China Consumer & Mediapg.jrj.com.cn/acc/Res/CN_RES/INVEST/2016/2/1/d66... · 1 February 2016...

Deutsche Bank Markets Research

Asia

China

Consumer

Periodical

Consumer & Media

Date

1 February 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) 124/04/2015.

Anne Ling

Research Analyst

(+852) 2203 6177

[email protected]

Winnie Mak

Research Analyst

(+852) 2203 6178

[email protected]

Agricultural Commodity Prices

Company news

Bright Dairy – Equity structure of the parent company adjusted

Yonghui – Banned substance found in fresh fishes

IT – 3QFY16 operational update

Embry Form – Sale update for 4Q15

Gome –Sales target of RMB2bn for Whirlpool’s products in 2016

China Shengmu – Trading halt

Meike International – Change of substantial shareholder

Emart – The worst is behind us; better conviction on 2016 recovery (Jihyun Song)

Shinsegae – Strong 4Q15 results; but remaining cautious on limited earnings visibility (Jihyun Song)

Titan Company – Expect cruise mode in CY2016 (Manoj Menon)

United Spirits – Lower for longer (Manoj Menon)

Videocon d2h – Strong operating performance continues – 40% EBITDA growth Q3 (Gaurav Bhatia)

Fonterra – Lower for longer milk prices (Gaurav Bhatia)

Anta – Sustainable value creation with fresh drivers; Buy (John Chou)

L'Occitane International – 9MFY16 sales broadly in line (Anne Ling)

Shanghai Jahwa Alert – Preliminary results implying a loss in 4Q15 (Anne Ling)

China Shengmu – Controlling shareholder to sell an aggregate of 1,525,056,000 shares

Vinda – 2015 revenue increases 21.4% yoy while NPAT decreases 47% yoy

Vitasoy – Received expressions of interest in acquiring operations in North America

COFCO Holdings – Controlling shareholder completes disposal of shares

VGI Global Media – FY3Q16 beats, but growth profile remains weak (Kris Sintusarn)

Godrej Consumer – Nearly a symphony (Manoj Menon)

Swatch Group Alert – FY results preview (Francesca Di Pasquantonio)

China Resources Beer – Back to fundamentals (Winnie Mak)

L’Occitane – Appointment of group managing director

Daphne International – 4Q15 results and FY15 profit warning

By-Health – Strategic cooperation with Fonterra

Sanyuan – Positive profit alert

Aokang International – Positive profit alert

Suning – Positive profit alert

1 February 2016

Consumer

Consumer & Media


LG H&H – Satisfactory 4Q15 results brightening 2016 outlook (Jihyun Song)

First Resources – Time to gain from CPO strength – share price lags earnings drivers (Jeffrey Ng)

BEC World PLC – Weak TV Adex 4Q15; a challenging year ahead (Chalinee Congmuang)

Coach, Inc Alert – F2Q Results: First Take (Dave Weiner)

Under Armour, Inc. – Tricky set-up into the print (Dave Weiner)

Biostime – Focusing on Swisse (Mark Yuan)

China Modern Dairy – Modern Farming (Group) to issue RMB500m domestic short-term debentures in the PRC

Golden Eagle – Share buyback

China Shengmu – Increase in shareholding by a controlling shareholder

Huabao – Update on derivative transaction of the controlling shareholder

Shanxi Fenjiu – Positive profit warning

Konka – Profit warning for FY15

San Miguel Brewery – Profit warning

Thai Union Group PLC – EU grants Thailand six more months to resolve IUU issue (Chalinee Congmuang)

Coach, Inc Alert – Q2 Preview (Francesca Di Pasquantonio)

Laox – Forecast revision: Stepping up measures for the next stage of growth

Gome Alert – SGM approves the acquisition of non-listed stores (Richard Huang)

WH Group – Appoints executive directors

Oriental Pearl – BesTV, Shanghai Unicom sign cooperation agreement

Goodbaby – Positive profit alert

Bonjour – Positive profit alert

Want Want – Share buyback

Matahari Department Store – Increasing ownership in MatahariMall.com to 10% (Reggy Susanto)

Charoen Pokphand Foods – Expect no loss in 4Q15; Continued recovery in 2016E (Chalinee Congmuang)

ITC – Relative price of cigarettes continues to be a headwind for volumes (Manoj Menon)

Sector news

China Luxury – Jimmy Choo bucks Chinese slowdown in luxury sector

China Catering – McDonald’s plans expansion in more lower-tier cities in China

China Luxury – In Love Diamond continues to close stores

Korea Advertising – Downgrading Cheil WW to Sell, Innocean WW to Hold (Han Joon Kim)

China retail – The first maternity shoes’ company listed on NEEQ

China retail – ETAM Développement SCA sales dropped in China in 4Q15

China Luxury – Swiss watch exports slide on poor HK sales

Air Conditioning Sector – Fujitsu General's 3Q results: Chinese market's margin of decline narrowing (Takeshi Kitaura)

China Retail – Costco opens its first offline store in Wuhan

China Retail – Inman opens 200 offline stores

China GE – Chinese TVs showing their strength in South Korean markets

China F&B – Chinese companies to invest USD1.74bn in Kazakhstan’s organic foods industry

China Luxury Market Trends – Access China conference highlights – Bain & Company (Anne Ling)

China Media – Moviebook and MangoTV jointly released a collaborative video-marketing product

China Sports – Lesports becomes the controlling shareholder of big soccer-data company Sodasoccer

China Luxury – Bulgari to push ahead with China expansion

1 February 2016

Consumer

Consumer & Media


China CBEC – CBEC transaction value up 30% in 2015

China Retail – O2O commerce generates real money in China

Korea Retail 2016 outlook – Selective investment opportunities amid unexciting business environment (Jihyun Song)

dbAccess China – China Consumer tour takeaways (Anne Ling)

China Cosmetics – Cosmetics imports from Korea to China amounted to over USD1bn in 2015

China CE – Local governments ask appliance makers to return subsidies

China Retail – First IPO of 2016 of Topscore Fashion approved

China Luxury – Gucci closes Southwest China Image Store

1 February 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 Oct-15 Nov-15 Dec-15

US soybean CBOT (1M futures) USD/Bushel 29-Jan-16 8.8 0.1% 1% -8% 8.8 8.7 8.9

China soymeal spot price Dalian RMB/t 29-Jan-16 4,280.0 5.2% 19% 71% 2,788.0 2,632.5 2,557.5

China crush margin RMB/t 29-Jan-16 111.2 -17.6% 1% 4843% 93.9 25.9 85.3

China soybean oil spot price Dalian RMB/MT 29-Jan-16 5,800.0 0.0% -2% 6% 5,660.0 5,662.5 5,862.5

US corn (1M futures) USD/Bushel 29-Jan-16 3.7 0.5% 4% 1% 3.8 3.6 3.7

China corn (1M futures) RMB/t 22-Jan-16 1,947.0 -6.7% -6% -15% 1,863.2 1,906.0 2,055.8

US wheat (1M futures) USD/Bushel 29-Jan-16 4.8 0.8% 2% -5% 5.1 4.9 4.8

China wheat (1M futures)

Strong wheat RMB/t 22-Jan-16 2,664.0 -9.4% -9% -1% 2,832.2 2,896.3 2,874.8

Hard wheat RMB/t 22-Jan-16 2,404.0 2.3% 6% 3% 2,231.0 2,303.5 2,455.0

China rice wholesale

Japonica Rice RMB/t 24-Jan-16 4,665.0 2.3% 2% 10% 4,677.5 4,644.0 4,555.0

Early Indica Rice RMB/t 24-Jan-16 3,834.0 -0.1% 0% -1% 3,815.4 3,829.4 3,838.0

Malaysia palm oil (1M futures) MYR/MT 29-Jan-16 2,411.0 -1.0% 0% 12% 2,242.2 2,151.5 2,235.3

US sugar 11 (1M futures) USD/Bushel 29-Jan-16 0.131 -8.9% -14% -11% 0.14 0.15 0.15

Fonterra milk powder

Whole milk powder USD/t 19-Jan-16 2,188.3 -1.0% -5% -8.9% 2,759.0 2,300.5 2,281.8

Skimmed milk powder USD/t 19-Jan-16 1,834.9 -2.9% -3% -23.2% 2,222.5 1,934.5 1,904.6

China raw milk RMB/kg 13-Jan-16 3.55 -0.6% 0% -1% 3.47 3.50 3.54

US orange juice (1M futures) USD/lb 29-Jan-16 1.3 8.8% -8% -5% 1.25 1.45 1.45

PET resin (monthly) USD/MT Dec-2015 804.5 na -5% -20% 856.0 847.5 804.5

Crude oil USD/bushel 29-Jan-16 34.74 18.8% -5% -29% 49.3 45.9 38.9

Aluminium USD/MT 29-Jan-16 1,519.0 2.5% 1% -19% 1,543.6 1,479.6 1,508.8

Pulp (China NBSK) RMB/t 26-Jan-16 3,919.2 -0.7% 1% -8% 4,012.5 3,901.8 3,888.5 Source: Bloomberg Finance LP, MOFCOM, China Custom, CZGM, Fonterra, MOA, CMA

1 February 2016

Consumer

Consumer & Media


PRC food prices trackers

Figure 2: PRC food prices trackers

Date Price Change Average Price

Unit Latest Latest WoW MoM YoY Oct-15 Nov-15 Dec-15 Jan-14 Dec-13 Jan-14

Pork (wholesale) RMB/kg 22-Jan-16 23.88 1.8% 6.2% 22.3% 23.18 22.37 22.53

Live hog price Rmb/kg 28-Jan-16 17.92 -0.4% 7.5% 33.6% 17.33 16.44 16.79

Pig to feedstuff ratio - 20-Jan-16 8.47 0.4% 6.9% 49.6% 7.96 7.93 7.94

Number of live hogs Million

Head

Dec-15 383.81 N/A -1.10% -9.0% 390.81 388.07 383.81

Chicken (retail) Rmb/kg 22-Jan-16 20.18 0.1% 0.3% 2.6% 20.00 20.01 20.08

Day-old-chick (wholesale) RMB/chick 26-Jan-16 1.25 -8.1% 16.3% 296.8% 0.76 0.53 0.85

Average fish (wholesale) Rmb/kg 22-Jan-16 20.11 0.5% 0.4% 2.7% 19.95 19.90 19.97

Eggs (retail) Rmb/kg 22-Jan-16 10.39 0.8% 1.4% -6.1% 10.43 10.26 10.24

Average vegetable (wholesale) Rmb/kg 22-Jan-16 4.88 8.7% 9.0% 6.8% 3.64 3.96 4.45

Average fruit (wholesale) Rmb/kg 22-Jan-16 6.12 1.0% 2.7% -9.9% 5.71 5.89 5.97

PRC Dairy products (retail)

Milk Rmb/l 22-Jan-16 11.2 -0.1% 0.8% 4.0% 11.03 11.09 11.13

Yogurt Rmb/l 22-Jan-16 14.1 -0.2% 0.1% 1.5% 13.85 13.88 13.99

Import infant formula Rmb/kg 22-Jan-16 212.0 0.2% 0.0% 1.8% 211.01 211.08 211.33

Domestic infant formula Rmb/kg 22-Jan-16 164.9 0.0% -0.2% 0.3% 164.08 164.34 165.10

Soybean oil (retail) Rmb/l 22-Jan-16 11.5 0.1% -0.1% -1.1% 11.42 11.44 11.46

Small pack rice (retail) Rmb/kg 22-Jan-16 6.5 0.2% 0.2% 0.9% 6.50 6.51 6.51

Small pack flour (retail) Rmb/kg 22-Jan-16 5.8 0.2% 0.0% 0.2% 5.77 5.77 5.77

White sugar (retail) Rmb/kg 22-Jan-16 10.7 0.2% 0.0% 0.1% 10.67 10.67 10.68 Source: MOFCOM, MOA, Efeedlink *MOFCOM start new data series

1 February 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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-08

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WMP All Contracts SMP 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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D-04 D-05 D-06 D-07 D-08 D-09 D-10 D-11 D-12 D-13 D-14 D-15

RM

B/T

on

Source: Bloomberg

Source: MOFCOM

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

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Source: Bloomberg

Source: Bloomberg

1 February 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 Wholesale Rice Price Trend

15%

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Foreign Brand Domestic Brand

Price premium

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J-06 J-07 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16

RM

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ne

Japonica Rice Early Indica Rice

Source: MOFCOM

Source: CZGM

1 February 2016

Consumer

Consumer & Media


Company news

China/HK

Bright Dairy – Equity structure of the parent company adjusted

(600597.SS, RMB10.47, Sell)

Based on the SOE reform plan, Guosheng Group, a wholly state-owned company, will

gratuitously transfer its 22.06% shareholding in Bright Food Group, the parent

company of Bright Dairy, to Shanghai Municipal Investment (Group) Corporation. After

the adjustment, Shanghai SASAC, Guosheng Group and Shanghai Municipal will hold

6%, 49% and 45% equity in Bright Food, respectively. Bright Food will still hold

54.35% equity in Bright Dairy.

Source: 27 January 2016, company announcement

Yonghui – Banned substance found in fresh fishes

(601933.SS, RMB7.48, Buy)

The Beijing Food and Drug Administration published its recent sampling test results on

28 January 2016. According to the report, malachite green, a banned substance, was

found in fresh fishes sold in supermarkets including Yonghui, Wal-mart and Tesco.

Source: 28 January 2016, caijing.com.cn

IT – 3QFY16 operational update

(999.HK, HKD1.81, NR)

IT’s Hong Kong/China operations reported a SSS decline of 2%/2.2% while that of

Japan registered a rise of 37.4% for 3QFY16. For the first nine months, it saw a SSS

decline of 1.3% in Hong Kong but 2.2% and 29.4% growth in China and Japan,

respectively. GPM narrowed 1.9ppt, mainly dragged down by the 10.3 ppt decline in

Japan in 3Q.

