china consumer & media -...

Deutsche Bank Markets Research

Asia

China

Consumer

Periodical

Consumer & Media

Date

11 April 2016

A buyer's guide

________________________________________________________________________________________________________________

Deutsche Bank AG/Hong Kong

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.

Anne Ling

Research Analyst

(+852 ) 2203 6177

[email protected]

Agricultural commodity prices Company news

Gehua CATV – More uncertainties on long-term outlook; new TP of CNY17.2

Li & Fung – Private-side Fung Capital Asia sells 26% stake in Future Supply Chain Solutions

Biostime – Refinances certain facilities Chongqing Department Store – Total sales declined 0.2% yoy in 2015 Marks & Spencer Group Alert – More appealing trends in store Anta – AGM: management sees 1Q16 SSSg in-line with its expectation Suning – Company as second-largest shareholder increases

shareholding Chow Tai Fook – Relocates a Mong Kok store to save rent of

HKD4.05m per month Sasa – Buys back shares for employee share award scheme Yong Sheng – Buys leading French lace producer Desseilles Maoye – To acquire 70% interest in Inner Mongolia Victoria

Commercial Laox – Ceases operations of all stores in China Thai Union Group PLC – Core earnings set to show strong recovery in

1Q16F ITC – Will larger warning on cigarette packs impact volumes? Belle International – Women not ready to go barefoot; maintaining Buy Biostime – Unsustainable high growth; maintaining Sell Bright Dairy – To sign up a new trusteeship contract for Tnuva's

operations Gome – Online momentum to continue in FY16; maintaining Buy Yili – Key takeaways from post-results conference call Koradior – Single-digit SSSg in 1Q16 Bright Dairy – Vice general manager resigns Gree – Suspension to continue till 20 May CJ CGV – CJ CGV acquires Turkey and Indonesia cinema stakes GS Retail – Favourable risk-reward and structural growth of CVS;

upgrading to Buy Godrej Consumer – Acquisition of SON (Strength of Nature)

Sector news China Ladies' Footwear – Stella: tough 1H for both export and

domestic segments China Consumer – Carrefour China opens in Haikou China Media – LeSports launches paid membership aimed at 'watch-

to-pay' market

11 April 2016

Consumer

Consumer & Media


Korea Travel Retail – New stores struggling to survive amid unfavourable environment

Indo Belanja – Boost to disposable income from higher personal tax exemption

India Consumer – Headwind for FMCG players exposed to South Africa?

Athletic Footwear Weekly – Report for weekly data ended Apr. 2 HK Media – ViuTV starts operations and will disclose TV ratings in May HK Apparel – Uniqlo cuts prices for certain SKUs in HK by up to 30.3% China Apparel – E-Land to list China business in China China Catering – HK float on the menu for hotpot chain Haidilao

offshoot Global Retail – German fashion retail sales down 6% in March Greater China Consumer – Trends in consumer demand and supply

chain for footwear/apparel China Consumer – Wahaha expands robot production to transform

business China Consumer – China drying machine sales to exceed 250,000 units

by 2020 China Media – Xiaomi invests USD25m in Indian firm Hungama China Sports – Alibaba announces USD5.5m e-sports tournament Indo Media – March ratings: MNCN and SCMA remained at #1 and #2 China/HK Watch & Jewellery Retailers – Read-through of EWJ’s 2015

results and 2016 outlook HK Retail – HK tourist arrivals down 13.6% in Jan-Feb 2016 Greater China Consumer Electronics – Taiwan’s Foxconn signs deal to

take over Japan’s Sharp China Consumer – Kao Group partners with Chinese e-tailer Korea movies – Korean movie industry finding opportunities in China

11 April 2016

Consumer

Consumer & Media


Agricultural Commodity Prices

Input cost trackers: wow change

Figure 1: Input cost trackers

Unit Date Latest price Change Average Price

WoW MoM YoY Jan-15 Feb-16 Mar-16

US soybean CBOT (1M futures) USD/Bushel 8-Apr-16 9.1 -0.2% 3% -3% 8.8 8.7 8.9

China soymeal spot price Dalian RMB/t 8-Apr-16 2,450.0 -33.8% -36% 3% 2,608.0 2,606.7 2,502.5

China crush margin RMB/t 8-Apr-16 6.0 #DIV/0! -62% -89% 98.2 99.8 11.5

China soybean oil spot price Dalian RMB/MT 8-Apr-16 6,200.0 0.8% 5% 13% 5,830.0 5,866.7 5,970.0

US corn (1M futures) USD/Bushel 8-Apr-16 3.6 2.3% -1% -4% 3.6 3.6 3.6

China corn (1M futures) RMB/t 1-Apr-16 1,704.0 -14.8% -15% -31% 2,046.6 1,995.5 1,932.0

US wheat (1M futures) USD/Bushel 8-Apr-16 4.6 -3.3% -2% -13% 4.8 4.6 4.6

China wheat (1M futures)

Strong wheat RMB/t 1-Apr-16 2,912.0 4.7% 5% 12% 2,890.8 2,773.3 2,795.3

Hard wheat RMB/t 1-Apr-16 2,543.0 7.3% 7% -6% 2,358.8 2,370.0 2,413.3

Malaysia palm oil (1M futures) MYR/MT 8-Apr-16 2,664.0 -2.6% 3% 25% 2,318.4 2,507.3 2,576.5

US sugar 11 (1M futures) USD/Bushel 8-Apr-16 0.147 -3.2% -3% 14% 0.14 0.13 0.15

Fonterra milk powder

Whole milk powder USD/t 5-Apr-16 2,013.0 2.1% 2% -20.7% 2,199.1 1,920.9 1,972.7

Skimmed milk powder USD/t 5-Apr-16 1,721.0 -0.6% -4% -30.2% 1,862.4 1,776.9 1,766.5

China raw milk RMB/kg 23-Mar-16 3.54 0.0% 0% 4% 3.56 3.56 3.54

US orange juice (1M futures) USD/lb 8-Apr-16 1.4 -5.8% 17% 23% 1.30 1.31 1.28

PET resin (monthly) USD/MT Mar-2016 861.0 na 9% -9% 778.8 791.3 861.0

Crude oil USD/bushel 8-Apr-16 41.94 8.5% 8% -28% 31.9 33.5 39.8

Aluminium USD/MT 8-Apr-16 1,520.0 -1.0% -3% -14% 1,494.6 1,527.0 1,536.3

Pulp (China NBSK) RMB/t 5-Apr-16 3,828.2 -0.6% -1% -6% 3,921.9 3,882.3 3,853.4 Source: Bloomberg Finance LP, MOFCOM, China Custom, CZGM, Fonterra, MOA, CMA

11 April 2016

Consumer

Consumer & Media


PRC food prices trackers

Figure 2: PRC food prices trackers

Unit Date Price Change Average Price

Latest Latest WoW MoM YoY Jan-16 Feb-16 Mar-16 Jan-14 Dec-13 Jan-14

Pork (wholesale) RMB/kg 1-Apr-16 25.34 0.4% 3.3% 38.6% 23.41 24.51 24.81

Live hog price Rmb/kg 30-Mar-16 20.09 2.7% 8.9% 59.4% 17.60 18.61 19.20

Pig to feedstuff ratio - 30-Mar-16 10.10 2.6% 13.9% 97.3% 8.40 8.74 9.48

Number of live hogs Million

Head

Feb-16 352.89 NA -5.50% -6% 373.43 352.89 NA

Chicken (retail) Rmb/kg 1-Apr-16 20.48 0.1% 0.6% 3.3% 20.17 20.36 20.40

Day-old-chick (wholesale) RMB/chick 5-Apr-16 0.64 -26.9% -59.6% -25.1% 1.20 1.11 1.32

Average fish (wholesale) Rmb/kg 1-Apr-16 20.45 -0.5% 0.0% 3.4% 20.13 21.04 20.46

Eggs (retail) Rmb/kg 1-Apr-16 10.13 -0.3% -2.9% -4.5% 10.35 10.60 10.28

Average vegetable (wholesale) Rmb/kg 1-Apr-16 6.09 0.0% 3.8% 41.5% 4.76 5.93 6.00

Average fruit (wholesale) Rmb/kg 1-Apr-16 6.29 -0.7% -0.3% -16.6% 6.05 6.40 6.32

PRC Dairy products (retail)

Milk Rmb/l 1-Apr-16 11.2 0.2% 0.1% 3.3% 11.22 11.21 11.19

Yogurt Rmb/l 1-Apr-16 14.1 0.1% 0.0% 2.3% 14.07 14.11 14.12

Import infant formula Rmb/kg 1-Apr-16 213.6 0.0% 0.1% 1.9% 211.72 212.86 213.38

Domestic infant formula Rmb/kg 1-Apr-16 166.4 0.0% 0.6% 1.0% 164.93 165.11 165.80

Soybean oil (retail) Rmb/l 1-Apr-16 11.5 0.1% -0.1% 0.2% 11.46 11.53 11.51

Small pack rice (retail) Rmb/kg 1-Apr-16 6.5 0.0% -0.2% 0.6% 6.52 6.53 6.53

Small pack flour (retail) Rmb/kg 1-Apr-16 5.8 -0.2% -0.3% -0.2% 5.77 5.78 5.77

White sugar (retail) Rmb/kg 1-Apr-16 10.7 0.1% 0.2% 0.1% 10.69 10.71 10.70 Source: MOFCOM, MOA, Efeedlink *MOFCOM start new data series

11 April 2016

Consumer

Consumer & Media


Figure 3: PRC raw milk price Figure 4: Fonterra average WMP and SMP All contracts

2.00

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SMP All Contracts WMP All Contracts

Source: Hesitan.com

Source: GlobalDairyTrade Platform

Figure 5: US Corn Price - CBOT Future (1st month) Figure 6: PRC corn future price

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on

Source: Bloomberg Finance LP

Source: MOFCOM

Figure 7: PRC Soybean Meal Spot Price Dalian Figure 8: PRC Soybean Oil Spot Price Dalian

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11 April 2016

Consumer

Consumer & Media


Figure 9: PRC pork wholesale price Figure 10: PRC average live hog prices

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Source: MOFCOM

Source: eFeedlink

Figure 11: Foreign vs. domestic branded infant formula

retail prices

Figure 12: Domestic wheat future price

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Strong Gluten Wheat Hard Wheat

Source: MOFCOM

Source: MOFCOM

11 April 2016

Consumer

Consumer & Media


Company news

China/HK

Gehua CATV – More uncertainties on long-term outlook; new TP of CNY17.2

(600037.SS, CNY 15.75, Hold)

Cable TV solid, but growing risks on broadband and investment; Hold

Gehua’s 2015 earnings missed DBe on a lower government grant, but its core cable TV

revenue again demonstrated resilient growth of 6% YoY. We remain on the sidelines

on Gehua’s shares after witnessing heavier price competition in its broadband

business and execution risks in investing the proceeds from a recent rights issue. We

reduce our revenue growth assumptions and factor in the share base expansion

(16%/19% for fully diluted/weighted average shares), driven by the rights issue and

convertible bond conversion. Maintaining Hold.

