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Co
ompany R
Research Huiiyuan juice (188
86.HK) Maar 12th, 2014 C
China
H
Huiyua
n Juice
e(188
86.HK)
)
BUY | Target prrice: HK$6.70
Ju
uicy fruity
F
Food
&B
Beverag
ge Secto
or
We
e initiate ou
ur coverag
ge of Huiyuan with a BUY
B
rating and a TP
of HK$6.70 based
b
on 0..5X 2-year PEG for FY
Y13-15. The
e
ompany is engaged
e
in
n the fruit and
a
vegetable juices market
co
wh
hich will se
ee a structu
ural growth
h of 12-15%
% p.a. in the
e future.
It is
i particula
arly strong in 100% ju
uice and ne
ectars whic
ch are the
ke
ey drivers of
o market growth.
g
Des
spite earnings volatility in the
pa
ast few yea
ars, we believe Huiyua
an has starrted to add
dress the
problems and will see strong
s
earn
nings reco
overy ahead
d.
„ A market witth structural growth.
g
Saless of fruit and vegetable juices grew by a
respectful CA
AGR of 28% during 2003-12. In 2012, China’s
C
annual per capita
consumption of 8.9 liters of fruit
f
and vegetable juices wass still far behind 39 liters in
d 26 liters in the US. The market is expecte
ed to see struc
ctural growth
Germany and
over a considerable period of
o time driven by rising dispo
osal income and increasing
he China Beve
erage Industry Association,
awareness for health drink. According to th
etable juices are
e expected to be
b the key drive
ers for a 12-15
5%growth for
fruit and vege
the soft drink market during the 12th five-ye
ear plan.
„ Best position
ned in the indu
ustry. Huiyuan
n is already welll positioned in the fruit and
vegetable juicces market. An
n added advanttage is its dom
minant position in the 100%
juice and necttar market with
h respective ma
arket share of 54.2%
5
and 44..1% in 2012.
They are expe
ected to see the strongest gro
owth within the
e juice and vege
etable juices
market. In Ch
hina, 100% juice accounted for 2% of the fruit and vege
etable juices
market in 201
12 compared with
w 41% in Am
merica and 36%
% in Australia while nectar
accounted forr 6% compared
d with 17% in Western
W
Europe
e and 12% in Australia.
A
eoff. Huiyuan has
h a strong brrand with a wide range of qua
ality products
„ Ready to take
at various ind
dividual serving
g sizes, a large
e and diversifie
ed production facilities
f
and
distribution ne
etwork. The ne
ew CEO is ag
ggressively revvamping the ex
xisting sales
system. The company has recently appo
ointed world re
enowned Ogilv
vy & Mather
4 marketing co
ommunication initiatives. In addition,
a
the
China to carrry out its 2014
acquisition of fruit juice concentrates
c
p
Chin
na Huiyuan
and purees producer,
Industrial (CE
EI) will significantly boost overrall margin of th
he company.
Analyst
Yang nanxian
ng
SFC CE No.:AYJJ777
00852-2899 830
00
yangnx@guosen
n.com.hk
Performance
e
30000
35
5
25000
30
0
25
5
20000
20
0
15000
15
5
10000
10
0
5000
0
2013/1/2
5
2013/3/2
HSI
201
13/5/2
0
2013/7/2
874.HK
Source: Yahoo Finance
Key Data
Price(HK$)
Shares Outstand
ding(m)*
Market Cap. (HK
K$ m)*
Free float (%)
Average Daily Turnover
52 Week Range
e
Controlling Sharreholder
BVPS (HK$)
Debt ratio (%)
4
4.40
2,0
000
8,8
800
27
7.81
HK$ 4.4m
2.96/5
5.72
Zhu xinli (55.32%))
4.46
4
43
y. Earnings had recovered frrom a loss of RMB32m in
„ Strong earniings recovery
FY1H12 to RMB114m
R
in FY1H13. We expect unde
erlying earning
gs to reach
RMB205m forr the full year of
o FY13 and gro
ow 110% to RM
MB430m in FY
Y14 and 30%
to RMB561m in FY15 main
nly driven by rising
r
sales an
nd improving margin.
m
This
translates into
o a CAGR of 65%
6
for FY13-1
15. We initiate our coverage on
o the stock
with a BUY ra
ating and a targ
get price of HK$
$6.70 based on 0.5X PEG for FY13-15.
