2017财年第4季度业绩预览-3月5日当周：专注于食品零售和奢侈品

3 March 2018ConsumerChina/HK 2017 results previewConsumerIndustry UpdateAsiaChinaIndustryChina/HK 2017results previewDate3 March 2018Deutsche BankMarkets Research4Q/FY17 Results preview - Week of 5Mar: focus on food retailing and luxuryChina – a more positive 2018 outlook is expectedDiscretionaries’ 2017 results have been mixed so far with the JNBY beat, Robammissing EBIT for the first time in eight years, Anta broadly in-line in sales butmissing NP on higher investment in new business, and the YUMC beat in SSSbut caution on the 1H18 outlook on a high base. We do not view Robam’s lower2018 guidance as a read-through for the entire white goods space and we remainpositive on Qingdao Haier (sales acceleration in 4Q17 on washing machines andrefrigerators) and Midea (unlike Robam, e-commerce was very strong on Single’sDay). On food retailers, while we do not expect a good set of 2H17F for SunArt (as Yonghui’s 4Q17 sales/NP was 4/8% lower than the market forecast), webelieve the operating environment will improve due to higher CPI expectation andits collaboration with online giants (directing traffic to stores at a lower expense).2017’s performance for staples is likely to witness a further recovery in salesin 2H17 or 4Q17 due to a recovery on key products (such as Tingyi and UPC’snoodle and Hengan’s tissue paper, Want Want’s UHT milk) and/or new productgrowth (like Dali’s soya milk and breakfast bread). We believe Tingyi should beatits USD250m NP official target for 2017, but the market forecast is likely to havefactored this. We expect most 2017 results to be in line and the key share pricedriver to be the 2018 outlook guidance. Raw material price increase is a concernfor all staples in 2018 but we believe with market recovery, they should be ableto offset part of the cost increase through price hike and mix upgrade. As leadersin the market, most listed companies should see market share gain, as they haveadvantages in sourcing raw material and cost control over smaller players in thisenvironment. That said, the initial share price reaction to price hike (which havecorrected subsequently) might have ben overdone for some companies.In the week of 5 March, Sun Art, Prada, Lifestyle (positive profit alert released)and Giordano will announce their 2017 results. We expect the market to focuson Sun Art and Prada .Top picks (China): Dali, Mengniu, Yum China, Anta, Q Haier, and HenganFor 2018, we pick companies that meet the following criteria: 1) mass segmentplayers with nationwide networks so as to enjoy the cyclical recovery; 2) segmentleaders, as they have sourcing advantages in times of raw material price hikes;and 3) agile and able to demonstrate product/business model upgrade capability.Anne LingResearch Analyst+852-2203 6177Mark YuanResearch Analyst+852-2203 6181John ChouResearch Analyst+852-2203 6196Louise LiResearch Associate+852-2203 6152Top picksAnta (2020.HK),HKD39.50BuyDali Foods (3799.HK),HKD7.51BuyHengan Intl. (1044.HK),HKD77.10BuyChina Mengniu Dairy(2319.HK),HKD25.70BuyYum China (YUMC.N),USD42.02BuyQingdao Haier (600690.SS),CNY19.59BuySource: Deutsche BankDeutsche Bank AG/Hong KongDeutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should beaware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should considerthis report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONSARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017.THE CONTENT MAY NOT BE DISTRIBUTED IN THE PEOPLE ’ SREPUBLIC OF CHINA (“THE PRC”) (EXCEPT IN COMPLIANCE WITH THE APPLICABLE LAWS AND REGULATIONS OFPRC), EXCLUDING SPECIAL ADMINISTRATIVE REGIONS OF HONG KONG AND MACAUDistributed on: 02/03/2018 22:16:01 GMT7T2se3r0Ot6kwoPa 3 March 2018ConsumerChina/HK 2017 results previewMengniu, Yum China, Anta, and Haier meet these criteria. With a national salesnetwork, large raw milk sourcing scale, and a solid track record in new productlaunches, Dali also fits the category. As the leader in paper household products,Hengan has made significant strides with its recent launch of wet tissue andsanitary napkins and its e-commerce penetration.Hong Kong – acceleration in SSS growth in Jan/Feb;operating leverageWe expect brands/retailers to report good SSSg with operating leverage for theirHK operation in 2H17, as a result of domestic recovery. Guidance for 2018 is likelyto be more positive based on the January/February trend as we expect SSSg toaccelerate in January/February for most operators, due to the improvement intourist flow, especially in Mainland travelers. We like Sa Sa, CTF and Lifestyle,with Sa Sa the current top pick in HK retailers as we expect the best operatingleverage from this company. CTF should continue to see good operating leverageowing to a higher sales mix from gem sets in HK (higher GPM). Should the marketturn more positive on HK’s medium-term outlook, we believe investors