Please refer to full report:

http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afbf04f

John Chou

Li & Fung – Private-side Fung Capital Asia sells 26% stake in Future Supply Chain Solutions

(0494.HK, HKD4.52, Sell)

Private equity (PE) firm SSG Capital Management has picked up a 40% stake in

Kishore Biyani-promoted Future Supply Chain Solutions from existing investors for

INR580 crore. Future Retail, the largest shareholder, offloaded 14%, and Li & Fung

exited by selling its 26% stake in the logistics company. Fung Capital Asia, the PE

investment arm of the families of Victor Fung and William Fung that controls Li & Fung

in Hong Kong, received about INR380 crore (USD57m) for its stake, according to

people familiar with the deal. It had invested USD30m to acquire the stake in 2009.

Source: 8 April 20016, economictimes.indiatimes.com

Deutsche Bank’s comment

Fung Capital Asia belongs to the parent company.

Biostime – Refinances certain facilities

(1112.HK, HKD30.15, Sell)

Biostime recently appointed an international financial institution to arrange and underwrite

the following facilities: (a) a USD450m senior secured term facility to be made available to

an indirect subsidiary of the company in order to refinance the bridge financing, which

refers to the facility agreement entered into by the company and its indirect subsidiary,

Biostime Healthy Hong Kong Limited, in respect of certain bridge financing of up to

USD450m for financing the acquisition of 83% equity interest in Swisse Wellness Group

Pty Ltd.; (b) a USD395m facility to be made available to the company for future refinancing

11 April 2016

Consumer

Consumer & Media


of other components of its capital structure, which may include the existing HKD3,100m

zero coupon convertible bonds issued by the company on 20 February 2014, which are

listed on The Stock Exchange of Hong Kong Limited (with the stock code: 6024) and which

will mature in February 2019. The new facilities will be secured by corporate guarantees

provided by the company and certain subsidiaries of the company and charges over the

shares and assets over certain subsidiaries of the company.

Source: 7 April 2016, company announcement

Chongqing Department Store – Total sales declined 0.2% yoy in 2015

(600729.SS, RMB23.01, NR)

Chongqing Department Store reported total sales of RMB30,079m in 2015, a slight

decline of 0.2% yoy. Sales from department stores declined 2.99% yoy to

RMB13,439m while sales from supermarkets increased 3.49% yoy to RMB9,423m.

Gross profit increased 10.5% yoy to RMB5,618m with GPM edging up 1.8ppt to

18.7%. NPAT was RMB367m, decreasing 25% yoy, with NPM declining 0.4ppt to

1.2%, mainly due to increased cost from opening new stores and new business

development. By the end of 2015, the company has 238 sales outlets in total, including

55 department stores, 150 supermarkets and 33 electric appliance stores.


Europe

Marks & Spencer Group Alert – More appealing trends in store

(MKS.L, GBp: 420.40 GBp, Buy)

Clothing sales improving, especially in stores

Q4 sales were broadly in line with our expectations in Food, but ahead in International and

General Merchandise. In turn the better clothing/ GM trend has come from a substantial

improvement in trend in store-based sales and despite lower promotional activity year-on-

year. Areas of earlier focus of the new clothing team like Autograph have significantly

outperformed and, whilst new CEO Steve Rowe acknowledges a number of areas to

address, we see the risk of a margin re-base as diminishing. Caution on International

margins results in no change to our forecasts but trading on just 11.6x calendarised 2016

earnings with an 8% FCF yield we reiterate our Buy rating.

Store-based clothing like-for-like sales improving

Overall like-for-like sales for the Clothing & Home division fell 2.7%, ahead of our

forecast decline of 4% and consensus -3.5% (from Bloomberg News). M&S.com

growth slowed significantly to 8% from 21% last quarter and hence we estimate that

store-only LFL improved from -8.8% to -4.4%. The improvement in the two-year trend

was even more significant: going from

-13.7% in Q3 to -6.2% in Q4. Whilst acceptable for the shares today, this is clearly still

“not good enough” for the sustainability of profits as Mr Rowe himself acknowledged.


http://pull.db-gmresearch.com/p/868-C668/45102990/0900b8c08afe634a.pdf

Charlie Muir-Sands

11 April 2016

Consumer

Consumer & Media


China/HK

Anta – AGM: management sees 1Q16 SSSg in-line with its expectation

(2020.HK, HKD 18.22, Buy)

Chairman Ding’s comments during AGM

We confirmed with Anta management on ET NET’s (dated April 6 2016), reported

news on the company’s AGM.

As reported by ET NET, during Anta’s AGM (April 6 2016) Chairman Ding indicated:

He views 1Q16 SSSg “in-line with management’s expectation”.

Management also expects sustainable SSSg momentum into 2Q16.

Anta remains confident in its target to deliver high-single-digit SSSg in 2016.

Fila will see further product upgrades thanks to new designs and the Jason

Wu series.

Deutsche Bank view: Resilient performance despite tough conditions in March

Although no further details were available, we estimate management’s expectation for

1Q16 SSSg to be at mid-single-digit to high-single-digit ppt increase. Based on our

channel checks, the sportswear industry was again impacted by colder weather during

March. We believe the tough conditions in March have dampened management’s

original expectations for 1Q16 SSSg (high-single-digit ppt, during analyst meeting on

February 23). However, we believe Anta should be relatively resilient.

Looking beyond 1Q16, we continue to see Anta upgrading its products and brand

(including installing skiing elements into Fila). This will be crucial for Anta to deliver

sustainable growth driven by sports segmentation trend, in our view.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afd160b

John Chou

Suning – Company as second-largest shareholder increases shareholding

(002024.SZ, RMB11.74, NR)

Suning Electric Appliance Group, as the second-largest shareholder, purchased back

302,926,906 ordinary shares from the market at a total consideration of

RMB3405.63m from 6 January to 6 April 2016. The average price per share is

RMB11.24. On completion of the purchase, it is interested in an aggregate of

1,381,067,985 shares, representing approximately 18.71% of the entire issued share

capital of the company.

Source: 7 April 2016, company announcement.

11 April 2016

Consumer

Consumer & Media


Chow Tai Fook – Relocates a Mong Kok store to save rent of HKD4.05m per month

(1929.HK, HKD5.05, Hold)

Chow Tai Fook has terminated its rental lease of a shop located in Good Hope Building

in Mong Kok, which faces Sai Yeung Choi St. South. Its monthly rent was about

HKD4.5m for a shop area of about 5,500sqf. The company then rented another shop in

the same building, which faces Nathan Rd, at a rent of HKD0.45m per month for an

area of 1,275sqf. In this way, the company saves HKD4.05m in monthly rent.

Source: 7 April 2016, Apple Daily

Sasa – Buys back shares for employee share award scheme

(0178.HK, RMB2.31, Hold)

Sasa’s board of directors resolved on 6 April 2016 to provide HK$5,345,000 (the

“contributed amount”) to a scheme to purchase its own issued shares on the Stock

Exchange of Hong Kong. The acquired shares will be awarded to selected employees

under the scheme, the objectives of which are stated in an adoption announcement.

Based on the closing price of HKD2.31 per share on 6 April 2016, the maximum

number of shares in the board lot that can be purchased by the contributed amount is

about 2,312,000, or approximately 0.08%, of the issued shares of the company

(2,892,131,561 shares) as of the date of this announcement.

The trustee will apply the contributed amount in purchasing shares under the scheme

from 7 April 2016. Allocation of the shares to relevant selected employees will be

made according to the scheme rules.


China/HK

Yong Sheng – Buys leading French lace producer Desseilles

(3608.HK, HKD1.47, NR)

Chinese leading textile company Yong Sheng has acquired French lace producer

Desseilles Laces SAS for EUR300,000 (USD341,300). With the acquisition, the

company will have its first production base in Europe.

Founded in 1993, Yong Sheng sells its products in more than 60 countries and regions,

and it posted revenue growth of more than 20% over 2014.

Last year, Desseilles saw its sales revenue reach EUR5.4m, declining 35% yoy from

2014. The acquisition will enable Desseilles, on the verge of bankruptcy, to survive.

Currently, 70% of Desseilles' products are exported to Asia. After the deal, the French

lace producer is expected to rapidly expand its market share in China, and encounter

more growth opportunities worldwide.

Source: 6 April 2016, China Daily

11 April 2016

Consumer

Consumer & Media


Maoye – To acquire 70% interest in Inner Mongolia Victoria Commercial

(848.HK, HKD0.77, NR)

Maoye announced that on 5 April 2016 that the group has entered into the acquisition

agreement to purchase 70% of equity interests in Inner Mongolia Victoria Commercial

for a consideration of RMB1.5bn in cash. The target company is principally engaged in

owning and operating department stores, supermarkets and commercial real estate.


Japan

Laox – Ceases operations of all stores in China

(8202.JP, JPY113, Hold)

Laox announced to close all of its stores in China due to intensive competition from

ecommerce. To recap, Laox teamed up with Suning (002024.SZ, NR) and opened the

first store in Nanjing in 2011. Laox opened 14 stores in total since then but its sales

have been declining continuously. In 2015, Laox China generated a loss of JPY400m

on total revenue of JPY6.9bn (USD61.3m), representing a 38% yoy decline.

Laox said it will focus on ecommerce business in China and sell CE and daily

necessities online. In August, Laox entered Tmall and generated JPY300m revenue

from cosmetics and other products on the 2015 Singles Day.

