汇丰银行中国食品与饮料行业中国食品与饮料行业2019年展望借鉴历史谋求稳定2019257页

Disclosures&DisclaimerThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.Issuerofreport:HSBCQianhaiSecuritiesLimitedViewHSBCQianhaiSecuritiesResearchat:Amacroslowdownanddemographicchangearethekeyconcerns;thefocusisonproductupgradesandcostcontrolLearningfromJapan,webelievethatF&Bleaderscanachievesteadylong-termgrowthdespitemacropressuresWelikecompanieswhichcandeliverstableearningsgrowth:Jonjee,ChongqingBrewery,MoutaiandWuliangye(allBuys)Stabilitythepriorityin2019.Wethinkconsumerdemandwillstabilisebutcouldbefacingsomeheadwinds,followingtheeconomiccycle,atrendthatisalreadybeingreflectedinsomesub-sectors.Continuedurbanisationshouldsupportgrowthinlower-tiermarkets,creatingopportunitiesforchannelpenetration.Industryleadersincondiments,beerandbaijiuhavegreaterresilience,helpedbytheirstrongbrands.Wethinkthemarketleaderscanachievedouble-digitrevenuegrowthin2019ebylaunchingnewproducts,penetratinglower-tiercities,andupgradingtheirproductmix.TheJapanexperience.LookingatwhathappenedinJapan,wefindthatleadingconsumerstaplecompaniescanoutperformthemarketindexeveninhardtimes.Inaddition,China’sdemographicstructurehasmanysimilaritiestoJapan’sattheendofthe20thcentury–alowbirthrate,anageingpopulation,andfeweryoungpeopleofworkingagetotakecareoftheelderly.TheNikkei225indexfellmorethan60%atonepointinthelast10yearsofthe20thcentury.However,companiesinthespirits,beer,instantfoodandmeatproductsectorsrecordedrelativelystablegrowth,andsectorleadersoutperformedthemarketindexdespitemacropressures.Productmixupgradesandcostcontrolarethekeystrategies–welikeJonjee,ChongqingBrewery,KweichowMoutaiandWuliangye.Inthisreport,weupdateourtargetprices,butdowngradeHaitiantoHoldonvaluationasthestockisnowtradingata40x2019ePE,2sdaboveitshistoricalmean.Majorcatalysts:AccelerationofSOEreform,stronger-than-expectedtaxcutpolicy,afurtherdeclineinrawmaterialprices,bettermixupgrade,andM&Aopportunities.Majordownsiderisks:A-shares’weightingintheMSCIEmergingMarketsIndexfailingtoincreaseto20%,slower-than-expectedSOEreform,asharpincreaseinrawmaterialprices,macrouncertainties,foodsafetyrisks,reduceddemandduetoextremeweatherconditions,andrisingindustry-relatedtaxrates.KatharineSong*(1700517120001)HeadofA-shareFood&BeverageandPulp&[e-mail][phone]*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulationsChinaFoodandBeverageEquitiesChina18February2019SummaryofratingsandtargetpricesCompanyTickerCurrencyPrice__________TP_______________Rating_____OldNewOldNewUpsideJonjee600872CHRMB31.7030.2236.44BuyBuy15.0%KweichowMoutai600519CHRMB725.30819.46804.95BuyBuy11.0%Wuliangye000858CHRMB64.7077.4480.62BuyBuy24.6%ChongqingBrewery600132CHRMB32.8835.7136.05BuyBuy9.6%HaitianFlavouring603288CHRMB75.5576.6877.40BuyHold2.5%Source:Wind,HSBCQianhaiSecuritiesestimates.Priceasof11February20192019outlook:Learnfromhistory,seekstabilityEquities●China18February20192LookingforthestableonesfromhistoricalexperienceAccordingtoHSBC’sstrategyreport“MakingmoneyfromnortheastAsiandemographics:whyoldisgold”,23May2018,Chinesepeopletendtosavemoreastheyage.Asaresult,theirsavingsareusedmoreproductivelytoboosttheeconomy.WeareconfidentaboutthefutureofChina’slong-termgrowth,althoughrecentmacrodatapointsarecausingsomeconcerns.First,whileGDPgrowthin2018wasstillrelativelystrong,up6.6%y-o-y,growthsloweddownfrom6.8%y-o-yinQ12018to6.4%y-o-yinQ42018.Second,thebirthratehasbeenshrinkingfortwoconsecutiveyears,whiletheproportionofpeopleover60yearsoldhasreached17.9%.Thepopulationgrowthrateisdecliningandtheageingtrendisbecomingmoreobvious.Toassesswhatthismeansfortheconsumersector,welookatJapan’sexperienceattheendofthe20thcentury.Backthen,Japanencounteredsimilarbutmoreextremeconditions:aneconomicdownturn,aslowdowninpopulationgrowth,anageingpopulation,andchangesinconsumerbehaviour.Basedonouranalysisofover25listedcompaniesinJapan’sF&Bindustry,wefoundthateveninsuchtoughmacroconditions,theperformanceofcompaniesinthecondiments,alcohol,instantfoodandmeatproductssectorsshowedrelativelystablegrowth.Industryleaderscanalwaysgrowtheirrevenuebylaunchingnewproductstomeetnewdemand,developingoverseasmarkets,andimprovingtheirproductmix.InChina,wethinkbaijiuandcondimentscompaniescandelivergoodstockreturnsevenduringaneconomicdownturn.Inthebeerindustry,aftersalesvolumespeakedin2014,brewersexpandedtheirhigh-endcapacityandinitiatedcostcontrolmeasures.Weexpectrevenuegrowthofbeercompaniestograduallyrecover.In2019e,weexpectdemandforhealthyandhigh-endproductstoincrease,giventhedemographicchanges,andthiswilldriveproductmixupgrades.Asaresult,webelievethattheleadingcompaniesincondiments,liquorandbeersectors,whichalreadyhavestrongbrandingpowerandtheabilitytocontrolcosts,willbeabletoachieverobustsalesevenduringaneconomicslowdown.Preferredstocks:Jonjee,ChongqingBrew