Financial Summary
y
Ye
ear to Dec
Re
evenue (RMB m)
Operating Profit (R
RMB m)
Re
eported Profit (R
RMB m)
Underlying Profit (RMB
(
m)
RMB)
Underlying EPS (R
DPS (RMB)
BV
VPS (RMB)
P//E (x)
Dividend Yield (%)
P//B (x)
2011A
3,826
13
310
(30)
(0.02)
0
3.57
158.2
0%
0.97
20
012A
3,,981
2
208
16
5
0
0.00
0
3
3.58
31
18.3
0
0%
0
0.97
2013E
E
4,600
0
404
216
205
0.10
0
0
3.18
8
34.3
3
0%
1.09
9
2014E
6,043
732
430
430
0.16
0
3.34
21.5
0%
1.04
2015E
7,255
891
561
561
0.21
0
3.56
16.5
0%
0.98
Sou
urce: Guosen Se
ecurities (HK)
For ratings definition
ns and other important disclosurees, refer to the Infformation Disclossures at the end o
of this report.
1
公
公司报告
汇源
源果汁(1886.HK)
20114 年 3 月 12 日 日
201
14 年 3 月 12
2日
汇
汇源果汁
汁(188
86.HK)
)
买入 | 目标
标价: HK$6.70
果
果香四溢
食品
品饮料行业
业
公司是中国领
领先的果汁生
生产企业,其
其品牌享誉全
全国。2013 年通过对
上游
游资产收购
购,闲置资产处
处理等方式实
实现了产业
业链垂直一体
体化及资产
结构
构优化;此外
外,通过引进
进高层管理人
人员有望推进
进内部营销体
体系变革。
我们
们预期明年
年有望实现业
业绩显著增长
长。 „
果汁饮料市场
场潜力巨大。过
过去十年,果蔬
蔬汁类饮品市场
场规模年复合增
增长 28%,
分析师
杨南翔
证监会中央
央编号:.:AYJ777
00852-2899
9 8300
yangnx @gu
uosen.com.hk
股价表现
现
占软饮料中比
比例提升至 201
12 年的 23%。中国人均果汁
汁消费量仍低于
于世界平均,
远低于发达国
国家。中国饮 料工业协会估
估计,十二五期
期间中国饮料总
总量将保持
12-15%的年
年均增长,果蔬
蔬汁类饮品仍将
将成为增长的主
主要动力。此外
外,我们认为
中高果市场有
有望在未来几年
年较快地成长起
起来。
„
30000
35
25000
30
25
20000
20
15000
果汁行业龙头
头企业。汇源果
果汁是中国领先
先的果汁生产企
企业,产品种类
类丰富,具有
享誉全国的果
果汁品牌。201
12 年,公司 100%果汁及中
中浓度果汁市占
占率分别达到
54.2%及 44.1%,在中高果
果细分行业长期
期处于领导地位
位。鉴于中国 100%果汁消
15
10000
10
5000
5
0
2013/1//2
2013/3/2
费占比不足果
果蔬汁饮料市场
场的 2%,中果
果不足 6%,对
对比欧美、澳洲
洲等国家的消
2
2013/5/2
HSI
0
2013/7//2
874.HK
费占比差距明
明显,我们认为
为未来中高果市
市场在中国具有
有较大增长前景
景。
„
企业重整,蓄
蓄势待发。201
13 年公司引进
进在业内具有丰
丰富经验的高级
级管理人才作
为公司新的 CEO,新管理
C
理层将对原有营
营销体系进行大
大幅度变革来重
重组现有的销
售体系。我们
们预计 2014 年有望实现销售
年
售人员数量的持续裁剪及销
销售效率的提
升。2014 年汇源将开始与
年
与奥美的合作,结合公司在果
果汁领域较强的
的品牌力,相
信该合作将有
有助于其市场营
营销的开拓。此
此外,汇源于 2013
2
年收购上
上游浓缩汁企
业,这将使得
得公司在 2014
4 年实现毛利率
率大幅提升。
„
首次给予“买
买入”评级,目
目标价 6.70 港元。我们认为
港
为,公司目前正
正处于经营改
善的拐点,盈利
利能力有望持续
续提升,预计 2013-15
2
年将实
实现核心利润人
人民币 2.05
亿、。4.3 亿 5.61
5
亿,年复合增长 65%。我们首次给予
予公司“买入”评级,目标
价“6.70 港元
元”,对应于 2013-15 年 0.5 倍 PEG。
Source:YYahoo Finance
股票数据
据
收盘价(港币
币$)
流通股本(百
百万)*
总市值(港币
币$百万)*
流通量(%)
日均成交额
额
52 周最高/最低
股东
主要控股股
每股净资产
产(港币$)
负债率 (%%)
盈利
利预测
截至 31/12
截
营
营业额(人民币百万
万)
经
经营盈利
(人民币百万)
账
账面盈利(人民币百
百万)
实
实际盈利
(人民币百万)
每
每股实际盈利(人民
民币)
每
每股股息(人民币)
每
每股账面价值
(人民
民币)
市
市盈率(x)
股
股息率(%)
市
市净率(x)
2011A
3,826
13
310
(30)
(0.02)
0
3.57
158.2
0%
0.97
20
012A
3,,981
2
208
16
5
0
0.00
0
3
3.58
31
18.3
0
0%
0
0.97
2013E
E
4,600
0
404
216
205
0.10
0
0
3.18
8
34.3
3
0%
1.09
9
2014E
6,043
732
430
430
0.16
0
3.34
21.5
0%
1.04
2015E
7,255
891
561
561
0.21
0
3.56
16.5
0%
0.98
Source:国信证券(香
香港)
国信
信证券(香港)
研究
究报告仅代 Table
e 分析员个人观点
点,请务必阅读正
正文之后的免责声明。 4.4
20
000
8,8
800
27
7.81
HK$ 4.4m
2.96/5
5.72
朱新礼 (55.32%)
4.46
4
43
汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 1 A market with structural growth
The soft drink market in China has been growing continuously. For the 10 years to 2012,
sales jumped 508% from RMB77.442 b in 2003 to RMB471.592 b in 2012 translating into
a respectful 22% CAGR over the period. The submarket for fruit and vegetable juices
saw a stronger growth of 832% from RMB11.523b in 2003 to RMB107.392b in 2012 or a