The company believed that HK sales were weakened as a stronger HKD provided less

incentive for the daigou business in China alongside an unusual warm winter. Japan

sales benefited from in-bound tourist traffic.


Embry Form – Sale update for 4Q15

(1388.HK, HKD3.77, NR)

The company announced overall sales for 4Q15 grew 2% with single-digit SSSg. It

also net increased retail outlets by 101 to bring the total number of store to 2,216:

2,032 concessionary counters and 184 retail shops.


1 February 2016

Consumer

Consumer & Media


Gome – Sales target of RMB2bn for Whirlpool’s products in 2016

(0493.HK, HKD1.05, Buy)

According to local press, Gome has reached a strategic agreement with Whirlpool

China (600983.SS, NR), under which Gome aims to reach RMB2bn sales for

Whirlpool’s products including Sanyo washing machines, Rongshida washing

machines and refrigerators, and Ditto refrigerators. In 2015, Whirlpool’s sales in Gome

rose 43% yoy, which exceeded the original target as the brand focused on inverter

technology and health oriented products. Gome plans to integrate its supply chain and

offer differentiated products to meet consumer demand in 2016.

Mr. Zhang, a senior vice president of Whirlpool, said that it would further penetrate

into lower tier cities, leveraging Gome’s store network and improving its branding

name to drive sales.

Source: 27 January 2016, China Appliance Association

China Shengmu – Trading halt

(1432.HK, Suspension, NR)

Trading in the shares of China Shengmu Organic Milk Limited was halted at 9:00 a.m.

today


Meike International – Change of substantial shareholder

(953.HK, HKD0.82, NR)

Meike International announced that Power Rich Development, the company’s

substantial shareholder directly wholly-owned by Dr. Allan Yap, who is an executive

director of the company, had entered into an S&P agreement with a company

controlled by CMC Holdings Ltd. Following completion of the transaction, Power Rich

will have disposed of its entire shareholding, representing 350m ordinary shares and

approximately 29.55% of the total issued capital of the company as at the date of this

announcement and will cease to be a substantial shareholder of the company.


South Korea

Emart – The worst is behind us; better conviction on 2016 recovery

(139480.KS KRW, Buy)

Maintaining Buy

2015 was a tough year for Emart due to the MERS impact in the middle of the year,

harsh price competition and one-off expenses for restructuring. However, we believe

Emart will be able to deliver solid earnings recovery (+19.6% yoy in OP) in 2016E,

thanks to: a) SSSg rebound for the offline discount store business; b) rapid growth of

1 February 2016

Consumer

Consumer & Media


Emart Mall with additional logistics centres increasing capacity and c) margin

improvement of the China operation and DFS business, thanks to restructuring

(inventory clearing) and loss-making store closings in 2015. Maintaining Buy.

Please refer to full report:

http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab6da24

Jihyun Song

Shinsegae – Strong 4Q15 results; but remaining cautious on limited earnings visibility

(004170.KS, KRW 213,500, Hold)

Maintaining Hold

We maintain our cautious view on Shinsegae, due to limited earnings visibility for its

department store business and DFS business. Aggressive store space expansion in

2016, on top of ongoing headwinds from retail industry dynamics change, should keep

weighing on the department store business. We also see risks of promotion cost

increase for the first couple of years of DFS operation; the company should open

downtown DFS in the highly competitive Seoul area.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab76387

Jihyun Song

Titan Company – Expect cruise mode in CY2016

(TITN.BO, INR 339.05, Buy)

Titan remains our high-conviction top pick; Buy

Tanishq’s sales growth of 30% in 3Q (15% underlying revenue growth in 1HFY16)

comprehensively addresses the bearish worry over consumer behaviour toward

Jewellery during times of gold price deflation. 3QFY16. Positives: 1) Jewellery GM

improved despite a reduction in making charges (a key bear argument is nullified) and

2) new advance purchase scheme provides revenue growth visibility of >25% for

CY2016. Negatives: 1) Watches business is undergoing a business transformation –

revenue growth of just 8% and high ad spends are affecting margins and 2)

management is cautious regarding the impact of PAN card implementation for

transactions over INR2,000,000.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab5fdf6

Manoj Menon

India

United Spirits – Lower for longer

(UNSP.BO, INR 2,575.00, Buy)

1 February 2016

Consumer

Consumer & Media


Lower EBITDA margins (versus consensus) in medium term

USL’s 3Q disappointed consensus as, (1) low gross margin improvement despite -

favourable input cost trends and better revenue mix (state mix and brand mix both

better), (2) management guidance of higher adspends (despite savings in related party

transactions in adspends), (3) its medium term target of c.11% EBITDA margin and (4)

incremental regulatory hurdles in Uttarakhand, Chattisgarh and Goa. We expect stock

to stay volatile in the short term. In 3QFY16, reported Sales/EBITDA/PAT grew

14%/13%/6% (+14%/-2%/-9% vs DB est.). Volumes were flat with 11% growth in

“prestige and above” and a 6% decline in “popular”. Underlying revenue growth was

22% (excluding revenues from the demerged Chennai unit). Diageo brands contributed

INR 2.56bn to net sales (c10%). Gross margins improved 150bps, however, EBITDA

margin was flat yoy due to additional ad spends.

USL is on the right path of investing on power brands and prioritize geographical

participation. Royal Challenge brand post its re-launch has delivered 58% volume

growth in 9MFY16. McDowell’s No.1 re-launch is underway. Management says there

are “early signs of positive consumer and trade response”. The Haywards brand’s

temporary pricing issue in Karnataka has been resolved (USL had to reverse a price

hike when faced with stiff competition). Improvement in net debt continues – INR

38.9bn as at end 3QFY16 (lower by INR 14.3bn largely due to divestments of UBL

shares). We’ve cut earnings and target price by c.10% modelling the earnings miss.

Our TP is based on 12.2% WACC and 4.5% terminal growth. Key risks are lower-than-

expected margin expansion and working capital improvement.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab5c5ae

Manoj Menon

Videocon d2h – Strong operating performance continues – 40% EBITDA growth Q3

(VDTH.OQ, USD 6.07, Buy)

Strong in-line results; subscriber addition could pick up in CY16

VDTH delivered 40% EBITDA growth in 3QFY16, in line with our estimates. The key

positives: (1) ARPU up 3% QoQ despite absorbing 0.5% additional service tax (Swatch

Bharat cess) during the quarter; and (2) churn declined to 0.73% pm vs. 1.19% in

2QFY16 (a key investor concern last quarter). VDTH seems on track to deliver similar

growth in 1HCY16 driven also by operating leverage from growing subscribers on

semi-fixed content costs. (Refer to our report '70mn done, 70mn to go', dated 24

July’15.) Government has not pushed back the digitization phase 3 deadline date,

1 February 2016

Consumer

Consumer & Media


which is a positive. The benefits could flow in over the next 6-12 months (still not in

our estimates).


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab604d1

Gaurav Bhatia

Global

Fonterra – Lower for longer milk prices

(FSF.NZ, NZD5.86, Buy)

Maintain Buy on positive turnaround outlook and valuation support

We re-iterate our Buy rating on FSF, notwithstanding today’s FGMP downgrade means

cash flows will remain challenging for farmers over the next 12 mths. The key

elements which underpin our positive FSF investment case are a combination of

positive earnings momentum (we have upgraded our EBIT forecast) coupled with a

material reduction in balance sheet gearing as a result of lower capex and the FCF

program. Both elements should be demonstrated at the interim result in March as well

further details provided on the turnaround program at the group level and within the

Australian business.

NZ FGMP downgrade due to weak commodity prices

Fonterra has downgraded its forecast for the FY16 NZ FGMP to NZ$4.15 per kgMS

(was NZ$4.60). This outcome is consistent with the recent weakness in GDT auctions,

other NZ processors also downgrading expectations and the limited near term price

recovery implied by the futures market. The key drivers continue to be a sluggish

demand environment as well as Europe in particular taking longer than expected to

reduce its supply in response to low prices. We would also highlight that while China

imports of NZ WMP have improved on pcp the recovery has also proved slower than

expected. On the FSF side, the Co-op has re-iterated its Nov. EPS guidance of NZ45 to

55cps and dividend of NZ35 to 40cps, which equates to a total farmer pay-out of

NZ$4.50 – NZ$4.55.

Re-basing our FSF earnings higher, net debt lower

We have upgraded our operating forecast to include the strong 1Q performance and a

portion of the additional information provided on the business transformation benefits

in Nov. Below the line, our EPS upgrade is magnified by the total cash benefits (FCF

program and other divestments) lowering net interest expense. Our FY16E EBIT is now

+11% to NZ$1.35bn and our YE gearing reduces to 44% (was 49%).

TP +9% to NZ$7.05, retain Buy, risks

We lift our P/E based TP +9% to NZ$7.05. This reflects rolling forward to our upgraded

earnings base and applying FSF’s LT avg. P/E multiple of c.14x. Key downside risks:

continued global dairy trade volatility, mgmt execution of earnings turnaround and/or

slowing macro conditions in key growth markets.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08a6ecff8

Gaurav Bhatia

1 February 2016

Consumer

Consumer & Media


China/HK

Anta – Sustainable value creation with fresh drivers; Buy

(2020.HK, HKD 17.02, Buy)

Buy Anta as a sustainable beneficiary of China’s sports industry

Anta’s share price has corrected by 29% from the recent peak (14/Nov/19) on fears of

(1) winter inventory & discount, (2) moderating industry recovery, and (3) negative

news flow. We continue to like Anta as a key beneficiary of sports industry

development in China. We forecast Anta’s growth driver to shift to sports market

segmentation and 2016 is crucial to achieve the transitions.

2H15 earnings release & investor conference a positive event

2H15 earnings: we expect Anta to meet our 2H15 earnings growth forecast of

up 17% YoY. Anta also has a track record of distributing a special dividend,

unless there is a better use of cash e.g. M&A.

4Q15 SSSg & 3Q16 orderbook deceleration: we believe the deceleration is

weather-driven, while the underlying demand remains strong. We believe that

Anta might proactively increase the mix of summer wear during 3Q16 sales

fair (vs. more jackets in the past).

Healthy channel inventory: despite of weaker 4Q15, we forecast Anta to

maintain a healthy channel inventory level of 4-5 months.

Brand acquisitions: we expect Anta to share more light on its brand

acquisition plans during the 2H15 investor conference. We view acquisitions

as crucial for it to capture sports market segmentation trends.

2016 risk factors weighing on Anta’s stock sentiment, but unlikely to break positive investment case

(1) Increased marketing expenditure is crucial during the 2016 Olympics. According to

the Financial Times, China will grow its medal count in 2016 Olympics (vs 2012). As

the major sponsor of the China team, this should enhance Anta’s brand equity. (2)

Conservative wholesaler and orderbook growth deceleration: replenishment orders will

likely offset orderbook deceleration (if any). With enhanced in-house production

capability, we view Anta as more flexible in production vs. domestic peers (3) Raw

material benefits: provide Anta with more flexibility to incentivize & support

wholesalers.

“Rejuvenate the bull” through sports segmentation

Longer-term, we expect Anta’s growth drivers to shift toward product & brand

segmentation. That is, we forecast Anta to serve as a brand platform branching into

new territories including outdoor, skiing etc. on top of strong running, basketball and

casual. This can be evidenced by Anta’s soccer expansion and potential brand M&As.

We note that Anta has a leading track record in operating multiple brands.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab5fbf4

John Chou

1 February 2016

Consumer

Consumer & Media


L'Occitane International – 9MFY16 sales broadly in line

(0973.HK, HKD 12.66, Buy)

9MFY16 sales broadly in line

9MFY16 sales grew 11.6% (5.8% in LCY) to EUR984.7m – in line with DB –and

accounted for 75% of FY sales vs. 77%/76%/75% in FY13/14/15. SSSG was 1.8% in

9M16 vs. 2.1%/1.6% in 1Q16/1H16. L'Occitane opened 82 stores (excl. seven stores

acquired from distributors in Norway) in 9MFY16 incl. 19 in China, 18 in US. Sell-out

sales grew 5.9% yoy in LCY, mainly driven by store network expansion; sell-in sales

grew 5.4% yoy in LCY.

By market

China remains the major growth driver with 19.1% growth in retail sales mainly due to

new store openings and decent sales from Tmall (+146% yoy, contributing 10%+ of

total China retail sales ytd). Sales in dept. stores and malls remain soft. Co plans to

further invest in digital e.g., 3rd-party & Wechat.

France posted strong sales growth of 12.9% with SSSG of 7.9% despite the Paris

terrorist attacks in mid-Nov 2015, driven by solid ecommerce, well-received Charismas

product offering and acceleration of wholesale business.

Japan saw softer growth of 5.6% mainly due to: 1) weak winter products resulting

from abnormally warm weather (moderate in Oct, especially weak in Nov, picked up in

Jan 2016); 2) CRM system issue triggered by new website set-up which impacted

overall sales growth by 1.1 ppt but now largely solved.

US also saw retail sales drop 0.7% given fewer discounts to protect profitability and

weak sales in dept. stores. Mgmt expects to focus more on other channels e.g.,

spatiality and ecommerce (contributing 6% of total sales).

HK momentum still weak with retail sales -9.7% in LCY, so growth still negative but

slightly better than in 2Q. Mgmt believes sluggish HK retail market has yet to be

bottom.

Emerging brands. Melvita saw better brand image with msd SSSG. Mgmt does not

target break-even next year as it is still at the investment stage.

Online retail sales rose 17.7% yoy in LCY, representing 10% of total sales. Ecommerce

growth slowed vs. first two quarters, mainly due to some one-time issues, e.g., CRM

issues in Japan and fewer discounts offered in US, according to mgmt. Tourist retail

broadly picked up in Asia except in HK and Macao.