Source: 5 April 2016, Linkshop

Thailand

Thai Union Group PLC – Core earnings set to show strong recovery in 1Q16F

(TU.BK, THB21.40, Buy)

Depreciation of THB, shrimp, and M&A brighten 1Q16 outlook; maintain BUY

We estimate core earnings (excl. FX gain/loss) of Bt1,416m (+1% QoQ, +136% YoY).

Including 1Q15’s FX gain of Bt822m and an estimated Bt100m FX loss in 1Q16, we

forecast norm earnings of Bt1,316m (-14% QoQ, -7% YoY). Core earnings should see a

big YoY jump because of strong GPM expansion driven by last year’s inventory loss,

recovery in domestic shrimp production, depreciation of THB vs. USD and EUR, and

improvement in the Chicken of the Sea canned tuna business after its strategy revamp

and consolidation of Rugen Fisch. We expect TU to continue seeing multiple re-rating

as it expands its branded product portfolio. Maintain Buy at a TP of Bt24 (unchanged).


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afbede8

Chalinee Congmuang

11 April 2016

Consumer

Consumer & Media


India

ITC – Will larger warning on cigarette packs impact volumes?

(ITC.BO, INR326.00, Buy)

Some investors are worried that the larger pictorial warning (85% of entire pack vs.

40% in front currently) would impact ITC’s cigarette volumes. The closure of factories

by the cigarette industry (ITC, Godfrey Phillips and VST) since April 1, 2016 is seen as

the industry's worry. We concur. Our Buy on ITC continues to be premised on

inexpensive valuations.

Our take: We assign a low probability for near-term cigarette volumes to be impacted

due to larger warnings on packs. However, in the medium to long term it may have a

bearing on rate of recruitment of new smokers.

No short term impact on volumes: c.70% of cigarettes sold in India is in single

sticks hence the consumer is not exposed to the pictorial warning or a plain

packaging on cigarette packs. When pictorial warning was implemented for

the first time in India in FY2010, there was no impact on volumes (in fact

volumes grew c.7% as there was no hike in excise duty).

Impact of health warning in other countries - no clear trend: While larger

health warning on packs is a growing trend worldwide, effectiveness of the

same is debatable and impact on volumes remains a question. However, what

is certain from various industry surveys is that smokers have toyed with the

idea of quitting smoking post implementation of pictorial warnings.

Snippets from various industry surveys on effectiveness of warnings: (a)

Surveys in Canada, Australia, UK, US revealed pictorial warnings were more

effective vs. text-only warnings at making smokers think about quitting and

larger warnings were associated with increased quitting attempts. (b) In

Singapore, 28% of smokers surveyed were smoking fewer cigarettes due to

the warnings; 14% avoided smoking in front of children, 8% smoked less at

home. (c) In Thailand, 44% of smokers said the warnings made them “a lot”

more likely to quit over the next month. (d) In Brazil, 67% of smokers said new

warnings made them want to quit.

On sale of loose sticks being banned, exposing smokers to cigarette packs:

While few states like Punjab and UP had banned sales of loose sticks, our

reconnaissance suggest it was difficult to implement the ban given the

numerous pan (small kiosk) shops. Our channel checks suggest there were

few cases of shopkeepers being fined, however loose sticks in both states

continue to be widely sold / available and there was no impact on volumes on

account of this.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afc81e2

Manoj Menon

11 April 2016

Consumer

Consumer & Media


China/HK

Belle International – Women not ready to go barefoot; maintaining Buy

(1880.HK, HKD 4.49, Buy)

... but factoring in a more conservative forecast for FY17-18

Although we cut our NP forecast by 11/16/23% for FY16/17/18 based on the current

SSSg trend and lower our target price by 39% to HK$6.49, we maintain Buy on Belle

as we believe current share prices have already reflected market concern about its

footwear businesses. We believe that a spin-off of two businesses could encourage

investors to revalue both businesses fairly. Applying a 20% discount to Pou Sheng’s

market PE multiple, the current price implies that the market is paying 5.1x FY17E PE

for its footwear business.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08af7c42f

Anne Ling

Biostime – Unsustainable high growth; maintaining Sell

(1112.HK, HKD 29.65, Sell)

Risk-reward not attractive; Sell

We estimate that the current valuation implies a 34x 2016 P/E for its nutritional

segment. We think the valuation has priced in the market’s bullish view on its near-

term growth, while overlooking various risks on the business (i.e. regulation,

sustainability of high margins and P&L impact from financial consolidations). In

addition, we do not expect the infant formula business to recover in 2016. We

continue to see material downside potential: maintain Sell.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08af538aa

Mark Yuan

Bright Dairy – To sign up a new trusteeship contract for Tnuva's operations

(600597.SS, CNY 11.87, Sell)

EGM approved a new trusteeship contract with Bright Food for Tnuva’s operation

Last Friday, Bright held an EGM which approved a new trusteeship contract between

Bright and Bright Food Group (BFG, Bright’s controlling shareholder). According to the

new contract, Bright will be the trustee and BFG will be the trustor. Bright will be

responsible for the daily operations of BFG’s subsidiary – Bright Food Singapore (BFS,

the major asset of which is Israel’s largest dairy company Tnuva). Bright will receive an

annual management fee amounting to Rmb100mn from BFG.

11 April 2016

Consumer

Consumer & Media


Bright might no longer consolidate BFS’s financial statements

Bright had begun to consolidate BFS’s financial statements from 2Q15 because it had

planned to acquire the business from its controlling shareholder BFG. However, as the

plan has now been suspended, we think Bright might no longer be eligible for

consolidating BFS’s financial statements under China Accounting Standards.

We like this contract

First, we estimate that the business will increase Bright’s China business by c.16.5%,

assuming 75% of the net profit margin for the management fee according to EGM

reports. Second, Bright will be able to create synergies between Bright and Tnuva (i.e.

R&D, dairy farming), because Bright still controls Tnuva’s daily operations. Third,

Bright has less re-financing pressure under trustee contract than when under an

acquisition plan.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afb62c2

Mark Yuan

Gome – Online momentum to continue in FY16; maintaining Buy

(0493.HK, HKD 1.11, Buy)

Total retail strategy bears fruit; maintaining Buy

Gome delivered sound FY15 results and completed the acquisition of the non-listed

stores at the end of March 2016. FY15 earnings beat our forecasts and market

estimates, with a notable 100%+ increase in online sales, 2.3% SSSg and a 40bp

improvement in EBIT margin. For FY16, management expects E-commerce GMV to

grow ~100% yoy. We believe 2016 is an investment year and the investment in traffic,

logistics and IT might bring costs up and put pressure on its margins. However, we

like Gome's strategy of focusing on a total retail model with online development while

not giving up profitability. The stock is trading at 3.9% FY17 dividend yield.

Maintaining Buy.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08af759d7

Richard Rui-Huang

Yili – Key takeaways from post-results conference call

(600887.SS, CNY 14.45, Buy)

2016: targets of 7.4% yoy recurring sales growth and 8.6% yoy PBT growth…

We held a post-results conference call for Yili last Friday. Yili guides Rmb63bn revenue

and Rmb6.0bn profit before tax in 2016. Excluding the impact of the discontinued

farming subsidiary, the guidance implied 7.4% yoy sales growth and 8.6% yoy PBT

growth.

…mainly driven by high-end and new products

Management expects sales to be driven by high-end and new products. To recap, Yili’s

sales percentage in key high-end products (including Satine, Ambrosial, Pro-Kido,

Chang Qing and Mei Yi Tian) improved 500bps, and its new products accounted for

11 April 2016

Consumer

Consumer & Media


16% of sales in 2015. The profit margin should expand due mainly to the mix upgrade

and lower raw milk price.

Yili to keep intensive A&P and will go to lower-tier regions

Yili will maintain a similar level of advertisement and promotion/sales as in 2015

(12.1% in 2015). Management indicated that it will avoid price competition and focus

on mix upgrade. Meanwhile, the company plans to improve its penetration in county

and rural regions by increasing salespeople and distributors. Capex will remain at the

2015 level (Rmb3.7bn in 2015).

Industry outlook: raw milk price to remain stable

Management expects the raw milk price to be stable in 2016. It also expects intensive

competition to continue in the near-term but was still confident in the long-term

demand for the dairy sector. Management does not expect imported liquid milk to be a

big threat to the domestic market given the longer logistics time and higher channel

expense.

Reiterating Buy

We trim our earnings forecasts by 1-2% in 2016-17 and forecast 8.9% yoy net profit

growth in 2016. We lower our price target by 1% to Rmb18.4 based on the DCF

method, which employs a WACC of 9.5% and terminal value growth rate of 2.0%.

Yili is our top pick in China dairy sector, as we expect it to continue to gain market

share in the near-term and to benefit from the trend of consumers trading up in China.

We reiterate Buy. Key downside risks include 1) food safety issues, 2) lower-than-

expected sales growth in high-end products, 3) greater-than-expected intensive

competition.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08af8b7c9

Mark Yuan

Koradior – Single-digit SSSg in 1Q16

(3709.HK, HKD12.54, NR)

Koradior’s high-end women’s apparel sales value recorded double-digit growth in a

sluggish macro economy in 2015, said President Jin Ming in a company

announcement. He added that the company will keep ASP stable; during 2007-2012,

high-end women’s apparel price grew 10%-15% each year. Koradior’s spring/summer

series are priced RMB1,500-3,500 and fall/winter series range within RMB3,000-

10,000. Its major target this year is strengthening brand awareness and market share

gain, supported by strong capital, while its competitors expect to slow down

expansion.

Other outlook highlights:

Ecommerce grew 75% in 2015, accounting for 8% of total sales and the target

is 10% in 2016.

The company plans to open 60 new stores in 2016; it owns 458 stores as of

end 2015.

11 April 2016

Consumer

Consumer & Media


SSS improved 5%-8%. 1Q16 had single-digit growth and revenue grew at a

double-digit rate. Koradior expects SSSg on a full-year basis to remain at the

same level as last year’s.

A&P cost accounted for 3.5% of sales in 2015. In 2016, the company expects

this ratio to range within 3%-4%.

