瑞信亚太地区医疗保健行业台湾医疗保健行业利基市场参与者乘势而上201932276页

DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.22March2019AsiaPacific/TaiwanEquityResearchHealthcareTaiwanH[e-mail]@credit-suisse.comINITIATIONNichemarketplayersridingontherisingtideFigure1:Globalhealthfoodsalesgrowat5%CAGRfrom2017-22ESalesinUS$bn(L-axis)andYoY%change(R-axis)Source:WorldBank,Euromonitor,CreditSuisseestimates■InitiatecoverageonTCIandGrapeKing.WebelieveTCIhasestablishedauniquepositioninthehealthfoodsupplychain,differentiatedbyitsindustry-leadingknow-howinproprietaryingredientengineering.WerateitanOUTPERFORMwithaNT$525TP(34%potentialupside)basedonthetrough20xNTM(Next-Twelve-Month)P/E.WehaveaNEUTRALratingonGrapeKingaswebelieveitisfairlyvaluedbutcouldbemoreconstructiveifweseeprogresswithitsforayintoSouth-EastAsiaover2020-21.GrapeKing’sbrandingbusinessesinTaiwanarealsorecoveringfromthelabelfalsificationscandalin2015.■Globalhealthfooddemandontherise.Webelievetheglobalhealthfoodsectorisinthemidstofamulti-yeargrowthcycleandforecastingtotalsalestohaveovera5%CAGRfrom2017andreachUS$268bnby2022E,drivenby:(1)acontinuingagingsocietyindevelopedcountries;and(2)increasingdisposableincomesandtheriseofthemiddleclassinemergingcountries,accompaniedbyaccelerating,agingpopulations.Specifically,webelieveChina'shealthfoodconsumptionisstillinitsinfancy,withgrowingmarketopportunitiescapitalisedonbyoutwardlookingTaiwanODMsleveragingontheirlongexperienceofqualitymanufacturingandexpandingofferingsintheirproprietaryrawmaterial/ingredientportfolios.■Taiwanleadershipwithlimitedcomparablepeers.LeadingTaiwanhealth-foodODMs,includingTCIandGrapeKing,alreadycapturethehighestvalue-addinthesupplychaincomparedtoChina/internationalpeers,havingmoresuperiorprofitabilityprofilesgiventheircontinuedfocusonproprietaryrawmaterial/ingredientdevelopment.Combinedwiththeirknow-howinqualitymanufacturingandscale,webelievethisalsosetsuphigherentrybarriersbarringpotentialpeersfromenteringinthelongterm.■Risks.(1)Slowingmacroimpactinghealthfooddemand;(2)tighteningregulatoryoversightinChina;and(3)potentialfoodscandalsimpactingconsumerconfidence.$160$171$183$196$210$2685.3%6.9%7.0%5.3%7.1%3%4%5%6%7%8%$100$150$200$250$300201320142015201620172022EGlobalhealthfoodmarketsizeYoY%change22March2019TaiwanHealthcareSector2FocuschartsFigure2:Chinahealthfoodforecasttoseea7.3%CAGRreachingRmb339mninsizeby2022SalesinRmbbn(L-axis)andYoY%change(R-axis)Figure3:AllthreerecenteconomiccrisesledtotroughNHE(NationalHealthExpenditure)asa%ofGDPNHEas%ofglobalGDPSource:ChinaNationalBureauofStatistics,CreditSuisseestimatesSource:Companydata,CreditSuisseresearchFigure4:TCI'sOPM%leadsoverseapeersandcatching-updirect-salesfocusedGrapeKingOPM%Figure5:GrapeKingandTCIcapturethehighestvalue-addinthehealthfoodsupplychainOPM%andROE%Source:Companydata,CreditSuisseresearchSource:Companydata,CreditSuisseresearchFigure6:TCI’sleadingknow-howinproprietaryIBD(IntegratedBioscienceDesign)ingredientsandqualitymanufacturingFigure7:GrapeKing’suniquesmile-curvebusinessmodelwithcompletevaluechaincoverageSource:CompanydataSource:Companydata$186$204$221$238$33910.1%9.7%8.3%7.5%4%5%6%7%8%9%10%11%$0$50$100$150$200$250$300$350$40020142015201620172022EChinahealthfoodmarketsizeYoY%change10.7%11.7%12.1%11.6%11.0%10.9%10.9%10.4%10.1%11.5%10.9%10.3%10.6%11.0%11.3%12.8%10.0%10.5%11.0%11.5%12.0%12.5%13.0%2000200120022003200420052006200720082009201020112012201320142015GlobalNHE%GDPAvg.%11.2%24%24%26%25%25%25%16%8%15%6%12%14%14%12%9%10%12%8%0%5%10%15%20%25%30%201620172018GrapeKingTCINutribiotechSirioPharmaKolmarBNHDyDoPharmaceutical26%25%13%12%11%19%9%0%16%19%0%5%10%15%20%25%30%GrapeKing(Brand+ODM)TCI(ODM)Herbalife(Directbrand)NuSkin(DirectBrand)S.F.C.(NaturalFoodBrand)2016OPM%2017OPM%2018OPM%2018ROE%22March2019TaiwanHealthcareSector3NichemarketplayersridingonrisingtideWeinitiatecoverageonTCIandGrapeKing.Webelievetheglobalhealthfoodsectorisinthemidstofamulti-yeargrowthcyclefundamentallysupportedbyastructuraldemographicshiftfromanageingpopulationinbothdevelopedanddevelopingcountries.WeexpectTaiwanhealthfoodODMstobethekeybeneficiariesfromrisinghealthfooddemandinChinahavingalreadyestablishedleadingedgesinthefieldandsupportedbyin-house-developedproprietaryrawmaterials/ingredients,qualitymanufacturingandscale.Thishasledtoenhancedvalue-addandsustainableprofitabilityversuspotentialpeersorrelatedplayersinthesupplychain.Inthissector,wepreferTCIoverGrapeKing.GlobalhealthfooddemandontheriseWebelievetheglobalhealthfoodsectorisinthemidstofamulti-yeargrowthcycle.Specifically,weforecastglobalhealthfoodsalestoreachUS$268bnby2022E,witha5%CAGRfrom2017.Webelievei