霸王集团 汇丰研究报告 英文

霸王集团 汇丰研究报告 英文

Flashnote

Consumer & Retail Personal Products

Equity – China

Neutral (V)

Target price (HKD) 3.10 Share price (HKD) 3.15 Potential return (%)

Performance 1M 3M 12M

Absolute (%) -4.8 -21.8 -0.9 Relative^ (%) -1.9

-29.7

8.8

^Index

SSE Composite Index

RIC 1338.K Bloomberg 1338 K

Market cap (USDm) 1,256

Market cap (HKDm) 9,741

Enterprise value (CNYm) 6,858

Free float (%)

H

H35 Note: (V) = volatile (please see disclosure appendix)

23 November 2010

Herald van der Linde* Analyst

The Hongkong and Shanghai Banking Corporation Limited (HK) +852 2996 6575

heraldvanderlinde@ Robby Gu* Analyst

The Hongkong and Shanghai Banking Corporation Limited (HK) +852 2822 4337

robbygu@

View HSBC Global Research at: *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations

Issuer of report: The Hongkong and

Shanghai Banking Corporation Limited

Disclaimer & Disclosures

This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

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Global Research

Bawang International (1338)

N(V): Still some way to recovery

Sales down following Dioxane incident in July, profits impacted by negative operating leverage Bawang is not out of the woods (yet); risks to 2011 earnings are rising

Remain Neutral (V) with new TP of HKD3.1 (was HKD4.1) using average PE of 15.5x (was 20.7x)

Profit warning. Bawang stated that group sales in the July-October period were down 31% and that profits for the full year would be down substantially. Based on this, we estimate that sales for Bawang products alone could be down as much as 43%. Increasing risk to 2011 outlook. On 12 November we already lowered our 2H profit

forecast to reflect weaker sales and rising advertising costs. At that time, we maintained our EPS forecast for 2011, which implied a return to normality next calendar year, on two key assumptions:

1

Monthly run rate for Bawang shampoo would recover from RMB90m in October 2010 to the 2009 normal level of RMB120m by April 2011.

2

Herbal tea sales would reach RMB306m in FY11 from RMB84m in FY10. It is the largest sales growth driver in 2011, contributing 35% to overall sales growth.

There is now risk that weak sales performance might extend into 2011. We are being shown how fragile new brands can be in China. We will consider turning more bearish on the stock if actual sales track below either of the above two assumptions.

Lower TP to HKD3.1. Given continued uncertainty over operating performance, we have decided to lower our target multiple to value Bawang. Using a multiple of 15.5x forward earnings, which represents the average PE between July and November 2009, we set our new TP at HKD3.1. Note that, if we used the lowest-ever PE that Bawang shares have traded on (12.7x in September 2009), our TP would fall to HKD2.5.

Risks: A slower-than-expected monthly sales recovery, especially in lower-tier cities; and intensified competition. Catalysts: Sell-through of herbal tea; new product launches.