Source: 5 April 2016, HKEJ

Bright Dairy – Vice general manager resigns

(600597.SS, RMB11.87, Sell)

Xia Xusheng, the vice general manager of Bright Dairy, officially resigned on 31 March

2016. According to a company announcement, his resignation is due to a job transfer.


Gree – Suspension to continue till 20 May

(000651.SZ, Suspension, Hold)

Gree announced that it has requested the Shenzhen Stock Exchange to extend its

share trading suspension. Its shares have been suspended since 22 February, and it

now plans to continue the suspension till 20 May, when it will release an M&A

proposal.

According to the announcement, Gree plans to acquire a 100% stake in Zhuhai Yinlong

New Energy Company by issuing new shares. There is no certainty of the outcome yet

as it is still discussing this with relevant parties.


Korea

CJ CGV – CJ CGV acquires Turkey and Indonesia cinema stakes

(079160.KS, KRW 97,000, Buy)

CJ CGV acquires MARS Entertainment for EUR605mn (W792bn)

CJ CGV reported after market hours that the company, along with financial investors,

acquired 100% stake in Turkey’s MARS Entertainment at W792bn. CJ CGV will hold

38.12% stake in MARS Entertainment, while multiple financial investors will hold the

remaining 61.88% stake. The acquisition is part of CJ CGV’s long-term strategy to

branch out into a global cinema operator. MARS Entertainment, established in 2001,

operates 81 cinema sites or 710 screens under the brand Cinemaximum.

Cinemaximum has a 42% market share in terms of box office revenue. MARS

Entertainment reported 2015 sales and operating profit of W243bn and W33bn

respectively.

11 April 2016

Consumer

Consumer & Media


CJ CGV to acquire additional 25.5% stake in Indonesia cinema

CJ CGV also reported after market to acquire additional 25.5% stake (86.1mn shares

worth W34.7bn) in PT Graha Layar Prima Tbk by 15 Apr, which will bring total stake to

40.25%. PT Graha Layar Prima Tbk operates cinemas in Indonesia under the brand

CGV Blitz. Based on the filings, CJ CGV will finance the acquisition with cash.

Mixed feelings about the MARS Entertainment acquisition

We believe the MARS Entertainment acquisition to have neutral to positive impact on

CJ CGV’s consolidated income statement while negative impact on the company’s

balance sheet. CJ CGV will need W302bn financing for the MARS Entertainment

acquisition, of which the company is likely to finance it with debt. According to the

filings, the company projects sales to grow 22% CAGR in 2016-18E while operating

profit will grow 34% CAGR during the same period. Based on the company’s financial

forecasts, we project CJ CGV’s 2016/17/18E net profit ex. minority to have

0%/+6%/+9% impact from our current estimates. However we believe balance sheet

deterioration is inevitable given the weak MARS Entertainment balance sheet

(liabilities to equity ratio of 1,172%) and additional financing burden. We will follow up

with additional details after checking with the company.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afb40c7

Dianna Kang

GS Retail – Favourable risk-reward and structural growth of CVS; upgrading to Buy

(007070.KS, KRW 50,600, Buy)

Upgrading to Buy from Hold

We upgrade GS Retail to Buy from Hold. With the recent correction, GS Retail now

trades at 20x 12M forward P/E, a discount to the regional peer average of 23x, despite

a solid underlying CVS business. We maintain our positive view on the structural

growth of Korea CVS on new store openings and merchandise mix improvements. We

forecast GS Retail will be able to grow its EPS by a 22.2% CAGR over 2015-17E

(excluding a one-off inventory gain in 2015E) vs. the regional peer average of 11.4%

CAGR. We believe the current share price offers favourable risk-reward with limited

downside.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08af5a6e1

Jeremy Kim

11 April 2016

Consumer

Consumer & Media


India

Godrej Consumer – Acquisition of SON (Strength of Nature)

(GOCP.BO, INR 1,390.15, Buy)

Godrej’s acquisition of “Strength of Nature”

In line with our expectation of accelerated M&A in India Consumer (‘Top-10 trends for

2016’, January 10, 2016), Godrej Consumer has acquired US-based ‘Strength of

Nature” (SON). On our estimate, this acquisition is likely to be earnings accretive by

c.4% in FY2017. While this acquisition could accelerate Godrej’s entry into the wet-

hair segment in Africa; it also increases the business risk (60% of revenues of SON are

from US, the wet-hair market is highly fragmented with c.100 players, c.3-4 brands of

SON accounts for bulk of its sales and hence Godrej may have to undertake portfolio

rationalization). Retain Buy and top pick status.

Facts: SON is a market leader in the wet-hair category is US (12% share). Revenue

contribution: US 60%, Africa 20%, Rest of the World including Caribbean etc

is 20%

Key product segments are relaxers, maintenance, styling and shampoo

Positioning of ‘superior quality at affordable prices” – largely in line with the

Godrej brand positioning

CY2015 annualized revenues of US$95mn (including acquisitions in CY2015) –

underlying revenues of US$78mn in CY2015 with EBITDA margin of 22%

Organic revenue growth of c.8% in last few years

Vertically integrated supply chain with entire manufacturing in US

Godrej has paid an EBITDA multiple of c.10-12x for SON – of this two-third is

paid upfront and one-third is to be paid after the third year subject to

achievement of certain terms in the earn-out clause. Based on the information

supplied by the company, we calculate the upfront payment will be c.

INR10bn.

Godrej’s Debt/Equity will increase to 0.6X from 0.3X post this acquisition

SON has a net working capital of c.115 days, we calculate the underlying

RoCE (excluding goodwill) for this business is >20%

Godrej is to fund this acquisition with USD denominated debt – cost of c.2%

(hedging the debt may not be required as most of the revenues are also in

USD).


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afa57a2

Manoj Menon

11 April 2016

Consumer

Consumer & Media


Sector news

China/HK

China Ladies' Footwear – Stella: tough 1H for both export and domestic segments

Stella (1836.HK) announces operational update for 1Q16

Stella’s total revenue declined 5.9% to USD280.3m in 1Q16.

Manufacturing business

The manufacturing OEM business saw revenue decline 6.5% to USD267.6m in 1Q,

mainly due to an abnormally warm winter in 2015 undermining clients’ confidence in

orders for spring/summer 2016. Shipment to China/US/EU fell 4.6%/7%/4%

respectively. ASP declined 4.5%, primarily attributed to raw materials, particularly a

decline in leather prices.

Looking ahead, the company expects volume to gradually improve in 2H16, mainly

driven by strong demand in the sports fashion segment. To recap, sports fashion

accounted for 20%/25% of its 2015/1Q16 sales volume. Mgmt expects order shipment

in 2016 to increase by 2m pairs in total, with an increase of 4m pairs in sports fashion

offset by a 2m decline in the casual fashion segment. On a full year basis, mgmt

expects ASP to decline by 2% due to lower raw material costs. GPM will be under

pressure in 1H but Stella expects EBIT margin to expand on a full year basis. USD45m

capex will be invested in catering to the additional demand in the sports segment as

sports fashion involves larger order sizes with different production layouts, according

to mgmt.

Retail business

Stella’s retail business remained weak in 1Q16 (Jan-Mar), with SSS down 22.4%.

Excluding RMB depreciation effects, SSS were down 17%, mainly due to a volume

decline (3Q15/4Q15 SSS down 18.4%/21.5%, respectively). Management commented

that discounts have been managed well, with Stella Luna offering around 25% off and

What For a 35% discount. Discounts are only offered on off-season products.

Despite the sluggish macro environment, mgmt expects the retail business to break

even in 2016 or make a small contribution with margin improvement. It will try to

launch a franchisee model and closely monitor store performance.

Deutsche Bank’s view

The trend in exports (weak 4Q15 on US retail demand for apparel/footwear in general

affecting order placement for the following quarters in 1H16) and deflationary pressure

are in line with those seen by Li & Fung, in our view. On the retail front, there was no

pick-up in SSSg in 1Q16. In contrast to Belle, however, Stella’s SSS decline is more

volume driven as the company has been controlling discounts.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afe69e0

Anne Ling

11 April 2016

Consumer

Consumer & Media


China Consumer – Carrefour China opens in Haikou

Carrefour China has opened a new 7,700 sqm store in China’s south. The Haikou

Penghui hypermarket opened a fortnight ago in Haikou, in the Southern Territory. Like

most of Carrefour’s hypermarkets in China, the store essentially anchors its own

shopping centre. In this case, there are 19 retail tenants with a combined sales area of

1,282 sqm in addition to Carrefour’s space. The centre includes a car park with space

for 500 cars. Carrefour now has more than 220 hypermarkets operating across China.

Source: 7 April 2016, insideretail.asia

China Media – LeSports launches paid membership aimed at 'watch-to-pay' market

LeSports, the sports arm of LeEco Holdings Ltd, announced its VIP paid membership

plan on 6 April 2016, making Chinese mainland the second region to launch the

service after Hong Kong. By utilizing LeEco's rich online broadcasting copyrights

cooperation with local broadcasters and sporting associations, the firm provides

domestic sports game viewers with an all-in-one membership subscription package

that is priced at RMB590 (USD91) per year.

LeSports said the number of paying viewers in 2015 soared 264% yoy to 28.84m, and

expects this to reach 54.41m this year. Revenue from online viewing memberships

jumped from RMB1.39bn (USD214.6m) in 2014 to RMB5.13bn in 2015, up 270% yoy.

Established on 22 March 2014, LeSports became independent from former Letv.com

and started distributing its businesses across the entire sports spectrum, based on the

unique value proposition of combining events operations, streaming content, and

smart devices with internet services.


Korea

Korea Travel Retail – New stores struggling to survive amid unfavourable environment

Maintaining cautious view on Korea DFS; Hold on Hotel Shilla and Shinsegae

We remain cautious on Korea DFS outlook. The latest data points suggest that DFS

demand from both inbound and outbound tourists is lacklustre. Given an operating

space increase of more than 90% in the Seoul DFS market in 2016, we believe that

most operators will inevitably face severe competition for the time being, which will

weaken their margin profile. Our recent company/store visits also support our

conservative view, reaffirming the unfavourable industry environment. We maintain

Hold ratings on Hotel Shilla and Shinsegae.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afad227

Jihyun Song

11 April 2016

Consumer

Consumer & Media


Indonesia

Indo Belanja – Boost to disposable income from higher personal tax exemption

Minimum wage earners should see a 2% boost in disposable income (additional

Rp75k/month or Rp900k/annum) as the government will increase the personal tax

exemption (non-taxable income) to Rp54mn/year from current Rp36mn. This will be

implemented in June, but will be applied retroactively since January 2016, hence

providing an extra boost to disposable income during the Muslim festive season,

where employees also get an extra month’s salary. We believe the main beneficiaries

from this higher disposable income are mass-market retailers (AMRT, LPPF, RALS),

cigarette companies (HMSP and GGRM) and FMCG companies (UNVR, ICBP, MYOR,

ROTI, KINO).


