet growing demand.
Financial Performance: The company is forecasted to achieve a 17% revenue CAGR from FY15 to FY17, supported by own-brand growth and rising sales volume. Revenue growth is expected to be 20% YoY in FY15-16.
Valuation: The stock is valued at 14x forward P/E, which is a 30% discount compared to other Hong Kong-listed consumer names, leading to a target price of HK$8.90 with a 65% upside from the current price of HK$5.39.
Investment Highlights: The company is expected to outperform the sector due to its leading market position, strong brand reputation, and strategic expansion into new products and markets.

Key Information

Forecasted Revenue Growth: 17% CAGR from FY15 to FY17.
Sales Volume Growth: 20% YoY in FY15-16.
Target Price: HK$8.90, with a 65% upside.
Investment Rating: Buy.
EPS Growth: Expected to increase at a 26% CAGR over FY14-17E.
P/E Ratio: 14x forward P/E.
Dividend Yield: 3.71% as of 29 June 2015.

Risks

Reliance on One Product: The company's revenue is heavily dependent on corn oil sales, making it vulnerable to market fluctuations.
Changing Consumer Preferences: There is a risk of falling demand for corn oil if consumer preferences shift away from it.
New Product Acceptance: The success of new products depends on consumer education and acceptance.
Raw Material Costs: Corn embryo accounts for 90% of the cost of sales, and any cost inflation could impact profitability.
Food Safety Concerns: Recent food safety scandals may affect consumer confidence and sales.

Financial Highlights

Metric	2013	2014	2015E	2016E	2017E
Revenue (Rmb m)	2,930	2,779	3,210	3,771	4,399
Net Profit (Rmb m)	270	266	292	380	467
EPS (Rmb)	0.49	0.46	0.51	0.66	0.81
P/E (x)	8.8	9.3	8.5	6.5	5.3
DPS (HK$)	0.15	0.20	0.25	0.31	0.38
Yield (%)	2.8	3.7	4.6	5.8	7.1
EV/EBITDA (x)	4.3	4.3	3.8	3.0	2.5

Investment Summary

Price Target: HK$8.90
Upside: 65.12%
Rating: Buy
3M Avg. T/O (HK$ m): 7.1
YTD Performance (%): -10.2
PEG (x): 0.32
Dividend Yield (%): 3.7
FY1 P/E (x): 8.5
FY2 P/E (x): 6.5

Peer Comparison

Stock	Bloomberg Code	Price (HK$)	Mkt Cap (HK$ m)	3M Avg. T/O (HK$ m)	YTD (%)	FY1 EPS Growth (%)	FY2 EPS Growth (%)	2-year EPS Growth (%)	PEG (x)	Div Yield (%)	FY1 P/E (x)	FY2 P/E (x)
Changshouhua	1006 HK	5.39	3,091	7.1	-10.2	9.5	30.1	26.5	0.32	3.7	8.5	6.5
Want Want China	151 HK	8.15	107,096	195.7	-20.3	12.8	11.3	12.0	1.7	2.3	19.9	17.9
Tingyi	322 HK	15.44	86,527	177.0	-12.9	21.7	14.9	18.3	1.3	1.8	23.2	20.2
China Mengniu Dairy	2319 HK	38.20	74,920	266.3	19.4	18.3	18.0	18.2	1.2	0.9	21.0	17.8
Qingtao Brewery	168 HK	46.60	68,059	120.8	-11.4	6.9	10.3	8.6	2.8	1.2	23.8	21.6
Uni-President China	220 HK	7.16	30,926	97.4	0.3	135.4	18.9	67.3	0.5	0.2	33.9	28.5
Biostime International	1112 HK	21.40	13,039	85.4	34.3	9.9	6.1	8.0	1.5	3.1	11.6	11.0
Yashili International	1230 HK	2.39	11,342	10.6	9.1	10.0	28.6	18.9	1.3	0.8	24.0	18.7
China Huiyuan Juice	1886 HK	4.25	10,762	80.7	46.6	N/A	N/A	N/A	N/A	0.0	N/A	N/A
Tenwow International	1219 HK	3.19	6,615	13.9	49.1	29.4	4.5	16.3	0.7	2.0	11.6	11.1

Summary of Financials

Growth (Revenue): 8.4% in 2013, -5.2% in 2014, 15.5% in 2015E, 17.5% in 2016E, 16.6% in 2017E.
Growth (EBITDA): 13.6% in 2013, 0.7% in 2014, 15.1% in 2015E, 23.8% in 2016E, 19.3% in 2017E.
Growth (EBIT): 15.6% in 2013, -3.8% in 2014, 18.2% in 2015E, 28.4% in 2016E, 21.7% in 2017E.
Growth (Net Profit): 32.3% in 2013, -1.5% in 2014, 9.5% in 2015E, 30.1% in 2016E, 22.9% in 2017E.
Gross Margin: 20.4% in 2013, 20.0% in 2014, 21.3% in 2015E, 22.5% in 2016E, 23.2% in 2017E.
EBITDA Margin: 13.5% in 2013, 14.3% in 2014, 14.3% in 2015E, 15.1% in 2016E, 15.4% in 2017E.
Net Margin: 9.2% in 2013, 9.6% in 2014, 9.1% in 2015E, 10.1% in 2016E, 10.6% in 2017E.

Analyst Certification and Disclosure

The research analyst certifies that the views in the report reflect personal opinions and are not influenced by compensation or investment banking functions.
The report does not guarantee the completeness, reliability, or accuracy of the information provided.
No financial interest in the company is equal to or greater than 1% of its market capitalization.
No investment banking relationship with the company in the past 12 months.
The company is not involved in market-making activities.

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