[看好评级]SINGAPORE CONSUMER MONTHLY:SET FOR STRONGER GROWTH IN 2018

时间:2018年04月17日 18:02:57 中财网
Rosier picture in Hong Kong, Singapore, Philippines and Vietnam; Impending electionsin Malaysia, Indonesia and Thailand could reignite consumer sentiment
Thailand’s beer demand declines for the 5th month post-excise tax in Sep-17; Willreview assumptions for ThaiBev after release of March and April data
FNN should benefit from the fast-growing dairy market in Vietnam
We maintained our OVERWEIGHT view on Singapore Consumer SectorStrong Feb-18 data affirmed a sustainable momentum into 2018
Retail sales in China grew 9.7% YoY in the first two months of 2018. E-commercecontinue to gain traction, with online sales growing at 37.3% in Jan-Feb, contributingto 20.1% of total retail sales, more than double the 9.9% recorded 3 years ago.
Multi-year high double-digit growth in retail sales and two-decade level lowunemployment rate painted a rosy picture in Hong Kong. Retail sales jumped 15.7%YoY while unemployment rate improved to 2.9% for Jan-Feb. Upbeat consumptionsentiment amid favorable employment and income conditions alongside further pickupin inbound tourism should continue to underpin retail sales momentum.
Notably, sales of luxury products (jewellery, watches and valuable gifts) rose 21% YoYin the first two months.
Singapore retail sales, excluding motor vehicle sales, rebounded strongly at 14.0% YoYin Feb-18 due to Chinese New Year effect. However, combining the first two months of2018, retail sales was up by 1.96% YoY, and c.4% of the total sales are transacted viaonline.
Food & Beverages Services increased 4.9% YoY in Feb-18, but fell 4.5% for the first twomonths. This is in contrast with Food retailers, which recorded sales growth of 61.2%in Feb-18 and 14.3% in the first two months. This could imply a potential change inconsumer preference to dine-in.
Indonesia retail sales remained bleak with 1.7% YoY increase in Mar-18. Moreover,consumer confidence was weighed by concerns over future job availability andincome. We expect the upcoming local elections in Jun-18 to underpin consumerconfidence while the government pushes for higher investment in infrastructure. TheAsian Development Bank (ADB) expects the Indonesia economy to expand by 5.3% YoYin 2018 and 2019.
Consumer spending in Malaysia continues to expand at a steady pace. We expectstrengthening ringgit, controlled inflationary pressure, and the upcoming electioncampaign would underpin domestic spending.
Strong exports and tourism recovery continued to lift Thailand's consumer sentiment,and thus private consumption. Consumer sentiment private picked up in Mar-18, aftera slight dip in Feb-18. Global trade tensions, political uncertainty and low farm pricesremained a concern. The Bank of Thailand raised its 2018 economic growth forecastfor the fourth time, to 4.1% from 3.9% projected earlier in Dec-17.
Philippines posted firmer sales in Feb-18. Net Sales Index recorded growth for secondconsecutive month, in terms of both value and volume, after a contractionary 2H17.
Vietnam has outdone itself. Retail sales for 1Q18 increased 10.3% YoY – the highestrate in the past 10 years. The strong consumption is a reflection of rising purchasingpower – against a backdrop of low inflation and rising wages (average wages increasedc.8% YoY in 2017)。

Slower than expected Beer demand in ThailandHistorically, the road to recovery post-excise tax hike takes about 4 months。

However, domestic beer sales continue to slide in Feb-18 – the 5th month since Sep-17. Weare still hopeful of a recovery in domestic beer demand on the back of a low 2017 base andas the excise tax effect subside. The March and April (Songkran) sales will paint a betterpicture on consumer sentiment. Notwithstanding that, we also expect the 2018 FIFA WorldCup to kick up beer sales in both Thailand and Vietnam by c.10% this year.
FNN, a proxy to Vinamilk’s strong growth and market dominanceStrong demand for Dairies should bolster the slowdown in non-alcoholic beverages (NAB)。

The strong demand for milk in Vietnam should support the FNN’s Dairies profitability.
Vinamilk posted revenue of VND51.135trn (USD2.24bn) and earnings of VND10.278trn(USD0.45bn) in 2017. It aims to increase its total revenue by 8.5% and its earnings by 4.6%in 2018. Vinamilk also plans to raise its market share in Vietnam by 1% each year, reachingat least 60% in the next five years. Its current market share is 58%, up 2% from 2017.
FNN currently has c.19.95% stake in Vinamilk and intends to further accumulate its interestin Vinamilk. However, it may face competition from Jardine C&C, whom has acquired c.10%interest in Vinamilk and has one representative on Vinamilk’s board. On a brighter note,the strategic partnership between Vinamilk and Jardine Matheson Group could accelerateVinamilk’s plan to boost its export sales.
Worth noting that Vinamilk will issue preferential shares to existing shareholders at theratio of 5:1, which would increase its chartered capital by 20% to VND17.415trn.
Expect upcoming elections to underpin consumer confidence, particularly in MalaysiaConsumer could be adopting a wait-and-see attitude on retail spending. The start of officialelection campaign (which could include government cash handout) would spur consumerspending. Post-election, consumer spending could improve further with stimulus spendingand consumers releasing pent-up demand.
The Malaysia government has disbursed the first of three parts of the cash handout (underBR1M programme) in Feb-18, aimed at increasing household spending for lower incomehouseholds. The next payouts are scheduled for June and in August. The government paida total amount of RM6.8bn for BR1M last year.
On top of BR1M disbursements, the Prime Minister Najib’s generous pre-election budget ofRM280bn has also set aside a one-time RM1,500 payments to 1.6 million civil servants,income tax relief and aid to rural communities.
Investment actions
Maintain OVERWEIGHT on Consumer Sector. Brighter regional economy outlook would liftjob and wage growth, thus fuelling consumer spending.
Both supermarket operators Sheng Siong (Accumulate/TP: S$1.13) and Dairy Farm(Buy/TP: US$9.83) are expanding their store counts to drive topline. Margins shouldcontinue to improve from better economies scale, improved operating efficienciesfrom central warehouse, and ramping up fresh product offerings. Fresh products havehigher margins compared to groceries and the least vulnerable to Amazon’s threat.
We also like Old Chang Kee (Buy/TP: S$0.98)。 It has completed its transformation inDec-17. Successful integration with the new factory would be the inflection point forOCK. Its new factory will yield manufacturing efficiencies and increase capacity to fuelits expansion domestically and regionally.
Thai Beverage (Buy/TP: S$1.05) and FNN (Buy/TP: S$2.83) are tapping onto the fastgrowingemerging markets such as Cambodia, Myanmar, Laos and Vietnam (CMLV)。

Both beverage giants should benefits on their recent acquisitions.
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