EBIT margin for the year should be largely in line with previous guidance (1-1.5ppt

contraction). For next year, mgmt expects A&P expense to remain the same as this

year, which will lead to a lower ratio as % of sales. Mgmt believes that Tmall is more

like a promotional platform with a relatively lower margin vs. general ecommerce,

while it has been continuously improved.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab4c3f5

Anne Ling

Shanghai Jahwa Alert – Preliminary results implying a loss in 4Q15

(600315.SS, RMB30.08, RMB40.67, Hold)

1 February 2016

Consumer

Consumer & Media


2015 NP up by 145%, mainly due to disposal of Jiangyin Tianjiang

Shanghai Jahwa (SJ) announced preliminary results for 2015 after the market closed

today. The company expects that NP in 2015 will grow by 145% yoy, mainly due to an

exceptional gain (ex-tax) of RMB1.79bn (23.84% stake disposal of Jiangyin Tianjiang).

Excluding this, the core NP of SJ implies a decline of 24% yoy to RMB679m, 27%/33%

lower than Deutsche Bank/market estimates of RMB934m/RMB1,024m (based on our

adjustment by excluding exceptional gain), respectively. This also implies a RMB112m

net loss when excluding the exceptional gain booked in 4Q15. We do not know if there

are any other one-off expenses or provisions that caused the weak 4Q results. The

company will announce its 2015 annual results on March 11, 2016.

Deutsche Bank view – 2016 outlook remains challenging

We believe the net loss (ex. one-off gain) in 4Q15 is mainly due to Herborist slowdown,

given that winter is usually a peak season for this brand. We expect 1Q16 to remain

challenging for Herborist due to a high base effect, and difficulties in the distribution

channels might persist (we expect an update from management in its upcoming 2015

results meeting). Meanwhile, Kao (4452.T, KWD6,106, Hold) launched its official CBEC

flagship stores in October 2015, offering products at more attractive prices. We believe

this might affect SJ’s distribution business in 2016. According to our Korea consumer

analyst Jinyun Song, who covers Kao, Merries diapers started to see a slowdown

beginning in September 2015, as they were disrupted by Daigou business in China.



Anne Ling

China Shengmu – Controlling shareholder to sell an aggregate of 1,525,056,000 shares

(1432.HK, HKD1.78, NR)

World Shining Investment Limited, the controlling shareholder of China Shengmu, has

conditionally agreed to sell an aggregate of 1,525,056,000 shares, representing 24% of

the total issued share capital of the company, to Nong You Co., Ltd. for a total

consideration of HKD3,355,123,200, or HKD2.2 per share, on 27 January 2016.

Nong You is a company incorporated in the British Virgin Islands. As informed by

World Shining, to its best knowledge, Nong You and its ultimate controlling

shareholder are independent third parties of the company and its connected persons.


Vinda – 2015 revenue increases 21.4% yoy while NPAT decreases 47% yoy

(3331.HK, HKD12.80, NR)

The company recorded a total revenue of HKD9,696m for 2015, an increase of 21.4%

yoy with organic growth at 15.3%. Revenue from the tissue business and the personal

care business grew 18.9% and 194% to HKD9,357.2m and HKD338.8m, respectively.

Revenue from e-commerce rose 124.0% to HKD1,248m in 2015. Gross profit

expanded 22.8% to HKD2,958.7m. Gross profit margin rose 0.3ppt to 30.5%, which

was mainly contributed by optimisation of tissue product mix and improvement in

1 February 2016

Consumer

Consumer & Media


production efficiency that was offset by rising wood pulp cost during the year. Due to

the depreciation of the renminbi, operating profit dropped 8.5% to HKD752.6m., PBT

decreased 39.1% to HKD448.9m and NPAT fell 47.0% to HKD314.4m. Excluding items

such as foreign exchange loss, transaction costs, post-tax loss and one-off gain from

V-Care that affected comparability, underlying operating profit increased 8.8% to

HKD891.6m, and underlying profit before income tax rose 6.6% to HKD788.7m.

Debtors turnover days and creditors turnover days were all down by 4 days from 47

days and 83 days in 2014 to 43 days and 79 days, respectively, in 2015, while finished

goods turnover days increased 3 days to 43 days in 2015.

Figure 13: Vinda – Result 2015

YE Dec 31, HKDm 2015 2014 YoY Change

Revenue 9,696.00 7,985.22 21.42%

Gross profit 2,958.67 2,408.71 22.83%

GPM 30.51% 30.16% 0.35%

Staff costs (963.51) (806.87) 19.41%

Depreciation (428.87) (356.19) 20.41%

Rent (144.86) (105.45) 37.38%

EBIT 752.63 822.31 -8.47%

EBITM 7.76% 10.30% -2.54%

Finance expenses (303.75) (80.50) 277.31%

PBT 448.88 737.00 -39.09%

Tax (134.44) (143.54) -6.34%

Effective tax rate 29.95% 19.48% 10.47%

NPAT 314.44 593.47 -47.02%

NPM 3.24% 7.43% -4.19%

EPS (HKD) 0.32 0.59 -46.97%

Costs as % of sales

Staff costs 9.94% 10.10% -0.17%

Depreciation 4.42% 4.46% -0.04%

Rent 1.49% 1.32% 0.17%

Source: Company announcement


Vitasoy – Received expressions of interest in acquiring operations in North America

(0345.HK, HKD14.46, NR)

Vitasoy has received expressions of interest from independent parties interested in

acquiring some of the company’s operations in North America, which the Board is

considering. The board confirms that the North America business is currently loss-

making. However, there is no substance to the assertion that the North America

business will be discontinued. The company intends to continue its presence in North

America. The shape of this North American operation will be decided at the conclusion

of the strategic review to structurally improve profitability, as announced in its

2015/2016 interim report.


1 February 2016

Consumer

Consumer & Media


COFCO Holdings – Controlling shareholder completes disposal of shares

(906.HK, HKD, NR)

CPMC Holdings announced that COFCO (Hong Kong) sold 269.34m shares,

representing approximately 27% of the issued shares of the company at a

consideration of HKD1.6bn (c. HKD6.00/share). Following the completion, COFCO

(Hong Kong) beneficially holds 330.66m shares, representing approximately 33.15% of

the issued shares of the company and remains as the single largest shareholder.


Thailand

VGI Global Media – FY3Q16 beats, but growth profile remains weak

(VGI.BK, THB 3.70, Sell)

VGI reported FY3Q16 net profit of Bt232m, beating our and Street’s forecasts by 22%

and 7%, respectively. Stripping out the Bt10m in net extra items from 1) gains on sale

of equipment and investment in JV, and 2) reversal of loss reserve for minimum

guarantee paid to advertisers, core net profit of Bt222m beats our forecast as 9MFY16

accounts for 82% of our FY16 forecast

Key takeaways:

Mass transit revenue was in line with expectation at Bt453.2m (down 8% YoY

and 6% QoQ), due to a decrease in BTS advertising occupancy. VGI won

advertising rights for 7 additional BTS stations, for which it was unable to fill

advertising space.

Revenue from office buildings and others was better-than-expected at Bt66.5m

(+39% YoY, +17% QoQ), mainly due to 1) expansion of advertising space at office

buildings (to 123 from 103), 2) new advertising vehicles such as 10 digital screens

at clock towers in large provinces, and 3) higher commission income from

MIDAS. Additionally, better-than-expected costs management helped improve

VGI’s gross and core net profit margins to 66% and 43% from 53% and 31% in

3QFY15, respectively. We expect margins to continue to expand as VGI has

decided not to renew its margin-squeezed advertising contracts at Victory

Monument.

Although office buildings and other media performance and net extra gain

provide an upside to our FY16 forecasts, we maintain Sell on VGI with a target

price of Bt2.4 as the FY17 outlook for the company’s core mass transit business

(accounting for 87% of total revenue) remains weak. We do not expect earnings

to turn around in the next 12 months, as it may not be in a position to outperform

SET.

1 February 2016

Consumer

Consumer & Media



http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08aa8a2db

Kris Sintusarn

India

Godrej Consumer – Nearly a symphony

(GOCP.BO, INR 1,150.00, Buy)

3QFY16: sales, EBITDA, PAT +6%/+17%/+16% (0%/+3%/-1% vs. our est.)

GCPL continues to deliver broad-based, market-leading growth. The highlight of 3Q

was 9% volume growth in India, with signs of better category and brand mix (driven

by the Insecticides category and the Cinthol brand). A 17% higher ad spend in

2HCY15, in addition to the ad spend having doubled in FY12-15, indicates that GCPL is

focusing on category outperformance and innovation. Slow revenue growth in

Indonesia is worrying (although Megasari is outperforming the industry). Darling's

underlying revenue growth of 15% is good, given the macro challenges. Accelerating

innovation and the expansion of rural distribution are critical to revenue

outperformance in FY2016-18.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab5c878

Manoj Menon

Europe

Swatch Group Alert – FY results preview

(UHR.VX, CHF338, Hold)

Swatch likely to release FY results next week

Swatch Group is likely to publish its FY results towards the end of next week. A

conference call is usually held at 2pm CET the day of the release.

1 February 2016

Consumer

Consumer & Media


DB estimates FY/H2 Net Sales CHF8509m/4317m, -2.3%/-6.3% yoy

Our net sales FY/H2 estimate for cFX growth is respectively -0.5% and -4% which

compares with +3.6% in 1H. For the W&J business, 1H cFX sales growth was +3.4%

and we now expect -3.5% in 2H and -0.3% in FY. As a reference, the Swiss watch

exports expressed in CHF were down 3.3% for the FY and respectively +0.6% and -

6.9% for 1H and 2H. Our CHF8509m net sales compare with Bloomberg consensus of

CHF 8.66m

We expect operating deleveraging

Due to softening top line trends we expect EBIT margin to contract further in 2015

despite the drop already experienced in 2014. We expect a 262 margin erosion for

FY15 on top of the 430bps dilution (on an adjusted basis) recorded last year. Dilution

was 210bps in 1H on top of 250bps dilution in 1H14 and we estimate 315bps margin

decline in 2H on top of the 580bps decline (adj.) experienced last year. Gross margin

and opex pressures in addition to the negative impact of the CHF should be

responsible for this. However we remind that the Co could recover some of last year’s

“higher deliberate marketing spend" which could provide some unexpected support to

earnings. Our EBIT of CHF1489m down 15% yoy compares with Bloomberg

consensus of CHF1.56bn (-11% yoy). Our net profit of CHF1.13bn is 4% below

consensus of CHF1.18bn. We believe our estimates to be conservative reflecting the

deteriorating environment in 2H, which has reflected in the share price trends


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab5bfe4

Francesca Di Pasquantonio

China/HK

China Resources Beer – Back to fundamentals

(0291.HK, HKD 12.30, Hold)

2H15 ASP 1% below DBe

China Resources Beer (CRB) management clarified that the 2H15 operating statistics is

based on new accounting treatment, under which part of the selling expenses in the

past is now treated as price discount, resulting in lower ASP and selling expenses, and

ASP in local currency was up 5% yoy in 2H15, with revenue up 3%. Net of 5% RMB

depn, it implies -3% adj due to change in accounting treatment. Compared to our old

forecast (which did not factor in accounting treatment change), 2H15 ASP and

revenue were 1% below DBe.

2015-17E NPAT forecast -8-10%; TP -10%; maintaining Hold

We cut our 2015-17 NPAT forecasts by 8-10%, as we cut our ASP forecast as well as

factor in new DB USD/CNY forecast (revised to 7 from 6.9 for 4Q16). Accordingly our

1 February 2016

Consumer

Consumer & Media


DCF-based TP falls 10% to HKD12.3 (3.9% RFR; 5.6% ERP, 1.0 beta; debt free

structure; 2% TG). Maintaining Hold. Key upside risks include unexpected and

earnings-accretive M&A, lower input costs. Key downside risks include intensifying

competition leading to price cuts and rising selling expenses, and input cost hikes.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab4c8bb

Winnie Mak

L’Occitane – Appointment of group managing director

(0973.HK, HKD 12.5, Buy)

L’Occitane announced that Mr. Domenico Trizio, the executive director and COO of the

company has been appointed as the new Group Managing Director. Mr. Trizio, aged

54, joined the company in November 2010. He is responsible for the overall

operational management including supply chain, management information system,

finance and research and development.


Daphne International – 4Q15 results and FY15 profit warning

(210.HK, HKD 1.04, NR)

Daphne International announced that the SSS of the group’s core brands business

recorded a decline of 20.2% yoy in 4Q15 and was down 18.5% yoy for FY15. The

decline in sales during 4Q15 was mainly due to 1) soft consumer sentiment along with

weakening economy in China; 2) unusually warm winter; 3) dilution of store traffic

from the Single’s Day online promotions in November; and 4) more competitive retail

environment resulting from earlier launch of deep discounts by peers. The ASP

recorded a single-digit drop during 4Q15. The group expects to record a net loss for

FY15, which was mainly attributable to 1) significant drops in both sales and gross

profit; 2) increased negative operational leverage; and 3) certain operational charges

related to, among others, inventory, personnel and store rationalization. As of 31

December 2015, the group had 5,597 POS (5,056 directly-managed stores and 541

franchised stores), with a net closure of 805 POS (692 directly-managed stores and

113 franchised stores).


1 February 2016

Consumer

Consumer & Media


By-Health – Strategic cooperation with Fonterra

(300146.SS, RMB30.01, NR)

The company signed a strategic cooperation agreement in research and development

with Fonterra Co-operative Group Ltd, New Zealand recently. The cooperation includes

dairy raw material supply, new functional raw material research, current material’s

new function and functional end products’ development, and dairy-related

individualized nutrition research. The parties will cooperate deeply in development and

application of functional nutrition derived from milk protein and put emphasis on

application and research of functional raw material and functional dietary supplements

in China.


Sanyuan – Positive profit alert

(600429.SS, suspension, NR)

The company announced on 27 January 2016 that NPAT for the year ended 31

December 2015 will be about RMB75m to RMB95m, largely increased from RMB53m

for 2014. The increase is mainly contributed by the sales growth in IMF and yogurt due

to better market penetration and channel construction and improved product mix. Also,

a stricter control in costs and expenses increased the profit margin. In addition,

financial income through cash management makes the profit higher.