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afe286e

Reggy Susanto

India

India Consumer – Headwind for FMCG players exposed to South Africa?

Structural changes in South African job market could alter consumer patterns

Our South African Retail Analyst Sean Holmes highlights that employment growth in

South Africa amongst low income earners continues to decline while the more skilled,

higher paid and older work force rises. He believes change in the composition of the

labour force will likely cause a change in consumer spending patterns. A robust higher

paid workforce would drive stronger apparel sales vs. Food/FMCG and a weaker low

income segment might lead to lacklustre sales growth or even downtrading in

Food/FMCG.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afe2676

Manoj Menon

US

Athletic Footwear Weekly – Report for weekly data ended Apr. 2

Easter shift negatively impacts total Athletic Footwear sales

After seven consecutive weeks of growth, total Athletic Footwear sales contracted -

9.1% y/y last week (based on our analysis of SportScan Info SSI data) with the 2-year

stack decelerating sequentially to +12.2% from +30.5%, as results cycled against the

week leading into the Easter holiday LY. ASPs increased 5.3% y/y but were offset by a

decrease in unit sales of -13.7%. Basketball and Casual Athletic were the only two

categories with positive y/y growth at +3.4% (+30% on a 2-year stack basis) and

+1.8% (+51.7% on a 2-year stack basis) respectively. The Jordan Retro 12 dominated

the top sellers list taking four out of the top 10 spots. Running declined -17.7% y/y as

new releases were limited; however, for the trailing 13 weeks sales were up 1.2% y/y.

11 April 2016

Consumer

Consumer & Media


The Adidas brand continues to show strength with sales increasing 31.4% y/y driven

by the success of the Superstar platform.

By brand, Under Armour and Adidas (incl. Reebok) advanced +35.9% and +18.1%

respectively, while Nike and Skechers decreased -10.1% and -10.9% respectively.


http://pull.db-gmresearch.com/p/793-AB16/46136218/0900b8c08afe7dd3.pdf

Dave Weiner

China/HK

HK Media – ViuTV starts operations and will disclose TV ratings in May

ViuTV started operations at 6am on 6 April. One-third of its broadcast time is on news,

and ad time was fully booked for the first two weeks. The majority of the ads are on

daily-use products, e.g. Nestle milk powder, the Morita cosmeceutical store, and

Samsung. ViuTV said it is cautiously optimistic about its TV ratings. It has advised

Nielsen to monitor its rating data and will start to disclose its TV ratings from May.


HK Apparel – Uniqlo cuts prices for certain SKUs in HK by up to 30.3%

Mingpo reported that Uniqlo reduced prices by JPY300-1,000 (HKD21-70) for certain

SKUs, including Oxford T-shirts, coats and pants in HK, in order to improve

performance. This is part of efforts to deal with rising raw material prices, JPY

depreciation and salary hikes in Japan. Uniqlo raised prices in 2014, followed by a 10%

price increase in 2015. However, sales started to decline thereafter. SSS value declined

0.3% and traffic declined 8.6% in March 2016; sales also had the first yoy decline for

this year.

Source: 7 April 2016; etnet, Mingpo

China Apparel – E-Land to list China business in China

E-Land Group, a South Korean apparel company, plans to integrate two of its

companies operating in China, and to have an IPO in HK, Shanghai or Shenzhen. HK is

its first choice. E-Land’s stores feature brands that include SPAO, WHO, A.U, TEENIE

WEENIE and Cole Haan in HK.


China Catering – HK float on the menu for hotpot chain Haidilao offshoot

China's largest hotpot chain Sichuan Haidilao Catering Co is planning to list its

seasonings spin-off business on the Hong Kong Stock Exchange. Even though Yihai

International Holding Ltd－ the spinoff－has not yet announced any details, its

11 April 2016

Consumer

Consumer & Media


prospectus notes that the proceeds will be used to build its production base in Bazhou

in Hebei province, make strategic acquisitions and promote its brand.

At present, Yihai is the exclusive supplier of Haidilao. Information released by Hong

Kong Exchanges and Clearing Ltd shows that Yihai's turnover rose from RMB316m to

RMB847m between 2013 and 2015. Its net profit jumped from RMB22.1m to

RMB125m during the same period. In 2015 alone, about 54% of Haidilao's income

came from Yihai. By the end of last year, Yihai made 56 products. Its distribution

network has covered most parts of China, reaching more than 6,000 stores. With the

support of leading e-commerce platforms such as Tmall.com and JD.com, its products

are now available in 11 countries and regions in North America, Europe and Asia.

Jiang Junxian, director of China Cuisine Association, expects more capital raisings by

Chinese restaurant and catering companies in 2016. National Equities Exchange and

Quotations, for example, will be a good choice for these companies to meet their

financing demand, which is usually not very high, he said. According to the Chinese

Catering Market Report 2015 released by China Cuisine Association in late February,

the total sales revenue of the Chinese restaurant and catering industry surged 11.7%

YoY to top RMB3.23tr.


Global Retail – German fashion retail sales down 6% in March

Fashion retail sales in Germany declined by 6% in March vs a 4% decline in March

2015. No recovery has been seen, even though 80% of survey participants expect

positive growth in April.

Figure 13: Weekly stationary fashion retail sales % y/y Figure 14: Weekly stationary fashion retail sales % y/y

-20

-15

-10

-5

0

5

10

15

20 Weekly stationary fashion retail sales (% y/y)

2016 4w mov avg 10w mov avg

-25

-20

-15

-10

-5

0

5

10

15

20

25

30 Weekly stationary fashion retail sales (% y/y)

2015 2016

Source: Deutsche Bank


11 April 2016

Consumer

Consumer & Media


Figure 15: Monthly fashion retail sales % y/y Figure 16: Monthly fashion retail sales % y/y

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly fashion retail sales (% y/y)

2016 (TW - offl ine only) 2016 (gfk - offl ine&online)

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly fashion retail online vs offline (% y/y)

2016 (gfk offl ine) 2016 (gfk online)



Source: 5 April 2016, Textilwirtschaft (survey data based on a representative sample of

stationary German fashion retailers across segments/regions), GfK.

Adrian Rott

China/HK

Greater China Consumer – Trends in consumer demand and supply

Key takeaways from a global footwear conference we recently attended:

A speaker from KPMG commented that the TPP agreement is not simply a

trade pact, but, potentially, will also involve data sharing, IP protection and

ecommerce development. As tariffs will be reduced (e.g., 80% of footwear

going into US will have a zero tariff after TPP vs. 0-48% currently), this will

impact how retailers are going to source. Currently, 80% of US footwear

imports are from China and 12-13% from Vietnam. However, KPMG also

commented that customized products may stay in China given better worker

efficiency and faster logistics times vs. TPP countries like Vietnam.

President of French Federation of Footwear believes that the trade pack may

enable retailers to lower retail prices (without reducing quality) and/or improve

margins. The big players will benefit more and smaller companies will need to

add value, differentiate through localization and customization. He added that

globalization (price harmonization), internet and fast fashion retailers are

already putting a lot of pressure on pricing. Also, wallet share for footwear

and clothing is continuing to fall, which means a shrinking market in Europe

and slower growth in Asia. We share his view and thus branding and

differentiation should also become more important in China.

Speaking of millennial consumers’ behavior (age 15-35), a speaker from the

Jayne Fashion Agency described these consumers as always looking for the

next best thing: they are multichannel and have non-linear purchasing

behavior; they love brands but love to compare prices too. A speaker from

Belle added that F&B and entertainment are the two major spending

categories for post-90s, which is different from the post-80s.

All speakers highlighted the consumer demand trend for short lead times

these days, from runway to stores or to shelves, or see now, buy now and

11 April 2016

Consumer

Consumer & Media


wear now. This is a new challenge to brands and the industry players have

different views: some believe that the industry should make the change for

speed while some believe that this would kill creativity.

Deutsche Bank view. As it was an industry conference, the speakers did not say how

this would impact returns on investment or profit margins moving forward. The

conference was reassuring on the need for international pricing harmonization (not just

for luxury brands but for all international brands) which Bruno Lannes from Bain &

Company expects will take two to three years. It also highlighted the structural pricing

pressure and the need for even shorter lead times while the traditional fashion show

model is under debate. We need to further explore the implications for individual

companies’ P&L and the industry outlook. While there are challenges, there are also

opportunities.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afb5d68

Anne Ling

China Consumer – Wahaha expands robot production to transform business

China's largest beverage producer, Hangzhou Wahaha Group Co. Ltd., is planning to

set up a new factory to expand the production of industrial robots as part of its

business transformation. The value of the investment was not revealed, but Chairman

Zong Qinghou told China Daily the figure could be significant. "Besides sticking to our

main business of beverages, we will largely develop intelligent manufacturing to

promote our company's business transformation and upgrading," said Zong. He added

that the company is seeking robot technologies from Israel for its new factory to be

built in Lin'an in East China's Zhejiang province.

Wahaha has been involved in robotic research and development since 2011. It has

developed industrial robots, which are used for packaging, palletizing and production

material delivery. At the end of 2015, Wahaha had 30 industrial robots in its own

factories. In 2016, another 100 will be put into operation. Zong added that the

competition in the Chinese robot market is fierce and the company is also developing

key parts of robots, such as servo motors and servo drives.

The world's second-largest economy is already the leading market for industrial robots,

accounting for a quarter of global sales, according to the International Federation of

Robotics. Between 2010 and 2014, the total supply of industrial robots in China

increased by about 40% per year on average. But still, for every 10,000 employees,

there were only 36 robots in China, compared with 478 in South Korea, 292 in

Germany and 164 in the United States in 2014.

