德意志银行-中国消费品行业研究(1)

GEMS:AsiaChinaConsumerRetail/WholesaleTrade30June2006Abuyer'sguideAnneLingResearchAnalyst(852)[e-mail]ghtDairySaSaandDicksonConceptreportedin-lineresultswithoutmuchsurprises.WedowngradedtwoAsharecompanies,SuningandBrightDairy-botharetradingatunsubstantiatedhighvaluations.AnotherDairyindustrymogul,ChinaMengniu,isofftoagoodstartbutvaluationisquitefair.WorldCupfevercontinues-willitimpactretailsalesinHK?OperatorssuchasSaSadidsayJunesalesweresoft.WearesellersofSuningandBrightDairythisweek.DeutscheBankAG/HongKongAllpricesarethosecurrentattheendoftheprevioustradingsessionunlessotherwiseindicated.PricesaresourcedfromlocalexchangesviaReuters,Bloombergandothervendors.DataissourcedfromDeutscheBankandsubjectcompanies.DeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.Independent,third-partyresearch(IR)oncertaincompaniescoveredbyDBSI'sresearchisavailabletocustomersofDBSIintheUnitedStatesatnocost.CustomerscanaccessthisIRat(002024.SZ),CNY51.30SellBrightDairy(600597.SS),CNY8.15SellCompaniesFeaturedSuningAppliance(002024.SZ),CNY51.30Sell2005A2006E2007EP/E(x)16.237.231.5EV/EBITDA(x)8.318.815.8Price/book(x)5.76.45.2BrightDairy(600597.SS),CNY8.15Sell2005A2006E2007EP/E(x)20.435.531.6EV/EBITDA(x)9.415.013.7Price/book(x)2.23.83.7Consumer&MediaTeamAnneLing,SectorHead85222036177JuliaXu85222036179MabelWong85222036178RebeccaJiang85222036152EugeneYoeh85222036181Mohd-HzemAbd-Rahman60320536769YoungroeKim8223168907PaulineChong6564236760LorraineKuo65221922821JeanZhou862138962833RelatedrecentresearchDateBrightDairyAlert-SellSlowrecovery;downgradetoSell,JeanZhou29Jun2006SuningAppliance-SellUnwarrantedpremium;downgradetoSell,JeanZhou23Jun2006ChinaMengniuDairyCoLtd-Hold;Offtoagoodstart,MableWong27Jun2006Amorepacific-BuyPostde-mergervalueanalysis,SarahPark27Jun2006CompanyResearchIndustryUpdateCompanynews„DenwayMotors—Forecastslowered,maintainHold„GlobalBio-Chem—Potentialspin-offofcertainbusinesses„GudangGaram–Downsideprotectionwithdecentyield„SuningAppliance–Unwarrantedpremium;downgradetoSell„ChinaMengniuDairyCoLtd-Offtoagoodstart„FarEasternTextile—Lookingforabetterfuture„Amorepacific–Postde-mergervalueanalysis„Amorepacific–KoreaStockExchangeannouncesofficialbaseprices„TexhongTextileentersintoLetterofIntentwithDowChemicaltoco-marketXLA-relatedproducts„BrightDairy–Slowrecovery;downgradetoSell„CharoenPokphandFoods–Improvingprospectsforexportsandlocalsales„DicksonConcepts–Broadlyin-lineFY06results„Giordano--Toopen20+BEstoresinTaiwan„ASTROAlert-TheAstroMaxPersonalVideoRecorderhasarrived„ClearMedia–ExtendedtheleasecontractinBeijing„Uni-President--ChinasubsidiarieslooktogolistinginHK„SaSa–In-lineFY06resultsSectornews„HK/ChinaRetail–H&MdebutsinAsia„HKMedia--WorldCupBroadcastrights„USRetail--ReportedrisingconsumerconfidenceinJuneafteradeclineinMay30June2006Retail/WholesaleTradeConsumer&MediaPage2DeutscheBankAG/HongKongCompanynewsDenwayMotors—Forecastslowered,maintainHold(0203.HKHKD2.50Hold)MaintainHoldWelowerourTPtoHK$2.50andmaintainourHoldratingonthestock.Wehaveloweredourearningsforecastsinlightofheightenedcompetitioninthemid-endcarsegmentwhichrepresentsoverhalfofthegroup'sportfolio.Wethinkthestockisfairlyvaluedbasedonourviewthatprofitswillhavelittleroomforgrowthin2006and2007.PleaserefertofullreportEugeneYeohGlobalBio-Chem—Potentialspin-offofcertainbusinesses(0809.HKHKD2.72Sell)GlobalBio-chem(GBT)(809.HK,Sell)announcedlastweekthatitisconsideringthefeasibilityofaspin-offofcertainbusinesses.Thespin-offplanisstillatapreliminarystageandnoconcretetimetablehasbeenfixedatpresent.Managementisoutoftownandnotavailabletogivemorecoloursonitspotentialspin-offplan.DBviews:„GivenheftycapexofHK$1bnthatcannotbemetbyinternalcashflow(operatingenvironmentstillweak!),wearenotsurprisedGBTwouldseekotherexternalfinancinglikedebtorequity.„Interestrateupcylecoupledwithlitigationoverhangwouldprobablyheightenitsdebtfinancingcost.Equityfinancingcouldbeabetteroption.„Whichprojectsarespin-offcandidates?Polyoland/orcornsweetenersarelikely.Themajorityofthisyear'scapexisearmarkedforthesetwoprojects.„IfGBTspinsoffpolyolonly,itshouldbeaHKGEMlisting.Withnoearningstrackrecord(nowintrialrun),itdoesnotmeettherequirementsforamainboardlistinginHK.Itcanalsoseekanoverseaslisting.IPOvaluationboilsdowntothecompany'sassumptionsandDCFcalculation.Wehavenotfactoredinthepolyolprojectintoourmodelforwearedoubtfulofitscommercialviability.„Alternatively,GBTcanbundleitsprofitablecornsweeteners/cornprocessingbusinesseswithpolyoltolistontheHKmainboard.PE-wiseshouldbesimilartowhatGBTisnowtradingatiec.10xFY07PE(ourest).„Allinall,itisearlydaystocommentontheimpactofthisspin-off(atve