Aokang International – Positive profit alert

(603001.SS, RMB21.42, NR)


December 2015 will increase over 50% from RMB258m in 2014. The increase is

mainly contributed by the growth of sales due to network structure adjustment and

the write back of assets impairment due to the decrease of total accounts receivable.


Suning – Positive profit alert

(002024.SZ, RMB10.60, NR)


December 2015 will be RMB840m to RMB940m, changing -3.10% to +8.43% yoy. The

profit was mainly contributed by the transfer of 68.08% equity in PPTV. Great Universe

Limited, an overseas subsidiary of the company, has completed the transaction to

transfer the equity of PPTV to the overseas subsidiary of Suning Culture with a

consideration of about RMB2,588m. And this transaction is estimated to add

RMB1,351m to Suning’s net profit for 2015.


1 February 2016

Consumer

Consumer & Media


South Korea

LG H&H – Satisfactory 4Q15 results brightening 2016 outlook

(051900.KS, 965,000, Buy)

Reiterating Buy rating

LG H&H showed impressive earnings growth of 33.9% yoy in operating profit in 2015,

driven mostly by growth in the DFS channel and a recovery in the

household/beverages businesses. We believe the company will be able to sustain this

strong earnings growth momentum in 2016, as a) the DFS channel is still in a

channel/portfolio expansion stage, and b) the company will likely upgrade its retail

platform and brand offerings in the China onshore market to widen its customer base.

We expect EPS to grow again in 2016, by 25.4% yoy. LG H&H is trading at an

undemanding valuation of 24.0x 2016E P/E, its mid-cycle valuation.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab4aad4

Jihyun Song

Singapore

First Resources – Time to gain from CPO strength – share price lags earnings drivers

(FRLD.SI, SGD 1.74, Buy)

Favourable risk reward justifies our Buy rating

In an environment of sharply weaker commodity prices, palm oil stands out with its

consistent price increases. These moves confirm our bullish stance on CPO and lead

us to reiterate our positive case for producers, notably First Resources (FR). FR's share

price has fallen significantly, diverging from its underlying earnings drivers and

ignoring the impact of Indonesian biodiesel policies that underpin our CPO forecasts.

Trading at S$1.74, the share has c.40% upside potential to our fair value target. We

reiterate our Buy rating but lower our target price by 14% to S$2.45 (target PE

unchanged).


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08a9f321f

Jeffrey Ng

Thailand

BEC World PLC – Weak TV Adex 4Q15; a challenging year ahead

(BEC.BK, THB 29.75, Hold)

4Q15 TV adex continued to fall YoY; maintain HOLD

According to AGB Nielsen, December adex came in at Bt9,822m (-6% YoY). Excluding

DTTV, total advertising expenditure fell 8% YoY to Bt8,306m. For 2015, total adex

edged up 3% YoY to Bt122,319m. Excluding DTTV, total advertising expenditure last

1 February 2016

Consumer

Consumer & Media


year slipped 8% YoY to Bt101,389m. Given the weak 4Q15 adex data, we believe 2016

should be a challenging year for BEC. We revised down 2015-17F earnings by 7-13%

based on the disappointing 2015 adex figures and fiercer competition among free TV

channels. Based on our DCF valuation, we derived a new 2016 TP of Bt28 (-13% from

previous TP). Given that BEC still offers a dividend yield of c5%, we maintain our Hold

rating.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab4b251

Chalinee Congmuang

US

Coach, Inc Alert – F2Q Results: First Take

(COH.N, USD 30.35, Hold)

Market reaction ahead of the 8:30 am call (call-in number: 888.405.2080)

We’d expect COH shares to trend higher today given management’s continued

success in hitting turnaround guideposts. There is particular relief about an in-line

North American comp for the quarter, as some previews into the print suggested a

worse result. As for guidance, management maintained its full-year revenue

expectations and raised EBIT plan, in part on relative upside from the Stuart Weitzman

brand. On the call, we’ll listen for an update about the performance of Coach’s

remodelled store performance and new product initiatives into Spring/Summer. In

addition, it will be interesting to hear what Coach says about the European consumer

(tourist and local), given commentary from other retailers/brands about some

weakness stemming from the Paris terrorist attacks in November.

Coach reports 2Q results

Total revenue (=): $1.27B vs. $1.28B consensus (StreetAccount)

North America comp (=): -4% vs. -4.2% consensus

China comp: Positive comps on the Mainland vs. weakness in Macau & Hong Kong

Gross margin (-): 67.4% vs. 67.6% consensus

Operating margin (+): 22.4% vs. 21.3% consensus

EPS (+): $0.68 vs. $0.66 consensus

Coach revises FY16 guidance

Total revenue: No change to +HSD vs. prior +HSD Coach Inc., with Coach brand +LSD (CC basis), though FX to pressure by 225bp-250bp vs. by 200bp previously

Gross margin: 69.5% for Coach brand (CC basis) vs. prior 70%, with FX to pressure by 90bp-100bp vs. by 80bp-100bp previously. Stuart Weitzman to negatively impact consolidated GM now by 70bp versus by 80bp-90bp previously.

Operating margin: No change to prior Coach brand guidance of mid-to-high teens. Stuart Weitzman to negatively impact consolidated OM now by 20bp versus by 50bp previously.

1 February 2016

Consumer

Consumer & Media



http://pull.db-gmresearch.com/p/852-1799/42335404/0900b8c08ab456b4.pdf

Dave Weiner

Under Armour, Inc. – Tricky set-up into the print

(UA.N, USD 68.16, Buy)

Maintain Buy on UA ahead of Thursday’s AM 4Q results

UA shares are down ~25% since 3Q results, as concerns over a warmer winter and the

market’s waning appetite for risk have weighed. For 4Q, we believe discounting was

likely worse than expected given UA’s exposure to cold weather product, though we

believe that’s well known at this point. Also, while apparel sales growth likely slowed,

we expect that momentum in footwear continued. We believe investors will overlook

less than stellar 4Q results, as long as management reiterates 2016(+) plan, which

calls for 25% revenue and 23% operating profit growth. Management will also have to

assure investors that the CFO transition is progressing smoothly. Maintain Buy, trim PT

to $95.

Trimming 4Q and 2016 numbers: Details within

Key thoughts ahead of Thursday’s 4Q results

(1) Discounting likely worse than expected: Sales of ColdGear, outerwear/fleece, and

hunting product likely suffered from the unusually, warm weather throughout 4Q. In

addition, we have seen incremental promotions at Dick’s Sporting Goods (DKS), UA’s

largest customer at ~14% of revenues. DKS ended its most recent quarter with excess

inventories, noting that it would try to secure additional markdown allowances from its

brands.

(2) CFO transition adds uncertainty: Last month, UA hired Chip Molloy, former EVP and

CFO of PetSmart, to replace outgoing CFO Brad Dickerson. Investors need reassurance

that Malloy can maintain Dickerson’s balance between setting high but beatable

expectations, while meeting the operational challenges of a global growth company.

(3) Within footwear, UA gaining credibility in basketball: While Nike still dominates the

basketball category, UA has quickly gained ground. On a trailing 13 week basis, UA

now holds a nearly 7% share compared to about 2% in the prior year period (based on

our analysis of SportScan Info SSI data).

(4) Expect management to affirm 3 year plan from Investor Day: Despite near-term

headwinds that have surfaced since Sept, namely the weather and excess industry

inventories, we expect management to maintain its long-term outlook. Plan calls for

25% revenue and 23% operating income CAGRs through 2018.

Maintain Buy, though trimming PT to $95. Risks.

Given UA’s LT global rev./OM potential within the athletic space, we believe investors

expect $4.00+ of EPS power. However, due to nearer-term invty./weather headwinds,

we trim our target P/E from 27.5x to 24x, consistent with the multiple decline of peers.

Risk: Investor sensitivity to high valuations management execution missteps given so

many global initiatives and improving short-term (2H15, but particularly in 4Q15) P&L

expectations.

1 February 2016

Consumer

Consumer & Media



http://pull.db-gmresearch.com/p/822-DE8E/41291188/0900b8c08ab3114d.pdf

Dave Weiner

China/HK

Biostime – Focusing on Swisse

(1112.HK, HKD 19.74, Sell)

Stock price rise on market expectations for Swisse 2016 growth

Biostime’s share price is up 28% year-to-date, outperforming the 12% decline for the

Hang Seng Index. We think the share price increase is due mainly to the market’s

expectation for Swisse (the nutritional subsidiary acquired by Biostime in September

2015) to deliver strong sales growth in 2016. To recap, Swisse recorded Rmb600mn

retail sales (on a retail price basis) during the “2015 doubled 11 shopping festival” on

T-mall (refer to “Biostime – Access China conference highlights 2016” published on

Jan 12, 2016).

We see low visibility on Swisse

We think it is too early to turn positive given low visibility on Swisse, considering 1)

Biostime has to obtain a license from government regulators before it can legally sell

in offline channels in China, which takes about two years, and before this it will rely on

cross-border e-commerce channels; and 2) the high volatility of Swisse’s historical

P&L – its sales/profit decline in FY14 and surge in FY15.

Competition remains intense in the infant milk formula (“IMF”) sector in 2016

IMF consumers should continue to shift from offline channels to online channels,

including domestic e-commerce channels and cross-border e-commerce channels. The

online channels lower entry barriers for new joiners and bring new competition. We

expect the intense competition to continue to pressure Biostime’s pricing and market

shares in 2016.

Maintain Sell

We prefer certainty in an uncertain market. Biostime trades at 22x 2016E P/E after the

recent price hike, compared to 17x for the China dairy and IMF sector and 18x for the

global nutritional product sector. We maintain our Sell rating given the uncertainty

ahead. Upside risks: better-than-expected Swiss sales growth and infant milk formula

sales.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab3c39a

Mark Yuan

China Modern Dairy – Modern Farming (Group) to issue RMB500m domestic short-term debentures in the PRC

(1117.HK, HKD1.45, Hold)

China Modern Dairy announced that Modern Farming (Group) Co., a non-wholly

owned subsidiary of the company, was to issue a tranche of domestic short-term

debentures with an aggregate amount of RMB500m on 25 January 2016 with a term

1 February 2016

Consumer

Consumer & Media


of 270 days and an interest rate of 3.89%. The net proceeds will be used to repay bank

loans and as general working capital.


Golden Eagle – Share buyback

(3308.HK, HKD8.54, NR)

Golden Eagle announced that on 25 January the company repurchased 1.3m shares

from the market, representing about 0.08% of the entire issued share capital of the

company for an aggregate amount of HKD11.2m.


China Shengmu – Increase in shareholding by a controlling shareholder

(1432.HK, HKD1.82, NR)

World Shining Investment Limited, the controlling shareholder of China Shengmu,

acquired 2,330,000, 8,188,000, 2,573,000 and 2,600,000 shares of the company on 20

January 2016; 21 January 2016; 22 January 2016 and 25 January 2016, respectively

from the open market. Following such acquisitions, World Shining held 3,844,131,600

shares of the company, representing approximately 60.49% of the existing issued

share capital of the company as at the date of this announcement.


Huabao – Update on derivative transaction of the controlling shareholder

(0336.HK, HKD2.88, Sell)

Ms. Chu Lam Yiu, the controlling shareholder and the Chairwoman of Huabao, has

settled the balance of the derivative that she entered into on 14 October 2011 by cash,

and settlements related to a long position of a monetary value equivalent to

59,937,000 shares of the company.

Ms. Chu, through companies wholly owned by her, indirectly held an aggregate

1,279,262,415 shares of the company, representing approximately 41.18% of the total

issued shares of the company. Her shareholding in the company before and

immediately after the settlement remains unchanged.


Shanxi Fenjiu – Positive profit warning

(600809.SS, RMB16.47, NR)

The company announced on 25 January 2016 that NPAT for the year ending 31

December 2015 would increase 40-60% from RMB355.75m in 2014, mainly

contributed by increased sales and decreased A&P expenses.


1 February 2016

Consumer

Consumer & Media


Konka – Profit warning for FY15

(000016.SZ4.96, NR)

Kongka has issued a profit warning for FY15, expecting a net loss of RMB1.2bn-1.4bn

vs. a net profit of RMB53m in FY14. It attributed the expected net loss to: 1) a one-off

write-off of RMB132m due to the recall of the government subsidy for energy-saving

home appliance products, 2) foreign exchange loss of RMB200m due to the

depreciation of RMB and 3) the restructuring of the management team for the

domestic market.


San Miguel Brewery – Profit warning

(0236.HK, HKD1.22, NR)

The company has announced that it expects a consolidated net loss for the year

ending 31 December 2015 vs. a net profit for the same period in 2014. The expected

net loss is mainly attributable to: 1) volume loss due to the non-renewal of the

distribution agreements with Anheuser-Busch InBev China Sales Company Limited

and Anheuser-Busch InBev International GmbH & Co KG in 2014; 2) operating costs

associated with sales and marketing operations of affected products, so that they are

sustained, redirected and reinvested in the development of new premium/craft brands

in the company’s portfolio, which is a key business strategy of the company to

maintain a broad portfolio of brands. The company expects to announce its

consolidated annual results for 2015 on 4 February 2016.


Thailand

Thai Union Group PLC – EU grants Thailand six more months to resolve IUU issue

(TU.BK, THB 17.50, Buy)

After Thai officials met EU representatives last Friday, the EU team said it was satisfied

with Thailand's actions over the past 8-9 months to resolve the problem of illegal,

unreported and unregulated (IUU) fishing. The EU team also said it would continue to

closely monitor progress over the next six months before making a decision, according

to the Nation newspaper.

Our take:

The news is positive for Thailand's fishing industry and particularly TU. At least the EU

team is satisfied that the Thailand has made progress on resolving the IUU issue.

Thailand is still in a "yellow card" stage which means the EU has held off imposing an

import ban on Thai fishery products. Despite the progress on the issue over the past 8-

9 months, we still expect the EU to maintain its yellow card on Thailand. On the other

hand, if Thailand were to receive a red card, the impact on TU should be limited given

that its exports to EU countries account for only 4% of its total sales. Maintain Buy on

TU at TP of Bt24.