Source: 6 April 2016, chinadaily.com.cn

China Consumer – China drying machine sales to exceed 250,000 units by 2020

According to the 2016 China Drying Consumption Trends conference held in Beijing,

the drying machine is expected to become a new growth point for the home appliance

market, with sales volume to exceed 40,000 units, an increase of 74.4% yoy, in 2016,

and to exceed 250,000 units by 2020. The rate of usage between washing machines

11 April 2016

Consumer

Consumer & Media


and independent dryers is 1:0.9 in the United States and 1:0.6 in Europe, but only 1:0.1

in China. According to All View Cloud (AVC) estimates, China’s dryer sales value and

volume were RMB96m and 25,100 units in 2015, respectively. Compared with China’s

RMB10bn air purifier market and the 30-million-unit washing machines market, there

is much room to grow.

Source: 1 April 2016, Economic Daily

China Media – Xiaomi invests USD25m in Indian firm Hungama

Xiaomi has made its first startup investment outside China, in Indian digital

entertainment company Hungama, which provides music, video and movie content to

over 65m users. Xiaomi has led a USD25m investment alongside existing investors

including Intel Capital and Bessemer Venture Partners. Xiaomi sees India as its second

largest market after China. The investment is part of Xiaomi's strategy to introduce

localized Internet services and content on its smartphones in India. Xiaomi entered the

Indian market in 2014 and began manufacturing in the country last year. Over 75% of

Xiaomi smartphones sold in India are made in India.

Source: 5 April 2016, People.cn

China Sports – Alibaba announces USD5.5m e-sports tournament

Alibaba has entered the e-sports arena with a USD5.5m tournament to be held

through its sports subsidiary Ali Sports, reportedly beginning this April. The World

Electronic Sports Games (WESG) will feature a USD1.5m CS:GO tournament, the same

for Dota 2, a USD400,000 StarCraft II contest and a USD300,000 Hearthstone

tournament too. The move is a result of a joint venture Alibaba signed with

Singaporean social networking giant YuuZoo yesterday to provide the organisation for

the event. The opening phases of the competition will be held this April, although

tournament structures are currently unknown, with the grand finals to take place in

December this year in China.

Ali Sports, as a sports media venture of the e-commerce giant, began operations in

September 2015 and has been picking up multiple lucrative broadcast rights since

then, the latest being an NFL streaming license in January 2015.

Source: 1 April 2016, ValueWalk

Indonesia

Indo Media – March ratings: MNCN and SCMA remained at #1 and #2

In March, Media Nusantara (MNCN IJ, NR, CMP:IDR 2190) and SCMA (SCMA IJ, Buy,

CMP:IDR 3,245) maintained their overall dominance as #1 and #2 with each posting

35.8% (-40bps mom, +180bps yoy) and 25.9% (-40bps mom, -420bps yoy) audience

shares respectively. VIVA (VIVA IJ, NR, CMP:IDR 360) remained at #3 with one-year

high audience share of 19.9%(+160bps mom, +340bps yoy). MNCN’s RCTI was the #1

TV station in March with 19.7% all time audience share (-40 bps mom, +430bps yoy)

whilst VIVA’s ANTV improved to #2 (vs. #3 in Feb) with 16.4% (+210bps mom,

+370bps yoy). SCMA’s IDKM and SCTV is now at #3 and #4 with each posted 14.6% (-

11 April 2016

Consumer

Consumer & Media


30bps mom, -130bps yoy) and 11.3% (-10bps mom, -290bps yoy) audience share,

respectively.

Updated guidance for 2016 and 1Q16 preview

We project industry ad-spend to grow by 10% in 2016, with SCMA guiding for 8-10%

revenue growth (factoring in current ratings trend) and MNCN guiding for 14%

revenue growth due to their ratings improvement. We do not expect significant capex

as there is still no definite time table for digital TV broadcast roll-out: SCMA is

budgeting Rp150bn and MNCN Rp550bn in 2016, mainly for the fit-out of its new

buildings. For 1Q16, in-line with the ad-spend recovery by the FMCG companies,

SCMA expects revenue growth of 8-10%, while for MNCN at c. 20% due to the ratings

improvement. Overall we view this positively for the industry as ad-spend is

accelerating and capex remains muted.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08afbf453

Reggy Susanto

China/HK

China/HK Watch & Jewellery Retailers – Read-through of EWJ’s 2015 results and 2016 outlook

Emperor Watch & Jewellery (EWJ) saw SSSg similar to Hengdeli

EWJ (0887.HK) announced a net loss of HKD120m in 2015 as sales declined 25.2% to

HK$4.4bn. Overall SSS was down 28.1% with HK down 28.8%. The company has

attributed the decline largely to mainland tourists travelling to destinations other than

HK, given the strong HKD.

GPM. EWJ’s product mix shifted more toward jewellery, while overall GPM remained

stable at 25% (jewellery/watch GPM at 35%/21-22%).

Watch ASP saw a 5% improvement despite many Swiss watch makers cutting prices

by 5-20% in 1H15 as consumers bought upgraded models

Inventory level was well managed. Inventories were reduced 16% to HKD3.2bn, better

than Hengdeli whose inventories were down 3% in 2015. This could be because HK is

11 April 2016

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Consumer & Media


more concentrated than China. Watch/jewellery accounts for 55%/45% of the

inventory mix.

Store network. The net increase in the number of stores was 12 in 2015 –three stores

were closed in HK, 13 opened in the mainland, and three opened in Singapore. The

total number of stores stood at 100.

YTD update and 2016 outlook

1Q16 saw SSS down 30% in HK, mainly attributed to a decline in volume.

Price was not cut in 1Q in HK, while Rolex raised its price in Europe by 5% in

Feb. To recap, 10 brands cut their prices in 1H15 in the range of 5-7%. They

are Cartier, Chopard, Franck Muller, Girard Perregaux, IWC, Jaeger-LeCoultre,

Penerai Officine, Patek Philippe, Piaget, and Rolex.

EWJ shut down one store at Canton road in Feb, in line with its plan to shift

focus from prime locations to emerging areas, e.g. Yuen Long and Tuen Mun.

In China, EWJ targets to open 10 jew stores in 2016.

EWJ will further reduce its inventories in 2016. Principals (watch brands) have

offered support to adjust inventories from slow-moving items to fast-moving

items, which is more active this year than last year.

EWJ might offer more aggressive discounts for higher-ticket-price items.

Rental cost negotiation has helped EWJ save more than HKD100m in costs (to

fully reflect in 2016). With rentals of one-third of the stores to be renewed in

2016, rental costs in 2017 will be continuously benefited, according to

management. EWJ will also try to streamline other opex (e.g., staff cost).

It will also tap online channels and plans to launch its Wechat payment in

2Q16 and e-commerce platform in 3Q16.

Deutsche Bank view

EWJ’s SSS trend is similar to Hengdeli and CTF. That said, EWJ does not have any

plan to close many stores in HK. We remain cautious on the high-end segment and

expect 2016 to be a tough year for the players.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08af87f17

Anne Ling

HK Retail – HK tourist arrivals down 13.6% in Jan-Feb 2016

Tourist arrivals in HK declined 20.5% in Feb, with those from China mainland down

26%. Combining Jan-Feb, total tourist arrivals declined 13.6% and those from

mainland China were down 18%, vs 15.8% growth in Jan-Feb 2015. Of all tourist

arrivals from mainland China, the number of overnight visitors was down 8.9% and

that of single-day tourist arrivals was down 19.3% in Jan-Feb 2016.

11 April 2016

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Figure 17: Tourists arrivals from Mainland Figure 18: Tourists arrivals from Mainland vs total

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

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Jul-

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Oct

-14

Jan

-15

Ap

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5

Jul-

15

Oct

-15

Jan

-16

Visitor Arrivals: ON: China Visitor Arrivals: SD: China

Visitor Arrivals: Total China

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Feb

-09

Jun

-09

Oct

-09

Feb

-10

Jun

-10

Oct

-10

Feb

-11

Jun

-11

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-11

Feb

-12

Jun

-12

Oct

-12

Feb

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Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Visitor Arrivals: Total China Visitor Arrivals: Total

Source: Deutsche Bank, Hong Kong Tourism Board

Source: Deutsche Bank, Hong Kong Tourism Board

Source: 1 April 2016, Hong Kong Tourism Board

Greater China Consumer Electronics – Taiwan’s Foxconn signs deal to take over Japan’s Sharp

Taiwanese electronics manufacturer Foxconn signed a JPY388.8bn (HKD27bn)

agreement on 2 April 2016 to take over Sharp Corp in the first foreign acquisition of a

major Japanese technology company.

The deal, negotiated on and off for four years, officially ended Sharp’s century of

independence. Terry Gou, chairman of Foxconn, signed the agreement with Sharp’s

president, Kozo Takahashi. It allows the Taiwanese firm to obtain a 66% stake in the

Japanese electronics maker.

Foxconn, also known as Hon Hai Precision Industry, is best known as a contract

manufacturer for Apple. The price for the stake in Sharp was RMB100bn lower than

the one agreed in February, according to media reports in Taiwan and Japan.

Takahashi said his company faced an increasingly difficult business environment amid

intense competition. “This agreement will not only contribute to the expansion of our

business, but will also improve our financial standing, creating vast synergies for both

companies,” he was quoted as saying.

The Taiwanese firm will benefit from Sharp’s LCD screen display business. It has

shifted production away from large screens to smaller ones used in high-end smart

phones and tablet devices.

Source: 3 April 2016, South China Morning Post

China Consumer – Kao Group partners with Chinese e-tailer

Japanese consumer products group Kao Group has formed a strategic partnership

with China’s largest online direct sales company, JD.com.

Included in the deal is the opening of Kao Group’s cross-border flagship store on JD

Worldwide in May, which will initially stock maternal and children’s products, with

other product lines expected to be introduced later.

11 April 2016

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Consumer & Media


Founded in 1887, Kao Group owns a range of consumer brands, including Attack,

Biore, Laurier and Merries. JD.com started cooperating with Kao China in 2014 for

categories covering baby and maternity products, personal-care items and cleaning

products.

