瑞银中国食品与饮料行业中国方便面产业低线城市带动了消费的持续复苏201961024页

GlobalResearch10June2019ChinaInstantNoodlesUBSEvidenceLabinside:LowertiercitiesledtocontinuousconsumptionrecoveryPotentialprofitabilityupsideunderpinnedbycontinuingpremiumisationInApril2019,UBSEvidenceLabconducted2,621interviewswithChineseconsumersaged18-64,residingacrosstier-1totier-5cities,tobetterunderstandconsumers'perceptions,behaviour,andbrandpreferencesininstantnoodles.Thissurvey'sresultsshowedthecontinuationofthepremiumisationtrendwementionedinour2017and2018studies,with60%ofregularbuyersnowspendingmorethanRmb5onaverageonabowlofnoodles,upfrom50%in2018.Ofregularbuyers,76%arewillingtopaymorethanRmb5forabowlofhealthy,nutritional,andtastyinstantnoodles,implyingfurtherASPupsidepotential,inourview.Weseemid-tolong-termprofitabilityupsidepotentialforTingyiCaymanIslands(Tingyi)andUni-PresidentChina(UPC),giventheirleadershipinthepremiumnoodlessegment.IncreasedpurchasefrequencypointstovolumeupsideThesurveyresultsshowedanobviousincreaseinpurchasefrequencyasaveragetimesofregularbuyerspurchasinginstantnoodlesperweekreboundedto0.76in2019(from0.59in2018,0.72in2017,and0.81in2016),drivenmostlybytheincreaseintier-2totier-5cities.Increasedpurchasefrequencyimpliesthepotentialreboundofconsumers'demandforinstantnoodlesin2019,inourview.ApolarizedconsumptionstructureislikelyforthenoodlesmarketDespiteTingyi'sandUPC'sleadingpositionsinthepremiumsegment,UBSEvidenceLab'ssurveyindicatedamuchhigherpurchasefrequencyfornon-premiumoverpremiumproducts,suggestingthemajorityofinstantnoodlesconsumedaremassproductsdespitecontinuouspremiumisation,inourview.Wethinkfurtherinvestmentsinproductdevelopmentandconsumereducationarerequiredgivenconsumers'stilllow(~30%)perceptionofinstantnoodlesashealthyandnutritionalin2019.Stockpicks:wepreferTingyioverUPCgivenitscheapervaluationWehaveupgradedTingyifromNeutraltoBuy,butmaintainourSellratingonUPC,withhigherearningsestimatesforboth.At8.2x2020EEV/EBITDATingyiistradingata15%discounttoUPC,andwefeeltheearningsdownsidefromitspricecutshasbeenfullyfactoredingivenVATcutssincethisApril.WeexpectTingyi'stwo-tieredbrandstrategyofgrowingpremiumproductofferings,whilemaintainingmass-marketdominance,willgrowitsinstantnoodlessharefrom2019.Tingyi'sbottledcoffeeofferingscanpotentiallybecomegrowthdriversfrom2020,asthenegativeimpactfromdecliningbottledwaterrevenueabates.InstantnoodlessectorvaluationsummaryNote:Pricesasof6June2019;Tingyi'sEV/EBITDAhasbeenadjustedforminorityinterests.Source:ThomsonReuters,UBSestimatesReutersSharePriceEPSCAGR(%)CompanyCodePriceNewOldtarget19E20E19E20E18-21E19E20ETingyiCaymanIslands0322.HK12.20BuyNeutralHK$14.468.6x8.2x16.2x18.9x4.7%4.54.8Uni-PresidentChinaHoldings0220.HK8.16SellSellHK$8.059.9x9.2x10.7x12.1x7.8%3.84.1Uni-PresidentEnterprises1216.TW81.50NeutralNeutralNT$80.009.8x9.5x15.9x16.3x5.7%3.13.4NissinFoodsHoldings2897.T6,620.00BuyNeutral¥7,70010.5x9.7xNANA2.5%1.51.8DividendYield(%)RatingEV/EBITDAROIC(post-tax)EquitiesAsiaFood&BeverageChristinePeng,[e-mail][e-mail][e-mail][phone]TingWang,[e-mail][phone]ChinaInstantNoodles10June20192ChinaInstantNoodlesP2UBSResearchTHESISMAPaguidetoourthinkingandwhat'swhereinthisreportOURTHESISINPICTURESMOSTFAVOREDLEASTFAVOREDTingyiCaymanIslands,NissinFoodsUni-PresidentChina,Uni-PresidentEnterprisesPIVOTALQUESTIONSQ:WillthepremiumisationtrendleadtoacceleratedrevenuegrowthfortheinstantnoodleindustryinChinain2019E?Verylikely,inourview.UBSEvidenceLabsurveyresultspointedtoincreasedaveragespendingperbowlofnoodles,togetherwithanobviousincreaseinpurchasefrequencyin2019.Atthesametime,weseeadditionalroomforproductupgradingtofurthermeetconsumers’demandforhealthy,nutritional,andtastyinstantnoodles.Thisisbecauseconsumers’positiveperceptiontowardsinstantnoodlesinthe2019surveydidnotcontinuetogrowcomparedwiththepreviousyears'results.AsTingyi’sandUPC'snon-premiumproductssawmuchhigherpurchasefrequencythanfortheirpremiumproducts,wepreferTingyi'stwo-tieredbrandstrategy,whichaimstogrowpremiumproductofferings,withmass-marketdominance,toUPC'sfocusonprofitability.moreUBSVIEWWebelievethemassmarketstillaccountsforthemajorityofinstantnoodlesconsumptionasUBSEvidenceLab'ssurveyindicatedamuchhigherpurchasefrequencyforTingyi’sandUPC'snon-premiumproductsoverpremiumproducts,despitetheirleadingpositionsinthepremiumsegment.Wefeelfurtherinvestmentsinproductdevelopmentandconsumereducationarerequiredgivenconsumers'stilllow(about30%)perceptionofinstantnoodlesbeinghealthyandnutritionalin2019.EVIDENCEUBSEvidenceLabsurveyresultsshow