1 February 2016

Consumer

Consumer & Media



http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab36f18

Chalinee Congmuang

North America

Coach, Inc Alert – Q2 Preview

9COH.N, USD32.43, Hold}

Expectations for sequential improvement

While the return to positive comps in North America is expected for Q4, we believe the

company’s work on product, marketing and store footprint is bearing fruit. Despite a

competitive and promotional environment, and despite EOS continuing to pressure

comps in the second quarter with two events per month versus about ten events in

last year's second quarter. We project NA comps at -4% vs -9.5% in 1Q (which

included a negative EOS pressure of 1.5pp). We expect the work done on the

modernization of the stores, the enhancement of the shopping experience and on the

merchandise selection to drive an improvement in traffic and conversion in FP retail.

This should include a positive response in both the $400+ category and below $300 as

explained during the 1Q conference call.

We have fine tuned our quarterly model and expect an EPS of $0.68 vs $0.66 at

consensus on the back of a change in the gross margin quarterly progression.

At current valuation multiples, risk-reward for COH shares continues to be balanced.

We give credit to the company for the progress in its transformation initiatives and in

the turnaround of the NA business, however the brand repositioning is happening in a

very challenging and competitive environment.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab0dddf

Francesca Di Pasquantonio.

Japan

Laox – Forecast revision: Stepping up measures for the next stage of growth

(8202.T, JPY188.00, Hold)

Investment perspective: Stepping up measures for the next stage of growth

Earnings update: We revise down our earnings forecasts and target price. Customer

traffic is higher than expected due to the uptrend in Chinese visitors to Japan, but an

unexpectedly steep decline in average spend per customer continues. We forecast OP

of ¥8.8bn (previous forecast ¥9.4bn) for FY12/15, ¥10.1bn (¥12.2bn) for FY12/16, and

¥11.9bn (¥14.1bn) for FY12/18. Downside is limited as the share price has corrected

substantially, but we see many uncertainties for the consumption-tax-free business,

and we maintain Hold.

1 February 2016

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Near-term earnings: Forecasting ¥8.8bn OP in FY12/15 and ¥10.1bn in FY12/16

We lower our earnings forecasts, mainly due to a revision of our outlook for the

average spend per customer. We forecast OP of ¥8.8bn (+5.1x YoY, previous forecast

¥9.4bn) in FY12/15, and ¥10.1bn (+15%, ¥12.2bn) in FY12/16. The number of foreign

visitors to Japan from China increased 2.1x YoY to 4.99m in 2015, and store network

expansion also meant an increase in the number of visitors making multiple store

visits, so that the total number of visitors to Laox stores in FY12/15 grew 3.7x YoY to

4.2m. However, we have revised our estimate of unit purchase price per customer

from the previous ¥21,600 to ¥20,000 (-35% YoY).

Medium-term earnings: Forecasting FY12/18 sales of ¥131.7bn, OP of ¥11.9bn

We forecast FY12/18 sales of ¥131.7bn (previous forecast ¥144.4bn) and OP of

¥11.9bn (¥14.1bn). For FY12/18, we maintain our forecast of 7.46m foreign visitors to

Japan from China, and raise the total number of visitors to stores from 6.79m to 8.2m,

but lower our forecast of unit purchase price per person from ¥19,000 to ¥14,500.

Laox is also beefing up its product line-up and customer service in view of stiffer

competition in the consumption tax-free retail business. Considering that attracting

customers is critical in the area of tax-free retail business, we intend to focus on the

trends in sales per customer and also whether Laox can maintain its edge in attracting

customers.

Valuation and risks

We lower our TP from ¥320 to ¥220. In addition to major changes in our earnings

forecasts from FY12/16 forward, we have incorporated an uncertain earnings outlook,

and reduced our terminal growth rate from 2.0% to 1.0%. We continue to calculate our

TP using a residual income model (RIM) assuming a 5.5% cost of equity, 1.0% terminal

growth, and five years of earnings forecasts. The target P/E is 22x based on our

adjusted FY12/17E EPS of ¥10 which assumes a normal tax rate. Upside risks include

greater-than-expected growth in Chinese visitors to Japan, and larger room for growth

at the firm's non-domestic store businesses. Downside risks include the Chinese

government strengthening restrictions on overseas travel, intensifying competition in

the tax-free retail sector, and earnings fluctuations due to M&A.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab3bd2b

Takahiro Kazahaya

China/HK

Gome Alert – SGM approves the acquisition of non-listed stores

(0493.HK, HKD1.14, Buy)

Acquisition of non-listed stores approved by SGM

Gome announced that the independent shareholders have passed resolutions for 1)

acquiring the non-listed stores and 2) the whitewash waiver during the SGM (special

general meeting) held on 22nd January. The executives of the company granted the

whitewash waiver on 15th January; therefore, there will be no requirement for a

mandatory general offer to be made.

1 February 2016

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Shareholder structure of Gome

We believe Mr. Wong’s stake will increase to 49% after the issue of the consideration

shares (5.5bn shares), and will further increase to 54% assuming all warrants (2.5bn

warrants) are converted.

Deutsche Bank comments

According to the company’s announcement on 26th July 2015, the completion of this

deal is subject to the approval of the listing committee of the stock exchange, and the

Ministry of Commerce’s anti-monopoly bureau. We welcome this deal as it mitigates

the corporate governance issue and a real Gome will be formed. It would further

eliminate corporate governance issues should online be finally integrated into the

listed company. We believe the revised offer is more reasonable on a lower PE

multiple (13.8x) and the EPS enhancement (+1%) for FY15E. We believe the

acquisition is in line with the company’s total retail strategy, and will help further

reinforce its leading position in the CE retail market. In our view, Gome has achieved

balanced growth in expanding its online GMV while maintaining healthy offline

profitability; maintaining Buy.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab0fa4c

Richard Huang

WH Group – Appoints executive directors

(0288.HK, HKD4.24, Buy)

WH Group announced that the company has appointed Mr. You Mu as an executive

director and Mr. Sullivan Kenneth Marc as the executive director and a member of

both the environmental, social and governance committee and the Food Safety

Committee of the company, effective January 22, 2016.

Mr. You, aged 48, has served in various positions within the group. He has served as

director and president of Henan Shuanghui Investment & Development Co., Ltd since

August 2015. Previously, he served as vice president and general manager of the meat

products division of Shuanghui Development from November 2014 to August 2015.

He also served as the general manager of Henan Luohe Shuanghui Industry Group Co.,

Ltd from July 2007 to November 2014 and had been appointed as a director of

Shuanghui Group since January 2014.

Mr. Sullivan, aged 51, has served as the president and chief executive officer of

Smithfield Foods, Inc. since December 2015 and as a director of Smithfield since

January 2016. He has served in various other positions within Smithfield since joining

it in 2003.


Oriental Pearl – BesTV, Shanghai Unicom sign cooperation agreement

(600637.SS, RMB27.50, Buy)

On 19 January 2016, the Shanghai Unicom WO 4G+ and Partner Conference was held

at Chinese Financial Information Center. Oriental Pearl’s brand BesTV and Shanghai

1 February 2016

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Unicom signed a strategic cooperation agreement, which indicates both sites will

cooperate in live video, 4K HDVOD (High Definition Video-On-Demand), VVAS (Video

Value Added Service) and other integrated new media services.

Shanghai is one of the first pilot cities for China Unicom 4G+ internet services.

Currently, the peak downstream rate and upstream rate of dual carrier aggregation

have already reached 75 Mbps and 300Mbps, respectively.

Source: 21 January 2016, sina.com.cn

Goodbaby – Positive profit alert

(1086.HK, HKD3.15, NR)

The company expects to record a significant increase by around 240% in its NPAT for

2015. This growth is mainly due to GP margin improvement as well as higher sales.


Bonjour – Positive profit alert

(0653.HK, HKD0.36, NR)

The company expects to record a significant increase in NP for 2015. This is mainly

attributed to 1) HKD400m gain from disposal of beauty and health salons; 2)

significant decline in OP from retail and wholesales businesses mainly resulting from

general decline in the HK retail market; and 3) recognition of one-off share-based

payment expense from share option.


Want Want – Share buyback

(0151.HK, HKD4.91, Hold)

Want Want announced that the company has repurchased 8.05m shares from the

market, representing about 0.063% of the entire issued share capital of the company,

for an aggregate amount of HKD39.57m.


Indonesia

Matahari Department Store – Increasing ownership in MatahariMall.com to 10%

(LPPF.JK, IDR 16,200, Buy)

LPPF’s ownership in MatahariMall.com, has increased to 10% (adjusted for future

dilution), post exercising its option to acquire an additional 5.45% stake in Global

Ecommerce Indonesia for Rp95bn on 20 January. This implies a valuation of Rp1.7trn

(US$126mn) for MatahariMall.com. We view this transaction positively as the

acquisition price is the same as the price that LPPF paid to acquire the 3.2% on 30

1 February 2016

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December 2015 and as ecommerce in Indonesia is still very heavily underpenetrated

accounting for c. 1% of retails sales. In total since August 2015, LPPF has invested

Rp180bn to acquire its 10% stake in MatahariMall.com. Post this transaction and

assuming that sister company Matahari Putra Prima (MPPA IJ), which now owns 1.8%

of MatahariMall.com exercises its option to increase its stake, the ownership structure

of Global Ecommerce Indonesia will be as follows: Investama Digital Ventura (74.9%),

Matahari Department Store (10%), Dutamas Sinar Mustika (6.7%), Matahari Putra

Prima (5%), Duta Wibisana Anjaya (3.4%).


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab1cc49

Reggy Susanto

Thailand

Charoen Pokphand Foods – Expect no loss in 4Q15; Continued recovery in 2016E

(CPF.BK, THB 18.20, Hold)

* Estimate normalized 4Q15 earnings of Bt908m (-29% QoQ but turning from loss in

4Q14). A sharp fall in soybean meal price, improving shrimp operation and 1-month

consolidation of S&W are key factors supporting YoY growth in 4Q15 earnings. Also,

with expectation of CPALL’s trading gain of Bt1.2bn and FX gain of Bt428m, we

estimate CPF’s 4Q15 net profit to come in at Bt2,536m (-29% QoQ, +214% YoY). We

also estimate CPF to report 4Q15 sales of Bt111,065m (-1% QoQ, +1% YoY). For 2015,

we estimate CPF’s revenue and normalized profit at Bt422,844m (-1%) and Bt2,342m

(-60%), respectively. Falling domestic livestock prices drove down sales and profit in

2015.

*Expect 4Q15 GPM of 13.8%, improving YoY – an improving shrimp operation and a

sharp fall in soybean meal price (-14% YoY) during 4Q15 should be key drivers for

CPF’s 4Q15 GPM, notwithstanding falling domestic livestock prices.

*Anticipate mixed performance for overseas operation. In 4Q15, Turkey will likely

make a loss due to poor geopolitical and economic conditions. China may feel the

pinch from economic slowdown. However, Vietnamese and Russian operations should

remain strong. We also estimate 1-month consolidation of S&W will contribute to

CPF’s 4Q15 profit by cBt250m.

*Conservative guidance for 2016. Though CPF expects improved operation in 2016

(esp. 1H16 due to low base in 1H15), the company guided for only 5-10% volume

growth. Management expects 2016 earnings to be driven by improved margins in

shrimp and domestic livestock businesses (due to a more balanced supply situation

and low raw material costs). As for overseas operations, while Vietnam may be softer

in 2016, the full-year contribution of S&W should be accretive to net profit. CPF will

announce 4Q15 earnings on February 24, 2016.

1 February 2016

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Chalinee Congmuang

India

ITC – Relative price of cigarettes continues to be a headwind for volumes

(ITC.BO, INR 304.10, Buy)

Cigarette EBIT margin declines (yoy) for first time in five years

At first glance, ITC’s results were in line (sales, EBITDA, PAT variance of 2% versus our

estimates). The first cigarette EBITDA margin decline (yoy) in five years is likely to give

ammunition to bears; although we reckon it is largely due to phasing of SG&A (due to

a high base as well). Cigarette volumes declined c.5% as the relative price of cigarettes

is still a headwind (the tough rural consumption environment offers no support either).

Our Buy is premised on: (1) low probability of incremental regulation (dovish

commentary by the WHO after the February 2015 budget); and (2) a reasonable ’ask

rate‘ in our reverse-DCF (at 10% WACC, ITC stock is pricing in 6% growth until

perpetuity).


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab0df33

Manoj Menon

1 February 2016

Consumer

Consumer & Media


Sector news

China/HK

China Luxury – Jimmy Choo bucks Chinese slowdown in luxury sector

Jimmy Choo, the UK-listed shoemaker, shrugged off the slowdown in the Chinese

economy, as new store openings boosted total sales by 7% in 2015. The high-end

footwear brand said sales rose from £300m to £318m in the year to December 31.

Source: 28 January 2016, FI.com

China Catering – McDonald’s plans expansion in more lower-tier cities in China

McDonald’s China says it eyes to open 250 new stores in the country this year and it

will focus its expansion in lower tier cities and consumers’ digital experience as the

fast food chain recovers from the OSI China supplier issue in 2014. Phyllis Cheung, the

chief executive officer of McDonald’s China, said that more new openings would be

located in third and fourth tier cities and a total of 150 existing stores in Beijing,

Shanghai, Guangzhou and Shenzhen would be equipped with self-service ordering

machines for customized burger menu by the end of this year. “Within two to three

years, we hope mobile ordering and other digital capabilities would cover all of our

restaurants in China and we will also launch our proprietary smartphone application

for ordering by the end of this year,” Cheung told in a media interview.

Source: 27 January 2016, shanghaidaily.com

China Luxury – In Love Diamond continues to close stores

According to Beijing Business News, the number of In Love Diamond stores continues

to fall. When In Love Diamond was found in 2011, it had four In Love Diamond stores

in Beijing. The In Love Diamond Shuangjing store was previously occupying 3,000

sqm in Fuli Plaza but moved to level 4 with a smaller area within four years. Currently,

there is only one store in Beijing. According to its 3Q15 report released in November

2015, In Love Diamond owned three stores in Beijing and other stores in Shenyang

and Chengdu, but it did not mention the stores in Shanghai, Shandong and other

cities.