Source: 1 April 2016, insideretail.asia

Korea

Korea movies – Korean movie industry finding opportunities in China

China market offers opportunities for Korea names

Korea movie names are expanding their business overseas, particularly to Greater

China. The China box office market (USD6.8bn in 2015) is roughly five times bigger

than Korea's and is the second largest market after the US. The China market also has

higher growth prospects, with box office revenue growing 49% in 2015 vs. 3% for

Korea. Among Korean movie-related names, CJ CGV has the greatest China revenue

exposure of 12%. We retain our Buy rating on CJ CGV as we project EPS CAGR will

reach 29% over 2016-18E, with resilient top-line growth from aggressive new site

openings in China and global 4DX screen expansion.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08af53639

Dianna Kang

The authors of this report wish to acknowledge the contribution made by Louise Li,

Kerith Chen and April Ding, employees of Evalueserve, a third-party provider to

Deutsche Bank of offshore research support services; and Jean Chen, employee of

CRISIL Global Research & Analytics, a division of CRISIL Limited, a third-party provider

of offshore research support services to Deutsche Bank.

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Figure 19: Valuation comps – China/HK Consumer

Code Company Rec TP Price Mkt Cap (Local)

Currency Year-End PER PB Dividend yield (%) FCF Yield (%) Net debt(cash)/mkt

cap

Staples (2016.4.8) FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E

1112.HK Biostime Sell 16.80 29.95 1,656 CNY Dec 23.95 22.51 4.27 3.83 1.70 1.81 3.56 5.52 -34.41 172.23

600597.SS Bright Dairy Sell 9.80 11.61 2,206 CNY Dec 25.05 23.25 1.46 1.41 0.82 1.71 NM 6.09 12.92 62.19

0341.HK Cafe de Coral Buy 29.00 24.10 1,992 HKD Mar 21.07 19.17 4.04 3.85 3.81 4.19 6.09 6.08 -29.90 -31.84

0506.HK China Foods Hold 3.20 3.11 1,394 HKD Dec 18.12 17.17 1.49 1.41 1.95 2.06 2.43 6.68 26.26 24.71

2319.HK China Mengniu Dairy Buy 14.10 12.22 5,407 CNY Dec 16.80 15.23 1.67 1.54 1.38 1.53 3.54 3.88 21.63 11.90

1117.HK China Modern Diary Hold 1.75 1.62 1,656 CNY Dec 12.36 8.80 0.86 0.78 0.00 0.00 0.48 2.56 69.38 65.79

6808.HK Sun Art Retail Group Buy 5.63 5.18 8,201 CNY Dec 17.29 15.97 1.91 1.82 3.61 3.91 5.43 5.91 -26.45 -27.11

1314.HK Tsui Wah Buy 2.50 1.47 565 HKD Mar 13.16 11.58 1.67 1.58 5.71 6.50 7.78 11.17 -50.89 -47.07

0151.HK Want Want Hold 5.50 6.14 13,004 USD Dec 17.99 17.74 5.33 4.84 3.71 3.76 4.74 4.83 -12.32 -10.93

600887.SS Yili Dairy Buy 18.40 14.35 15,914 CNY Dec 17.26 15.07 3.95 3.56 3.91 4.49 4.24 5.36 -29.20 -34.22

601933.SS Yonghui Superstores Buy 12.90 8.54 5,363 CNY Dec 27.09 21.59 2.60 2.44 1.66 2.08 1.30 2.16 -10.96 -48.22

Average 19.10 17.10 2.66 2.46 2.57 2.91 3.96 5.47 -5.81 12.49

Discretionary

2020.HK Anta Buy 23.00 19.60 5,882 CNY Dec 17.38 14.30 4.39 3.97 3.92 4.62 6.39 6.44 -67.85 -63.57

1880.HK Belle Buy 6.49 4.40 9,578 CNY Feb 7.24 7.75 1.17 1.11 8.29 7.74 8.81 10.85 -27.96 -22.80

1929.HK Chow Tai Fook Hold 5.69 4.88 13,593 HKD Mar 14.54 13.69 1.20 1.15 3.53 3.75 12.30 14.20 20.41 16.80

1476.TW Eclat Textile Sell 380.00 409.50 3,565 TWD Dec 23.81 21.78 6.90 6.54 3.13 3.21 2.95 3.61 5.21 -10.63

0330.HK Esprit Sell 5.48 6.80 2,353 HKD Jun 106.15 NM 1.10 1.11 0.00 0.00 NM 2.23 -34.13 -42.17

0709.HK Giordano Buy 4.20 3.23 799 HKD Dec 11.46 10.21 1.98 1.98 8.89 9.98 10.90 10.80 -28.47 -34.88

0493.HK Gome Buy 1.55 1.08 3,127 CNY Dec 11.60 10.03 0.82 0.78 3.46 4.00 4.34 7.85 -33.98 -38.75

000651.SZ Gree Hold 16.29 19.22 17,886 CNY Dec 8.68 7.67 1.86 1.59 3.46 3.91 13.82 15.97 -100.62 -94.33

1169.HK Haier Electronics Hold 13.02 13.42 6,530 CNY Dec 11.78 10.80 1.84 1.60 0.85 0.93 4.86 7.52 -69.91 -54.08

3389.HK Hengdeli Hold 0.56 0.59 822 CNY Dec NM 154.59 0.40 0.40 0.00 0.19 12.22 15.90 26.43 25.00

0494.HK Li & Fung Sell 3.51 4.54 7,040 USD Dec 15.40 17.04 1.74 1.75 5.62 5.79 5.17 5.29 50.07 49.79

2331.HK Li Ning Co Ltd Hold 3.90 3.57 867 CNY Dec 15.91 10.71 1.41 1.26 3.20 3.68 6.10 7.14 22.65 -30.71

1212.HK Lifestyle International Buy 16.40 10.62 2,726 HKD Dec 9.44 8.84 1.49 1.39 5.95 6.35 4.35 2.73 -13.50 -10.14

0973.HK L'Occitane Buy 19.63 13.00 3,586 EUR Mar 19.47 16.57 2.41 2.21 1.83 2.15 2.37 5.26 -24.03 -29.84

000333.SZ Midea Buy 33.25 30.02 21,266 CNY Dec 9.71 9.00 2.23 1.94 4.23 4.56 13.40 14.54 3.52 -12.35

1913.HK Prada Buy 41.00 25.65 17,559 EUR Jan 19.08 16.81 2.43 2.13 2.20 2.68 6.23 6.21 -10.61 -6.44

600690.SS Qingdao Haier Buy 10.80 8.32 7,872 CNY Dec 10.12 8.77 1.79 1.56 2.98 3.44 11.88 14.08 -81.15 -56.15

0178.HK SA SA International Hold 2.60 2.36 2,013 HKD Mar 12.78 13.51 3.71 3.71 7.81 7.39 10.32 7.78 -54.87 -64.41

1910.HK Samsonite Hold 23.03 25.10 4,577 USD Dec 20.50 18.62 3.08 2.82 2.14 2.36 4.94 5.54 -5.76 -8.43

600315.SS Shanghai Jahwa Hold 25.76 30.00 4,316 CNY Dec 33.51 25.86 3.32 3.11 1.37 1.78 1.07 2.16 -68.90 -60.47

0321.HK Texwinca Hold 8.33 7.53 1,283 HKD Mar 11.87 10.49 1.83 1.83 8.43 9.53 8.85 8.90 -38.10 -41.79

Average 19.52 20.35 2.24 2.09 3.87 4.19 7.56 8.33 -25.31 -28.11 Source: Deutsche Bank For additional information on all stocks mentioned here please refer to our website at: http://gm.db.com

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Figure 20: Valuation comps – Asia Pacific Consumer

Code Company Rec TP Price Mkt Cap (USDm)

Currency Year-End PER PB Dividend yield (%) FCF Yield (%) Net debt(cash)/ mkt cap

(2016.4.8) FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E

CPF.BK Charoen Pokphand Foods Hold 23 25 5,435 THB Dec 26.03 21.83 1.68 1.62 2.11 2.52 NM 1.82 98.79 101.66

097950.KS Cheiljedang Buy 450,000 357,500 4,464 KRW Dec 13.88 10.92 1.49 1.32 0.84 0.90 5.76 7.38 112.06 105.59

GGRM.JK Gudang Garam Buy 75,000 66,000 9,650 IDR Dec 19.90 NA 3.12 NA 0.00 NA 0.18 NA 49.83 55.62

INDF.JK Indofood Buy 9,000 7,225 4,821 IDR Dec 14.10 NA 2.21 NA 2.50 NA 7.21 NA 34.16 29.68

ICBP.JK Indofood CBP Buy 16,000 15,125 6,702 IDR Dec 23.59 20.64 4.85 4.29 1.90 4.60 2.64 3.45 -26.23 -12.24

JFC.PS Jollibee Foods Corp Hold 208 231 4,799 PHP Dec 38.55 32.81 7.09 6.20 0.92 1.09 2.50 3.00 -2.17 -8.02

JUBI.BO Jubilant Foodworks Hold 1,350 1,252 1,403 INR Mar 62.52 50.66 10.47 8.86 0.20 0.20 0.02 0.13 -4.04 -4.52

KLBF.JK Kalbe Farma Buy 1,970 1,440 5,758 IDR Dec 30.15 27.00 5.48 4.93 1.26 3.52 1.49 1.94 -15.93 -23.53

033780.KS KT&G Hold 100,000 115,500 12,588 KRW Dec 14.60 13.65 2.14 1.96 3.03 3.03 5.36 5.96 -2.37 -10.41

NEST.BO Nestle India Ltd Buy 6,500 5,980 8,675 INR Dec 40.75 33.72 20.08 19.08 1.84 2.34 2.71 3.28 -15.02 -16.42

001800.KS ORION Corp Buy 1,250,000 930,000 4,236 KRW Dec 21.74 19.62 3.11 2.74 0.75 0.75 1.25 1.88 58.16 55.50

TUF.BK Thai Union Frozen Buy 23 19 2,694 THB Dec 16.27 14.21 1.95 1.82 3.07 3.52 NM 1.95 84.46 74.03

UNSP.BO United Spirtis Limited Buy 3,200 2,350 6,470 INR Mar 97.45 59.63 34.69 23.07 0.12 0.23 1.01 0.63 250.65 700.25

URC.PS Universal Robina Corp. Hold 207 219 10,355 PHP Sep 29.75 25.37 6.54 5.70 1.43 1.68 2.68 3.26 -10.26 26.85