28% CAGR for 2003-12. According to the China Beverage Industry Association, the soft
drink market will see volume growth of 12-15% annually during the 12th five-year-plan
and fruit and vegetable juices will be the key growth driver.
Exhibit 1: Market size of soft drink (03-12)
Exhibit 2:Market size of Fruit and vegetable juice (03-12)
500,000 450,000 120,000 RMB M Market size of F&V juice exceed 100 million in 2012
100,000 400,000 350,000 80,000 300,000 60,000 250,000 200,000 40,000 150,000 100,000 20,000 50,000 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: NBSC,Guosen Securities (HK)
Source: NBSC,Guosen Securities (HK)
As of 2012, fruit and vegetable juices accounted for 23% of the soft drink market
compared with 15% in 2003. It was the largest submarket followed by 18% for
carbonated drink, 17% for both bottle water and tea or others, 16% for vegetable protein
and 9% for solid drink.
国信证券(香港)
研究报告仅代 Table 分析员个人观点,请务必阅读正文之后的免责声明。 3
汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Exhibit 3:Breakdown of Soft drink market in 2012
Solid drink, 9%
Tea and others, 17%
Vegetable protein drink, 16%
Fruit and vegetable juice, 23%
Carbonated drink, 18%
Bottle water, 17%
Source: NBSC, Guosen Securities (HK)
Despite the strong 28% CAGR rise in sales for 2003-12, the fruit and vegetable juices
market in China will continue to grow in the foreseeable future in our view. China’s
consumption of fruit and vegetable juices exceeded 10 million tons in 2012. On per capita
basis, it amounted to 8.9 liters per year in 2012 almost doubled the 4.5 liters per year in
2007. However, it was still far below the consumption in developed countries. In 2011, per
capita consumption of fruit and vegetable juices amounted to 39 liters per year in
Germany and 26 liters per year in the US. China is even lower that the world average per
capita consumption of 10 liters per year.
Exhibit 4:Per capita juice consumption
50
40
39
30
26
20
10
9
World
China
10
0
Germany
USA
Per capita consumption (liter/year)
Source: Euromonitor、AC.Neilson、USDA、Guosen Securities (HK)
国信证券(香港)
研究报告仅代 Table 分析员个人观点,请务必阅读正文之后的免责声明。 4
汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 We believe the continuous growth in consumption of fruit and vegetable juices will be
driven by rising disposal income especially in urban areas. Annual disposable income per
capita for urban households jumped by almost 10-folds from RMB 2,577 in 1993 to
RMB24,565 in 2012 translating into a CAGR of 11.9%. In China, urbanization increased
from 27.99% in 1993 to 52.57% of population at the end of 2012. This is still low
compared with other western countries. As such, the process is likely to continue.
Coupled with an annual 7.0-7.5% GDP growth with consumption growth as a priority for
domestic policymakers, we expect annual disposal income per capital will continue to
see high single-digit to low double-digit growth per annum in the foreseeable future. This
is likely to lead to a growing awareness of health food and drink and therefore
consumption of fruit and vegetable juices.