In 2012, Wancheng Holdings, the parent company, operated a series of acquisitions

and helped In Love Diamond to a back door listing. The shell is China Public Health

(Holdings) Limited, which has changed name to China Fortune Investments Holding

Ltd (8116.HK). According to Beijing Business News, the president of In Love Diamond,

Wan Zihong did not hold investments long-term or cultivate brand; instead, he sold

projects to make profit through strategic marketing.

Source: 29 January 2016, Beijing Business News

1 February 2016

Consumer

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South Korea

Korea Advertising – Downgrading Cheil WW to Sell, Innocean WW to Hold

Turning cautious on the Korean Advertising sector

We downgrade both stocks under our coverage in the Korea Advertising sector. Cheil

Worldwide (CWW) now trades at a valuation premium to its global peers despite a

lower growth profile and thus we downgrade it to Sell. A key upside risk is Cheil

becoming a target for a potential buyout, but we think the valuation premium reflects

the risk. For Innocean Worldwide (IWW), our thesis has been that its valuation gap to

its peers would narrow, which we believe has now happened with the discount

decreasing from c.50% in Aug 2015 to c.15%. We thus downgrade it to Hold and view

it as a 'show-me' stock where positive catalysts need to surprise materially on the

upside.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab706b1

Han Joon Kim

China/HK

China retail – The first maternity shoes’ company listed on NEEQ

G’VILL, the first maternity shoes’ company in China, was recently listed on the NEEQ.

According to the company, the maternity shoes from G’VILL offer comfort and

intelligent hardware technology designed specifically for pregnant ladies.

Source: 27 January 2016, iFeng

China retail – ETAM Développement SCA sales dropped in China in 4Q15

France apparel retailer, ETAM Développement SCA (TAM.PA) reported its 4Q15

results. Net sales increased 2.8 % YoY to EUR347.4m, while the group’s net sales for

FY15 increased 6.2% YoY to EUR1,296.5m.

In China, net sales in 4Q15 totalled EUR111.1 m, down 0.7 %, including a positive

currency effect of EUR9.4m relating to the appreciation of RMB against EUR. Like-for-

like and at constant exchange rates, net sales fell 7.0 % YoY. During FY15, net sales

totalled EUR417.4 m, which increased 9.1% YoY, including a positive currency effect

of EUR59.8m relating to the appreciation of RMB against EUR. Like-for-like and at

constant exchange rates, net sales decreased 2.5%. Like-for-like and at constant

exchange rates, the decline in revenues over the year was a result of the significant

decrease in revenue in 4Q15 and a quasi-stability in the previous nine months 2015 (-

0.8%). In line with the policy mentioned in the statement of activity for 3Q15, the

group has chosen to focus on improving the margin rate versus the volume of activity

in 4Q15.

In 2015, the Etam Group had 4,098 points of sales − 945 in Europe, 2,877 in China and

276 international franchises. In 2015, the group continued to expand its international

network for its lingerie activities with openings in Mexico and Chile under the Etam

1 February 2016

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brand, and in Saudi Arabia under the brand Undiz. It also resumed openings for 1.2.3

stores in France, in Switzerland and through partnerships in Chile, Colombia and Peru.

In China, the network was reduced by 58 units.

Figure 14: ETAM Développement4Q15 Result

€m 4Q15 change change lfl F15 change change lfl

Group sales 347.4 2.8% -0.5% 1 296.5 6.2% 1.6%

Europe 236.3 4.5% 1.7%

879.1 4.9% 2.9%

China 111.1 -0.7% -7.0%

417.4 9.1% -2.5%

Europe by country

France 209.9 4.8% 1.9%

777 5.1% 3.4%

Other 26.4 2.1% 0.3%

102.1 3.5% -0.3%

Europe by brands

ETAM 192.8 4.4% 1.9%

719.6 6.0% 4.4%

1.2.3 43.5 4.9% 0.8% 159.5 0.4% -2.7%

Source: Company Announcement


China Luxury – Swiss watch exports slide on poor HK sales

Swiss watch exports fell for the first time in six years in 2015, as the key Hong Kong

market tanked. After several years of record growth, exports lost 3.3% to CHF21.5bn

(USD21.1bn), the Federation of the Swiss Watch Industry said.

Source: 27 January 2016, Shanghai Daily

Japan

Air Conditioning Sector – Fujitsu General's 3Q results: Chinese market's margin of decline narrowing

Sales outlook lowered, but profit guidance up on support from raw material prices and

forex

Fujitsu General (NR) reported 3Q results showing sales of ¥58.6bn, OP of ¥6.35bn

(OPM 10.8%), and EPS of ¥44 (3Q FY3/15: sales ¥57.9bn, OP ¥5.5bn, OPM 9.5%, EPS

¥40). Profit increased versus the previous year. The air-conditioning business in 3Q

delivered an 8% sales gain (+3% Japan, +10% overseas) and a steep rise in OP from

¥700m a year ago to ¥3.4bn (+¥1.1bn from improved sales composition, +¥2.5bn from

lower costs, and -¥700m from the forex effect). For overseas local-currency sales,

increases by Europe (roughly two-fold YoY), Oceania (just under 20%), and the

Americas (4%) more than offset declines by China (estimated lower single digits) and

elsewhere in Asia (60% including the impact from a discrepancy in shipment timing for

India). The prior-year hurdle in China appears to be dropping as we anticipated.

Information & communications systems and electronic devices businesses performed

broadly in line with guidance. Although Fujitsu General lowered air-conditioning sales

assumptions for many major markets besides Europe in updated full-year guidance, it

raised the OP target by ¥1bn, bringing it higher than the IFIS consensus estimate of

¥24.3bn (sales lowered from ¥300bn to ¥290bn, OP up from ¥24bn to ¥25bn, OPM

1 February 2016

Consumer

Consumer & Media


8.6%, and EPS ¥153). Among main revision items, sales composition weighed ¥1.3bn

on profit, but was more than offset by lower materials costs due to the price of copper

and forex benefits (which added ¥700m and ¥900m respectively). Other businesses

provided some support too. Management presented an upbeat outlook for the air-

conditioning business in 4Q with a 5% sales increase and roughly 20% OP gain. While

headwinds from the business environment remain strong, we think the Chinese

market is following expectations and see no sign of significant erosion in business

conditions.

Daikin Industries: Review of our 3Q outlook

We forecast Daikin's 3Q OP to be about ¥35-40bn. Overall, favourably performing

regions and sluggish businesses have been mixed, but we think the sales decline

narrowed in the core China business during 3Q and strong regions such as Asia and

Europe are likely to support overall operations. We expect sluggish smartphone

shipment volume to impact the chemicals business. While it will not be easy to

achieve our forecasts (on par with guidance), they are within reach. We are hoping for

further narrowing of downside in China, improvement in cost cutting, and curbing of

fixed costs. We reiterate our Hold rating in light of earnings and valuation levels.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08ab6016d

Takeshi Kitaura

China/HK

China Retail – Costco opens its first offline store in Wuhan

Costco opened its first offline store, Just Store, in China on 23 January. This store has

a GFA of 1,500 sqm, offering food, daily necessaries, luxury products, baby and

maternity products, wine and fresh food. It has rich product categories, but only offers

2-3 brands for each category to ensure product quality. Costco engages in the

membership warehouse business, covering 9 countries globally and owning 663

hypermarket stores. It has 76m fee-paying members.

Just Store plans to add 5 bonded zone stores in Wuhan, and 20 offline stores in Hubei,

and further have 1,000 stores across the nation.

Source: 25 January 2016, Linkshop

China Retail – Inman opens 200 offline stores

The founder of Inman, Fang Jianhua, stated that since March 2015, Inman has opened

200 offline stores; self-support stores are mostly in first-tier cities and franchised

outlets are mostly in second-tier cities. 90% of the stores are franchises. Inman plans

to open 1,000 outlets, mainly by adopting franchise stores. Besides, Inman’s brands

Chuyu and a Life on the Left will also open outlet stores at New World department,

Intime and Simple Style shopping mall.

Inman was founded as an online apparel brand in 2008, and positioned itself on the art

of cotton and linen fabrics. The total sales in 2015 were RMB160m, and the sales in

2013 peaked at RMB760m.

Source: 27 January 2016, News Efu

1 February 2016

Consumer

Consumer & Media


China CE – Chinese TVs show their strength in South Korean markets

According to Korean media report, as Chinese businesses are putting out their

products one after the other, South Korean TV businesses are in danger of giving up

South Korean low and medium-priced TV markets to them. It is predicted that Chinese

businesses will absorb most of the South Korean consumers who prefer cherry-picking

products. South Korean consumers’ perception of Chinese products has also changed

significantly.

Lotte Hi-Mart made distribution contract with TCL, which is in third place in global TV

markets, and started selling 3 types (32-inch, 40-inch, and 50-inch) of TVs from 22

December. 2,600 32-inch TVs and 1,700 40-inch TVs that had come in as first supplies

were all sold out in just 10 days. 50-inch TVs are also being sold at a very fast pace. A

reason why TCL’s TVs are receiving so much popularity is due to its good performance

compared to its price. Based on stand-type standard, 32-inch and 40-inch are being

sold at US$249.82 (299,000 KRW) and US$416.92 (499,000 KRW), respectively. These

prices are half of the prices of Samsung Electronics and LG Electronics products that

have similar specifications.

Followed by TCL, Xiaomi and Haier are also going to put out their products in South

Korean markets. Xiaomi’s TVs, which are prime example of having good performance

compared to price, are going to be sold starting next month by JJGames. JJGames is

going to sell Xiaomi’s 40-inch Mi TV2 at US$416.92 (499,000 KRW). Xiaomi also has

set up personalized support system before selling its TVs in South Korean markets. 40-

inch Mi TV2 already had obtained all certifications and switched MI UI for Smart TVs

into Korean. It has instructions in Korean and uses power cords that work in South

Korea.

Haier also launched 32-inch MOOKA, which was sold for only Chinese customers

earlier, on 18 January 2016. Though it costs US$249.82 (299,000 KRW), it will be sold

at a discounted price to commemorate its release.

Source: 26 January 2016, finance.sina.com

China F&B – Chinese companies to invest USD1.74bn in Kazakhstan’s organic foods industry

Chinese companies have agreed to invest USD1.74bn in Kazakhstan’s organic foods

industry for products earmarked for export to China, Kazakh Deputy Agriculture

Minister Gulmira Isayeva announced. Isayeva said the contracts will be centred on the

production of organic meat, honey, crushed tomatoes, flour and other products. “We

will start 19 agricultural projects with a total investment of USD1.74bn. Twelve of the

projects are located in eastern Kazakhstan and the Almaty region,” Isayeva said after

the signing the so-called “Cooperation Plan” between Kazakh and Chinese companies.

Source: 26 January 2016, laht.com

1 February 2016

Consumer

Consumer & Media


China/HK

China Luxury Market Trends – Access China conference highlights – Bain & Company

2015 – China luxury sales declined by 2%

In 2015, the China luxury market went down ~2% to ~113B RMB, impacted mostly by

slowdown in watches (-10%), men’s wear (-12%), and leather goods (handbags down

5% and accessories down 6%); North and North-East regions were most impacted.

Jewellery was in fact up by 7%, womenswear up 10%, shoe 2% and cosmetic up 5%

Market deceleration amplified with rebading from anti-corruption not over yet and

significant impact from stock market crash in Q2/Q315.

Overseas purchase destinations shifted:

Overseas purchase destinations shifted: Japan, Korea (except during Mers crisis), Euro

zone and Australia grew strongly while HK & Macau shrank significantly; Daigou

market declined due to brands’ efforts to close price gaps, government’s tightening

control and emerging cross-border e-commerce

Global pricing – a new trend in 2015

It is a key reaction to increasing parallel channels and overseas purchases, was started

by Chanel and gradually adopted by several brands.

SSS and traffic continue to decline

This is the case even among newly introduced brands, prompting store closures,

cautious network expansion and increased focus on revamping core store networks. In

the mainland, by channels, shopping malls and department stores traffic continued to

decline, while number of outlet malls continued to grow.

Online for sales growth and branding

Growing customer digital engagement continued and brands continue to increase their

digital marketing budget; several brands are experimenting with online channel

(brand.com or 3rd party platforms), but overall full price e-commerce business for

brands remains small (except for cosmetics)

Customers’ growing individualism continued

The trend towards “fashion” and “exclusivity”; smaller, fashion-orientated brands is

still gaining popularity. Meanwhile, luxury experience spending continued to increase

Outlook for 2016:

According to Bain, no major changes are expected in the macro environment while the

rising middle class becomes more sophisticated and knowledgeable about luxury;

overseas channels will likely stabilize (daigou will decline), while expansion of global

pricing by leading brands and the government efforts to localize consumption will spur

domestic growth


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08aabb83e

Anne Ling

1 February 2016

Consumer

Consumer & Media


China Media – Moviebook and MangoTV jointly release a collaborative video-marketing product

Moviebook Media Technology Co., Ltd. and MangoTV recently jointly released a

collaborative video-marketing product called, “Yi Zhi”, at the Video Eco-Marketing

Strategy conference. “Yi Zhi” changes the traditional method of embedded

advertisement by post-production technology.

Source: 25 January 2016, Finance Sina

China Sports – LeSports becomes the controlling shareholder of big soccer-data company Sodasoccer

On 25 January 2016, LeSports announced that it bought 56% shares of Sodasoccer for

RMB39.2m and became the controlling shareholder of the big soccer data company.

Sodacoccer maintains its operating independence after Lesports purchased the shares

and is expected to build a big sports database including soccer, basketball, tennis and

golf.