ACES.JK Ace Hardware Indonedia Buy 925 830 1,082 IDR Dec 21.70 18.50 4.39 3.64 0.60 0.69 3548.18 4466.92 -15.70 -21.24

AMRT.JK Alfamart Buy 650 600 1,721 IDR Dec 32.79 23.26 5.41 4.31 0.91 1.29 0.69 2.94 147.11 121.53

090430.KS AmorePacific Buy 490,000 404,000 20,458 KRW Dec 33.76 27.89 6.00 5.09 0.40 0.50 1.96 2.84 -5.65 -12.55

035760.KQ CJ O Shopping Buy 230,000 195,400 1,051 KRW Dec 10.38 8.87 1.18 1.05 1.38 1.38 25.06 31.99 73.20 73.69

CPALL.BK CP ALL Buy 52 45 11,360 THB Dec 25.26 22.06 8.00 6.20 0.79 0.91 0.57 2.16 458.74 383.99

139480.KS Emart Buy 240,000 171,000 4,130 KRW Dec 12.08 10.86 0.60 0.57 0.88 0.94 NM NM 53.96 50.80

HMPR.BK HomePro Buy 9 9 2,758 THB Dec 27.26 23.79 5.64 5.05 2.02 2.31 NM 2.27 72.80 68.99

HLL.BO HUL Hold 900 851 25,734 INR Mar 42.38 38.88 44.26 39.74 2.12 2.32 2.38 2.75 -59.27 -63.56

069960.KS Hyundai Dept Store Buy 146,000 138,000 2,799 KRW Dec 10.57 9.45 0.86 0.79 0.58 0.72 8.02 11.57 8.18 9.99

ITC.BO ITC Buy 400 321 45,401 INR Mar 25.74 23.16 7.99 7.66 2.87 3.27 4.02 3.97 -12.33 -24.56


For additional information on all stocks mentioned here please refer to our website at: http://gm.db.com

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Figure 21: Valuation comps – Asia Pacific Consumer (cont’d)




051900.KS LG H&H Buy 1,120,000 1,019,000 12,947 KRW Dec 25.29 23.12 5.83 4.80 0.49 0.54 2.64 3.08 51.20 33.75

023530.KS Lotte Shopping Hold 210,000 259,500 6,532 KRW Dec 14.40 12.98 0.47 0.45 1.04 1.16 1.15 2.87 62.71 64.91

MRCO.BO Marico Limited Buy 250 253 3,058 INR Mar 45.02 36.67 14.51 11.64 0.79 0.89 2.42 2.44 41.10 22.50

PART.BO Pantaloon Retail India Ltd Hold 200 153 NA INR Jun NA NA NA NA NA NA NA NA 81.84 NA

RALS.JK Ramayana Hold 825 700 377 IDR Dec 15.64 14.36 1.36 1.30 2.94 3.21 6.68 3.31 -50.24 -55.93

ROBI.BK Robinson Dept. Store Hold 50 47 1,412 THB Dec 23.65 20.99 3.85 3.53 1.69 2.38 3.52 3.61 5.01 -0.81

004170.KS Shinsegae Hold 210,000 202,000 1,891 KRW Dec 12.19 9.99 0.63 0.59 0.64 0.69 NM 5.48 66.43 46.26

TITN.BO Titan Industries Buy 430 336 5,245 INR Mar 38.10 26.73 8.49 7.24 1.04 1.49 1.25 1.43 -3.27 -3.57

UNVR.JK Unilever Indonesia Hold NA 43,000 24,931 IDR Dec 51.11 44.81 68.38 60.01 1.85 2.02 2.04 2.27 8.50 -1.92

ASPN.BO Asian Paints Hold 850 853 10,498 INR Mar 43.73 36.06 14.34 11.99 1.11 1.41 1.91 1.88 -16.14 4.11

GOCP.BO Godrej Consumer Buy 1,400 1,370 5,262 INR Mar 41.65 34.99 9.05 7.54 0.51 0.51 2.12 2.43 22.39 25.13

HLL.BO Hindustan Unilever Hold 900 851 25,734 INR Mar 42.38 38.88 44.26 39.74 2.12 2.32 2.38 2.75 -59.27 -63.56

TAGL.BO Tata Global Beverages Buy 180 118 1,582 INR Mar 16.11 14.81 1.27 1.23 2.76 3.21 5.42 4.87 9.98 11.33

008770.KS Hotel Shilla Hold 65,000 69,000 3,692 KRW Dec 21.52 14.86 3.45 2.85 0.58 0.58 3.88 6.11 56.61 71.56

2914.T JT Buy 5,400 4,655 78,055 JPY Dec 16.85 16.15 2.74 2.53 3.01 3.22 5.23 5.53 -5.49 -15.39

4911.T Shiseido Hold 2,400 2,467 8,203 JPY Dec 30.94 24.50 2.60 2.41 0.89 0.97 NM 2.95 15.78 -0.40

027410.KS BGF Retail Buy 221,000 191,500 4,098 KRW Dec 27.20 23.09 5.51 4.61 0.73 0.89 5.55 6.19 -53.28 -61.82

007070.KS GS Retail Buy 65,000 49,000 3,081 KRW Dec 20.81 16.98 1.98 1.83 1.94 2.35 5.44 8.30 7.36 48.83

MYOR.JK Mayora Indah Buy 30,000 32,225 2,190 IDR Dec 25.86 NA 5.06 NA 0.60 NA 1.21 NA 68.54 54.72

LPPF.JK Matahari Department Store Buy 20,000 18,325 4,062 IDR Dec 23.03 19.56 22.16 13.42 2.15 2.17 4327.69 4964.34 -54.47 -98.46

MPPA.JK Matahari Putra Prima Buy 4,100 1,650 674 IDR Dec 13.01 11.63 2.32 2.01 0.00 0.00 7.03 8.77 -26.25 -12.94

MAPI.JK Mitra Adiperkasa Buy 7,000 4,400 555 IDR Dec 33.32 22.52 2.60 2.33 0.11 0.50 NM NM 111.61 123.81

CNPF.PS Century Pacific Food Buy 21 19 904 PHP Dec 18.83 16.60 4.30 3.61 1.42 1.59 3.66 4.22 -19.21 -19.77

COSCO.PS Cosco Capital Inc. Buy 13 8 1,216 PHP Dec 10.65 9.59 1.09 1.00 1.41 1.56 8.88 10.80 -5.96 -7.24

PGOLD.PS Puregold Buy 42 39 2,345 PHP Dec 19.75 17.73 2.53 2.26 0.89 1.01 4.03 4.84 -5.66 -7.76

RRHI.PS Robinsons Retail Hldgs Buy 78 77 2,312 PHP Dec 21.50 19.19 2.25 2.05 0.84 0.95 2.74 3.55 -23.91 -23.36

BIGC.BK BIGC Hold 250 250 5,029 THB Dec 28.34 25.03 3.99 3.59 1.05 1.19 2.39 4.57 31.49 20.68

CENTEL.BK Central Plaza Hotel Hold 39 41 1,435 THB Dec 27.63 25.49 5.31 4.77 1.63 1.77 NM 2.28 108.90 82.19

M.BK MK Restaurant Group Hold 52 53 1,517 THB Dec 21.89 20.04 3.68 3.66 4.30 4.70 5.59 5.65 -2.35 -2.21

MINT.BK Minor International PLC Hold 35 36 4,060 THB Dec 27.70 25.48 4.40 3.99 1.44 1.57 NM NM 95.54 115.46

MAKRO.BK Siam Makro Hold 34 34 5,300 THB Dec 25.59 21.63 9.99 8.78 2.74 3.24 0.37 3.27 5.18 30.86

Average 27.31 23.16 8.29 7.28 1.39 1.70 178.64 200.83 33.78 37.82 Source: Deutsche Bank For additional information on all stocks mentioned here please refer to our website at: http://gm.db.com

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Figure 22: Valuation comps – Media




600037.SS Gehua CATV Hold 17.20 15.49 4,585 CNY Dec 29.52 26.21 1.80 1.72 1.12 1.27 1.65 2.01 -40.81 -58.76

600637.SS Oriental Pearl Buy 46.00 28.30 13,889 CNY Dec 30.12 26.91 2.42 2.21 0.57 0.68 0.38 2.12 -33.64 -48.05

0511.HK Television Broadcasts Hold 27.96 27.45 2,179 HKD Dec 18.50 12.83 1.64 1.69 9.47 9.47 6.49 6.80 -42.73 -37.13

ASTR.KL Astro Malaysia Hold 3 3 5,145 MYR Jan 28.15 24.67 20.33 18.78 3.20 3.65 8.56 5.41 415.87 302.60

BEC.BK BEC World PLC Sell 25 28 2,226 THB Dec 19.51 18.03 6.15 5.58 3.59 3.88 5.04 4.69 -35.43 -12.39

DABU.BO Dabur India Limited Hold 290 249 6,340 INR Mar 33.34 28.34 10.66 8.68 0.99 1.16 2.89 3.05 7.06 13.57

DSTV.BO Dish TV India Ltd Buy 135 84 1,079 INR Mar 34.80 18.96 -167.65 21.38 0.00 0.00 2.41 4.46 NM NM

ZEE.BO Zee Entertainment Buy 475 391 4,994 INR Mar 32.98 26.14 5.83 4.92 0.58 0.58 0.89 2.23 -11.86 -13.25

SCMA.JK Surya Citra Media Buy 3,800 3,250 3,611 IDR Dec 26.98 NA 11.72 NA 2.52 NA 3488.15 NA -23.43 -37.26

Average 26.05 21.98 1.95 1.87 3.72 3.81 2.84 3.64 -39.06 -47.98 Source: Deutsche Bank For additional information on all stocks mentioned here please refer to our website at: http://gm.db.com

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Appendix 1

Important Disclosures

Additional information available upon request *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Anne Ling

Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock.

Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock

Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell.

Newly issued research recommendations and target prices supersede previously published research.

54 %

35 %

11 %19 %17 % 16 %

050

100150200250300350400450500

Buy Hold Sell

Asia-Pacific Universe

Companies Covered Cos. w/ Banking Relationship

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Regulatory Disclosures

1.Important Additional Conflict Disclosures

Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the

"Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

2.Short-Term Trade Ideas

Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are

consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the

SOLAR link at http://gm.db.com.

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