Sodasoccer is one of the earliest professional soccer data companies, having been

founded in 2004. Its data partners include portal sites, TV stations, management

department of the Chinese Football Association, Guangzhou Evergrande Taobao

Football Club and Beijing Guoan LeTV Football Club.

Source: 25 January 2016, Sports 163

China Luxury – Bulgari to push ahead with China expansion

Bulgari, the world’s third-largest watch and jewellery brand, a part of luxury goods

powerhouse LVMH, plans to open two boutiques in mainland China in 2016, aiming to

tap in to the growing reluctance of Chinese shoppers to buy abroad due to security

fears, stricter customs checks and a devaluation of RMB.

Source: 25 January 2016, Gulf News.

China CBEC – CBEC transaction value up 30% in 2015

Shen Danyang, a spokesman of the MOFCOM, commented that CBEC (including

imports and exports) grew 30% in 2015, although total import/export transactions fell

7%. For now, there are more than 5,000 CBEC platform players, and over 200,000

importers/exporters are engaged in CBEC. The CBEC market in China is expected to

reach RMB6.5tr, representing 20% of total imports/exports of China, with an expected

CAGR of over 30% in the future. Besides, the market expects new policies to be rolled

out with a new CBEC tax system. Meanwhile, the government supportive tone remains

as the State Council continues to promote this new business model in order to boost

domestic consumption.

Source: 24 January 2016, Linkshop

China Retail – O2O commerce generating real money in China

China’s rapidly emerging online-to-offline (O2O) market was a significant contributor

to the growth of the country’s eCommerce industry in 2015, according to internet

1 February 2016

Consumer

Consumer & Media


market research firm iResearch. Online-to-offline GMV grew 38% last year to

RMB335bn (USD51bn) as Chinese consumers became increasingly enthusiastic about

using their smartphones to book and pay for taxi rides, food delivery, movie tickets

and other local services, iResearch said in its new report, 2015 China E-commerce &

O2O Summary Report.

Source: 25 January 2016, Insideretail

South Korea

Korea Retail 2016 outlook – Selective investment opportunities amid unexciting business environment

Macro upside lacklustre; selective approach required

We believe 2016 will be another difficult year for Korean retailers, considering the

limited boost from the macro side, an ongoing shift in retail dynamics to new

platforms, and harsher competition, driven by excessive new store space additions.

Against such a backdrop, we expect companies enjoying structural growth, such as

CVS, to continue to outperform vs. most of the market share-losing major retailers.

From the other angle, we recommend investors use the recent steep correction as a

buying opportunity for stocks with attractive risk-reward, trading at trough valuations

despite a solid earnings outlook. We recommend BGF Retail, HDS and Emart as top

picks in the Korean retail sector.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08aae8f5c

Jihyun Song

China/HK

dbAccess China – China Consumer tour takeaways

All brands/retailers are adjusting their models

We visited Yonghui, Gome, Intime, Galaries Lafayette, Joy City and Anta on 14

January 2016, after the Beijing conference. These are retail channels with different

formats or brands, and have been adjusting their formats and offerings in accordance

with changing consumer behaviour and demand. To recap our 2016 theme, despite a

tough year on the macro front, we believe consumers still care about beauty, health

and wellness, and are trading up. With a strong FCF yield for most companies, we see

stability in dividend income for some of the companies. We stay defensive and

selective. Top Buy picks: Yanghe, Hengan, Anta and Midea. Top Sells: Eclat and Li &

Fung.


http://gm.db.com/ger/document/ShowPdf.eqsr?productIDMore=0900b8c08aaf8699

Anne Ling

1 February 2016

Consumer

Consumer & Media


China Cosmetics – Cosmetics imports from Korea to China amounted to over USD1bn in 2015

Yonhap News Agency reported that Korean exports in 2015 were mainly driven by

cosmetics exports. In particular, the cosmetics export to China grew 100.6% to

USD1bn (95% for 2014).

To recap, Korea cosmetic exports were only USD142m in 2002, but since 2010,

exports of cosmetics have seen high double-digit growth every year (51.6%/53.6% yoy

growth in 2014/2015).

Source: 25 January 2016, finance.sina

China CE – Local governments ask appliance makers to return subsidies

Local governments have asked major Chinese home-appliance makers to return the

subsidies given to boost sales of energy-efficient products after reports of widespread

misappropriation. Appliance makers like Sichuan Changhong Electric Co Ltd, Skyworth

Digital Holdings Ltd and TCL Corporation confirmed the development and said they

have received notices from their respective local finance departments asking for

repayment of the subsidy. According to a statement issued by Changhong in

December, the Sichuan provincial finance department has decided to withdraw

RMB439m given to the company to subsidize sales of flat-panel televisions. TCL said

the economic development bureau of Guangzhou has asked it to repay RMB5.72m

worth of subsidies, while Skyworth said it was asked to return RMB138m. Preliminary

estimates indicate that subsidy repayment notices sent out to companies stood at

about RMB900m till date.

Source: 23 January 2016, chinadaily.com.cn

China Retail – First IPO of 2016 of Topscore Fashion approved

On 20 January 2016, China’s securities regulator allowed 7 companies to sell IPO

shares after the introduction of a new bidding system for IPO shares in 2016.

According to the statements on China Securities Regulatory Commission, among the 7

companies, Topscore Fashion Shoes Co., Ltd will be listed on the Shanghai Stock

Exchange. Topscore Fashion issued prospectuses for Shanghai IPOs on 22 January.

Topscore Fashion Shoes Co., Ltd is Hongkong Gogocyber Company Limited’s wholly

state-owned company, which was founded in 1998 in Guangzhou. The company owns

brands including Kiss Cat, Patricia, Zsa Zsa Zsu, Tigrisso and Kiss Kitty. Brand

positioning is at the middle-level professional female users. According to Topscore

Fashion’s Prospectus, 2014 revenue grew 11.67% YoY to RMB685.88m and net

income grew 14.65% YoY to RMB123.99m. Topscore Fashion plans to sell no more

than 700m shares to raise RMB685.14m for three projects including expanding chain

stores.

Source: 22 January 2016, CSRC

1 February 2016

Consumer

Consumer & Media


China Luxury – Gucci closes Southwest China Image Store

According to a report from National Business Daily, Gucci Renhe Spring store on East

Renmin Rd., Chengdu has been closed. An insider from Gucci confirmed the store was

closed for better outlet distribution and adjustment, and new design concepts will be

presented in 2016. Gucci Renhe Spring store was the first Southwest China Image

Store opened in 2011. The two-storey store with a total area of 800 square meters

used to be the fashion landmark of Chengdu.

Source: 24 January 2016, National Business Daily

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

Kerith Chen and Julia Xu, 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 15: Valuation comps – Staples

Ticker Company Recom Target Share Price Mkt Cap(m) Rpt. Ccy Y/E Headline PEx PBx Div Yield Free cashflow yield

Net Debt/ Mkt cap

(12 mth) Price 22-Jan-2016 Local FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E

0341.HK Cafe de Coral Buy 29.00 21.25 1,992 HKD Mar 18.58 16.90 3.56 3.39 4.32 4.75 6.91 6.89 -11% -14%

0506.HK China Foods Hold 3.40 2.47 887 HKD Dec 31.05 16.54 1.13 1.05 0.00 0.00 4.39 9.45 26% 17%

2319.HK China Mengniu Dairy Buy 16.00 10.74 5,407 CNY Dec 14.55 13.06 1.52 1.40 1.50 1.67 2.26 2.83 13% 12%

1117.HK China Modern Diary Hold 2.00 1.42 880 CNY Dec 13.69 9.39 0.76 0.69 0.00 0.00 NM 0.19 77% 77%

0291.HK CRE Hold 12.30 12.36 3,861 HKD Dec 30.77 28.75 2.09 1.99 0.00 1.05 54.19 3.23 7% 6%

603288.SS Foshan Haitain Buy 34.30 27.50 11,318 CNY Dec 29.76 25.12 8.54 7.34 2.05 2.43 2.71 3.75 -8% -10%

1044.HK Hengan Buy 82.00 69.20 10,878 HKD Dec 21.07 18.28 4.78 4.34 3.04 3.51 3.88 5.69 -2% -4%

0336.HK Huabao Int'l Sell 3.10 2.87 2,157 HKD Mar 5.97 5.32 0.87 0.78 5.05 5.67 17.88 17.65 -37% -50%

002304.SZ Jiangsu Yanghe Buy 73.40 58.81 13,478 CNY Dec 17.83 15.18 3.93 3.42 2.80 3.29 7.74 9.24 -8% -13%

600519.SS Kweichow Moutai Buy 267.00 200.40 38,281 CNY Dec 15.79 14.00 3.91 3.26 2.06 2.32 4.64 6.81 -14% -18%

6808.HK Sun Art Retail Group Buy 6.33 4.36 5,340 CNY Dec 14.75 13.69 1.66 1.55 2.71 2.92 4.50 5.65 -19% -21%

0322.HK Tingyi Buy 13.00 8.80 6,320 USD Dec 17.04 14.23 2.09 1.95 2.93 3.51 6.66 6.63 20% 16%

600600.SS Tsingtao Brewery Co Ltd-A Hold 31.40 27.50 5,650 CNY Dec 20.67 17.73 2.20 2.03 1.74 1.72 4.41 5.90 -24% -28%

0168.HK Tsingtao Brewery Co Ltd-H Hold 36.00 27.55 4,779 CNY Dec 17.49 14.99 1.86 1.72 2.05 2.04 5.21 6.97 -28% -33%

1314.HK Tsui Wah Buy 2.50 1.44 565 HKD Mar 12.89 11.35 1.64 1.54 5.83 6.64 7.94 11.40 -28% -33%

0220.HK Uni-President China Hold 7.00 5.01 2,778 CNY Dec 20.69 18.38 1.59 1.49 0.97 1.09 NM 4.73 24% 20%

0151.HK Want Want Hold 5.90 5.08 8,579 USD Dec 15.40 14.18 3.85 3.53 2.53 4.70 5.01 5.73 -5% -7%

0288.HK WH Group Buy 6.50 4.42 8,310 USD Dec 10.98 9.54 1.41 1.27 0.00 3.24 4.59 12.02 40% 29%

000858.SZ Wuliangye Yibin Buy 31.00 23.66 13,658 CNY Dec 15.87 13.03 2.09 1.91 2.46 3.00 5.28 11.72 -26% -34%

600887.SS Yili Dairy Buy 18.60 13.33 12,423 CNY Dec 19.11 16.05 3.93 3.50 3.12 3.62 2.63 3.73 -6% -7%

601933.SS Yonghui Superstores Buy 12.90 7.77 4,806 CNY Dec 31.79 24.65 2.50 2.37 1.34 1.83 0.46 1.43 -19% -19%

Average 24.04 16.36 2.73 2.41 2.15 2.67 8.11 6.69 2.2% -2.8%

0341.HK Cafe de Coral Buy 29.00 21.25 1,992 HKD Mar 18.58 16.90 3.56 3.39 4.32 4.75 6.91 6.89 -11% -14%

0506.HK China Foods Hold 3.40 2.47 887 HKD Dec 31.05 16.54 1.13 1.05 0.00 0.00 4.39 9.45 26% 17% Source: Deutsche Bank estimates, Bloomberg Finance LP For additional information on all stocks mentioned here please refer to our website at: http://gm.db.com

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Figure 16: Valuation comps – Discretionary

Ticker Company Recom Target Share Price Mkt Cap(m) Rpt. Ccy Y/E Headline PEx PBx Div Yield Free cashflow yield

Net Debt/ Mkt cap

(12 mth) Price 29Jan-2016 Local FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E

2020.HK Anta Buy 24.00 18.66 5,982 CNY Dec 19.57 16.06 4.68 4.31 3.59 4.37 6.09 6.20 -17% -19%

1880.HK Belle International Holdings Ltd Buy 10.58 5.20 9,578 CNY Feb 7.68 7.75 1.38 1.29 7.81 7.74 9.67 11.34 -22% -25%

1929.HK Chow Tai Fook Hold 6.97 4.50 13,593 HKD Mar 11.07 9.95 1.09 1.04 4.64 5.16 9.14 9.69 11% 7%

1476.TW Eclat Textile Sell 410.00 467.00 3,479 TWD Dec 25.72 24.10 9.28 8.94 3.33 3.53 2.53 3.50 -1% -1%

0330.HK Esprit Hold 6.05 8.00 2,353 HKD Jun NM 129.69 1.37 1.36 0.00 0.04 NM 3.00 -28% -31%

0709.HK Giordano Buy 4.51 3.10 614 HKD Dec 10.39 9.44 1.80 1.79 9.34 10.41 10.99 11.54 -19% -21%

0493.HK Gome Buy 1.82 1.08 2,352 CNY Dec 11.81 10.09 0.89 0.84 3.40 3.98 14.32 8.52 -46% -51%

000651.SZ Gree Hold 17.27 18.73 17,135 CNY Dec 7.79 6.89 1.78 1.50 3.85 4.35 15.28 17.63 -59% -73%

1169.HK Haier Electronics Hold 14.12 13.66 4,900 CNY Dec 11.41 10.23 1.98 1.67 0.91 1.02 7.28 8.55 -32% -40%

3389.HK Hengdeli Hold 1.23 0.83 468 CNY Dec 8.24 7.22 0.54 0.51 3.64 4.16 28.40 20.71 28% 9%

0494.HK Li & Fung Sell 4.07 4.44 4,620 USD Dec 12.96 13.11 1.70 1.71 6.50 6.56 5.35 6.53 34% 35%

2331.HK Li Ning Co Ltd Hold 3.90 3.59 868 CNY Dec 112.57 16.18 1.60 1.43 0.47 3.14 0.51 6.00 -21% -28%

1212.HK Lifestyle International Buy 18.00 9.58 2,084 HKD Dec 7.59 7.59 1.32 1.21 6.46 6.46 11.23 6.37 -15% -15%

0973.HK L'Occitane Buy 19.63 13.56 3,586 EUR Mar 21.33 18.15 2.55 2.33 1.67 1.97 2.16 4.80 -12% -15%

000333.SZ Midea Buy 34.09 27.31 17,716 CNY Dec 9.31 8.18 2.07 1.77 3.63 4.13 13.59 15.90 -37% -49%

1913.HK Prada Buy 41.00 23.10 17,559 EUR Jan 18.04 15.90 2.19 2.01 2.33 2.83 6.58 6.56 -9% -13%

600690.SS Qingdao Haier Buy 11.51 9.92 9,371 CNY Dec 10.56 9.06 2.07 1.78 2.86 3.33 11.20 13.32 -41% -51%

0178.HK SA SA International Hold 2.60 2.12 2,013 HKD Mar 11.48 12.13 3.34 3.34 8.70 8.23 11.48 8.66 -16% -16%

1910.HK Samsonite Hold 22.77 20.05 3,625 USD Dec 18.59 16.23 2.64 2.42 2.39 2.75 4.71 5.47 -6% -9%

600315.SS Shanghai Jahwa Hold 40.67 30.39 3,108 CNY Dec 8.34 20.43 3.05 2.82 2.83 2.26 7.83 3.59 -23% -24%

0321.HK Texwinca Hold 8.33 7.50 1,283 HKD Mar 11.82 10.45 1.83 1.83 8.46 9.57 8.88 8.94 -26% -26%

Average 17.81 9.17 2.34 2.19 4.13 4.57 9.36 8.90 -17% -22%

Source: Deutsche Bank estimates, Bloomberg Finance LP For additional information on all stocks mentioned here please refer to our website at: http://gm.db.com

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Figure 17: Valuation comps – Asia Pacific Consumer

Code Company Rec TP Share Price Mkt Cap Currency Year-End PER PB Div Yield (%) FCF yield(%) Net Debt/ Mkt cap

29-Jan-2016 FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E FY1E FY2E

CPF.BK Charoen Pokphand Foods Hold 23 20 4,213 THB Dec 60.97 20.55 1.36 1.32 2.72 2.68 NM NM 112% 123%

097950.KS Cheiljedang Buy 450,000 411,500 4,944 KRW Dec 19.30 15.49 1.83 1.66 0.61 0.73 5.07 5.16 90% 88%

GGRM.JK Gudang Garam Buy 66,000 58,350 8,093 IDR Dec 20.66 18.64 3.09 2.79 1.91 0.00 1.21 0.86 15% 17%

INDF.JK Indofood Buy 9,000 6,200 3,924 IDR Dec 12.40 11.18 1.87 1.69 2.87 3.23 8.13 8.89 6% 0%

ICBP.JK Indofood CBP Buy 16,000 14,450 6,074 IDR Dec 25.21 22.53 5.23 4.64 1.55 1.98 2.05 2.76 -2% -3%

JFC.PS Jollibee Foods Corp Hold 205 205 4,604 PHP Dec 39.16 31.45 7.14 6.22 0.90 1.12 2.79 3.99 -2% -5%

JUBI.BO Jubilant Foodworks Hold 1,500 1,263 1,403 INR Mar 63.11 47.20 10.57 8.81 0.20 0.20 0.02 0.31 0% 0%

KLBF.JK Kalbe Farma Buy 1,970 1,335 4,511 IDR Dec 29.56 22.84 5.58 4.85 1.00 1.45 1.84 2.71 -4% -6%

033780.KS KT&G Hold 100,000 103,500 10,854 KRW Dec 12.52 13.09 2.09 1.92 3.29 3.38 6.21 5.98 -5% -8%

NEST.BO Nestle India Ltd Buy 6,500 5,497 7,810 INR Dec 53.90 37.46 19.76 18.46 1.64 2.00 2.15 2.95 -1% -1%

001800.KS ORION Corp Buy 1,360,000 1,030,000 4,514 KRW Dec 30.83 23.14 3.92 3.45 0.68 0.78 NM 1.35 16% 12%

TUF.BK Thai Union Frozen Buy 23 19 2,450 THB Dec 16.64 13.76 1.75 1.64 3.00 3.63 5.22 NM 39% 43%

UNSP.BO United Spirtis Limited Buy 3,200 2,500 6,470 INR Mar 103.65 63.42 36.90 24.54 0.12 0.21 0.95 0.59 12% 12%

URC.PS Universal Robina Corp. Hold 207 193 8,836 PHP Sep 30.88 26.22 6.60 5.76 1.37 1.62 2.00 3.04 4% 3%

ACES.JK Ace Hardware Indonedia Buy 875 800 989 IDR Dec 24.24 20.92 5.14 4.23 0.61 0.62 4106.00 3681.24 -4% -6%

AMRT.JK Alfamart Buy 650 610 1,660 IDR Dec 38.73 30.60 6.20 5.37 0.77 0.98 0.70 0.95 20% 20%

090430.KS AmorePacific Buy 490,000 405,500 19,758 KRW Dec 40.44 32.93 7.05 5.96 0.30 0.37 1.64 2.02 -2% -3%

035760.KQ CJ O Shopping Buy 230,000 179,000 919 KRW Dec 11.43 9.51 1.19 1.08 1.40 1.51 24.98 27.36 89% 77%

CPALL.BK CP ALL Buy 54 41 10,214 THB Dec 27.19 22.43 10.12 7.96 2.21 1.78 NM 1.46 43% 47%

139480.KS Emart Buy 240,000 164,000 3,811 KRW Dec 22.46 11.58 0.62 0.58 0.91 0.91 NM NM 84% 99%

HMPR.BK HomePro Buy 9 9 2,495 THB Dec 26.70 23.09 4.75 4.08 2.06 2.38 NM NM 15% 17%

HLL.BO HUL Hold 880 816 25,734 INR Mar 40.63 37.27 42.44 38.10 2.22 2.41 2.49 2.86 -2% -2%

069960.KS Hyundai Dept Store Buy 146,000 128,000 2,498 KRW Dec 11.27 9.74 0.86 0.79 0.55 0.63 NM 8.58 13% 5%

ITC.BO ITC Buy 400 318 45,401 INR Mar 25.50 22.94 7.91 7.58 2.89 3.30 4.06 4.01 -4% -4%

051900.KS LG H&H Buy 1,140,000 991,000 12,116 KRW Dec 30.94 24.68 7.15 5.73 0.45 0.50 2.25 2.91 5% 4%

023530.KS Lotte Shopping Hold 210,000 237,000 5,740 KRW Dec 16.48 13.66 0.42 0.41 0.84 1.14 1.30 3.78 160% 159%

MRCO.BO Marico Limited Buy 235 223 6,174 INR Mar 39.58 32.24 12.76 10.23 0.90 1.01 2.75 2.78 0% -2%

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

RALS.JK Ramayana Hold 825 605 309 IDR Dec 15.40 13.52 1.24 1.18 4.16 3.40 6.53 7.73 -45% -50%

ROBI.BK Robinson Dept. Store Hold 50 47 1,193 THB Dec 21.27 18.23 3.17 2.87 1.88 2.19 1.02 5.62 7% 3%

004170.KS Shinsegae Hold 210,000 212,500 1,743 KRW Dec 19.05 12.10 0.70 0.66 0.59 0.61 5.32 NM 109% 119%

Source: Deutsche Bank estimates, Bloomberg Finance LP

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

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Figure 18: Valuation comps – Asia Pacific Consumer (continued)

Code Company Rec TP Share Price Mkt Cap Currency Year-End PER PB Div Yield (%) FCF yield(%) Net Debt/ Mkt cap


TITN.BO Titan Industries Buy 430 365 5,245 INR Mar 41.32 28.99 9.21 7.86 0.96 1.37 1.16 1.32 0% 0%

UNVR.JK Unilever Indonesia Hold NA 36,700 20,185 IDR Dec 47.96 43.62 62.94 58.36 2.13 2.16 2.23 2.39 0% 0%

ASPN.BO Asian Paints Hold 850 869 10,498 INR Mar 44.58 36.76 14.62 12.23 1.09 1.38 1.88 1.84 -1% -1%

GOCP.BO Godrej Consumer Buy 1,400 1,228 5,262 INR Mar 37.33 31.36 8.11 6.76 0.57 0.57 2.37 2.71 1% -1%

HLL.BO Hindustan Unilever Hold 880 816 25,734 INR Mar 40.63 37.27 42.44 38.10 2.22 2.41 2.49 2.86 -2% -2%

TAGL.BO Tata Global Beverages Buy 180 127 1,582 INR Mar 17.39 15.99 1.37 1.32 2.56 2.97 5.02 4.52 7% 7%

008770.KS Hotel Shilla Hold 65,000 65,100 2,094 KRW Dec 135.86 18.57 3.42 3.24 0.54 0.61 NM 3.86 24% 26%

2914.T JT Buy 5,400 4,661 69,970 JPY Dec 18.74 16.87 2.98 2.74 2.57 3.00 4.52 5.23 -5% -7%

4911.T Shiseido Hold 2,400 2,240 7,374 JPY Dec 79.48 25.47 2.69 2.78 0.89 1.12 2.28 4.79 5% 2%

027410.KS BGF Retail Buy 243,000 215,000 4,384 KRW Dec 34.11 26.95 7.35 5.96 0.47 0.56 4.11 5.48 -10% -14%

007070.KS GS Retail Hold 66,000 65,500 4,206 KRW Dec 28.91 26.59 2.79 2.59 1.07 1.22 2.26 3.52 22% 20%

MYOR.JK Mayora Indah Buy 30,000 27,000 1,741 IDR Dec 29.70 21.67 5.08 4.24 0.36 0.71 0.72 1.44 11% 10%

LPPF.JK Matahari Department Store

Buy 20,000 16,000 3,364 IDR Dec 24.40 20.11 37.66 19.35 1.82 2.46 4405.31 4956.56 -3% -5%

MPPA.JK Matahari Putra Prima Buy 4,500 1,670 647 IDR Dec 14.23 12.43 2.69 2.30 0.00 0.00 5.32 7.43 -3% -8%

MAPI.JK Mitra Adiperkasa Buy 7,800 3,745 448 IDR Dec 24.26 15.55 2.22 1.94 0.20 0.68 0.05 2.59 46% 45%

CNPF.PS Century Pacific Food Buy 21 16 728 PHP Dec 17.62 15.70 4.30 3.58 1.37 1.70 2.31 4.39 -5% -7%

COSCO.PS Cosco Capital Inc. Buy 13 7 1,143 PHP Dec 11.24 10.37 1.17 1.06 1.33 1.45 4.77 9.12 -9% -16%

PGOLD.PS Puregold Buy 47 33 1,916 PHP Dec 18.15 16.41 2.38 2.13 0.99 1.10 1.91 3.79 -3% -6%

RRHI.PS Robinsons Retail Hldgs Buy 88 59 1,716 PHP Dec 17.67 15.22 1.88 1.70 0.89 1.15 1.99 3.38 -13% -15%

BIGC.BK BIGC Hold 202 224 5,156 THB Dec 24.75 22.49 3.91 3.48 1.21 1.33 3.21 3.59 5% 3%

CENTEL.BK Central Plaza Hotel Hold 40 40 1,488 THB Dec 28.79 24.93 4.47 4.07 1.58 1.82 4.44 1.17 15% 16%

M.BK MK Restaurant Group Hold 58 54 1,352 THB Dec 22.53 19.65 3.71 3.59 3.57 4.09 4.55 5.66 -1% -3%

MINT.BK Minor International PLC Hold 33 34 4,145 THB Dec 31.92 26.31 4.75 4.29 1.43 1.52 NM NM 25% 29%

MAKRO.BK Siam Makro Hold 35 35 4,621 THB Dec 29.83 26.45 11.20 9.71 2.14 2.41 NM 1.59 5% 6%

Average 32.44 23.30 8.57 7.18 1.42 1.57 192.43 183.94 16% 15%

Source: Deutsche Bank estimates, Bloomberg Finance LP

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

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Figure 19: Valuation comps – Media

Code Company Rec TP Share Price Mkt Cap Currency Year-End PER PB Div Yield (%) FCF yield (%) Net Debt/ Mkt cap


600037.SS Gehua CATV Hold 23.00 15.55 2,763 CNY Dec 24.77 25.18 2.68 2.51 1.37 1.32 3.95 2.68 -15% -17%

600637.SS Oriental Pearl Buy 46.00 25.69 13,889 CNY Dec 40.63 27.34 3.58 2.19 0.34 0.63 2.98 0.42 -17% -24%

0511.HK Television Broadcasts Hold 30.45 27.05 1,521 HKD Dec 7.62 11.55 1.45 1.47 9.61 9.61 7.94 6.69 -29% -26%

ASTR.KL Astro Malaysia Buy 3 3 5,145 MYR Jan 23.29 20.00 19.19 17.51 3.87 4.50 8.24 6.17 14% 15%

BEC.BK BEC World PLC Hold 28 30 1,674 THB Dec 19.66 18.87 7.21 6.96 4.83 4.77 5.84 5.79 -4% -3%

DABU.BO Dabur India Limited Hold 290 251 6,340 INR Mar 33.57 28.54 10.73 8.74 0.98 1.16 2.87 3.03 -1% -2%

DSTV.BO Dish TV India Ltd Buy 135 91 1,079 INR Mar 37.61 20.10 -181.16 22.61 0.00 0.00 2.23 4.22 9% 5%

ZEE.BO Zee Entertainment Buy 475 422 4,994 INR Mar 35.59 28.20 6.29 5.31 0.53 0.53 0.82 2.06 -2% -3%

SCMA.JK Surya Citra Media Buy 3,800 2,700 2,846 IDR Dec 26.31 22.41 11.31 9.74 2.95 3.04 4347.78 4198.69 -3% -5%

Average 27.67 22.47 -13.19 8.56 2.72 2.84 486.96 469.97 -5% -7%

Source: Deutsche Bank estimates, Bloomberg Finance LP 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

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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. Notes:

1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were:

Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12-month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period

53 %

36 %

11 %21 %17 % 20 %

050

100150200250300350400450500

Buy Hold Sell

Asia-Pacific Universe

Companies Covered Cos. w/ Banking Relationship

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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