Exhibit 5:Annual disposable income per capita for urban household and
Urbanization rate of China (1992-2012)
30000
55%
25000
50%
45%
20000
40%
15000
35%
10000
30%
25%
0
20%
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
5000
Annual disposable income per capita for urban household
Urbanization of China
Source: NBSC,Guosen Securities (HK)
2 Best positioned in the industry
The fruit and vegetable juices market mainly comprises juice drinks, nectar and 100%
juice. According to Nielsen, nectars are defined as juice beverages with juice content of
26-99% and juice drinks are juice beverages with juice content of 25% or below. Major
consumption has been juice drinks. Market share of juice drink increased by 11
percentage points from 81% in 2007 to 92% in 2012. During the period, market share of
nectar declined from 15.2% to 5.7% while market share of 100% juice remained relatively
stable at 2-3%.
国信证券(香港)
研究报告仅代 Table 分析员个人观点,请务必阅读正文之后的免责声明。 5
汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Exhibit 6: Juice drinks dominate Chinese juice market
100%
80%
60%
40%
81%
82%
86%
87%
90%
92%
2007
2008
2009
2010
2011
2012
20%
0%
Juice drink
Nectar
100% Juice
Source: Company, Guosen Securities (HK)
While juice drinks dominate the fruit and vegetable juice market in China, we believe the
strongest growth will come from 100% juice and nectar. In 2012, 100% juice accounted
for less than 2% of the fruit and vegetable juice market in China compared with 41% in
North America, 36% in Australia and 33% in Western Europe. For nectar, its market
share was less than 6% in China. This compared with 17% in Western Europe, 12% in
Australia and 6% in North America. We notice that 100% juice consumption in China has
begun to rise since 2012 with a growth rate higher than the overall fruit and vegetable
juice market.
Exhibit 7: Small proportion of 100% juice consumed in Asia Pacific
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Asia Pacific
Australia
Concentrates
Eastern Europe
Latin America Middle East North America
and Africa
Fruit‐Flavoured Drinks
Juice Drinks
Nectars
Western Europe
100% Juice
Source: Euromonitor, Guosen Securities (HK)
国信证券(香港)
研究报告仅代 Table 分析员个人观点,请务必阅读正文之后的免责声明。 6
汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Exhibit 8:100% juice market scale increase slowly
40%
250
30%
200
20%
150
10%
100
0%
‐10%
50
‐20%
‐30%
0
2007
2008
2009
2010
100% Juice
2011
2012
yoy%
Source: Company, Guosen Securities (HK)
2.1 Position of Huiyuan
Huiyuan is principally engaged in the production and sale of fruit juice, fruit and vegetable
juice and other beverages. Its products are categorized into 100% juice, nectars and
juice drinks based on juice concentration.
Exhibit 9:100% juice and Nectar attribute to most of Huiyuan’s sales
4,500
4,000
RMB 000'
8.4%
14.2%
24.4%
28.4%
27.2%
21.4%
39.6%
34.1%
26.4%
3,500
3,000
2,500
2,000
1,500
1,000
500
0
6.1%
30.2%
5.1%
27.3%
43.1%
45%
20.6%
22.6%
23.6%
24.5%
27.8%
2008
2009
2010
2011
2012
100% Juice
Nectar
Juice drink
Others
Source: Company,Guosen Securities (HK)
The company launched more than 700 beverage products in the past including fruit juice,
fruit wine, milk, jelly, tea drinks, bottle water, vinegar, vegetable protein drinks and etc.
Most of its products are selling under the “Huiyuan” brand and some are under various
sub-brands like quanyou, zhenpengyou, guoguoxin, leleyuan, zhenxiancheng, Kiwi super
fruit, lemon-me, Juizee Pops. Various individual serving size juice boxes are provided for
the convenience of on-the-go and out-of-home consumption at school or in the office.
国信证券(香港)
研究报告仅代 Table 分析员个人观点,请务必阅读正文之后的免责声明。 7
汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Table 1:Production series
Products Juice Specification Flavors contents
100% Juice 100%
200ml,500ml,1L,PET1.25ml,2L Orange, apple, peach, grape, tomato C”Ta” V”Ta” 100% 500ml,1L Orange, apple, tomato, pear All‐in series
50%
PET1.5L Composite: carrot + apple + orange+ pineapple 
40% 250ml,1L Peach, pear, hawthorn, strawberry, ——Hawthorn tea
NA 500ml,1L Hawthorn ——Huiyuan duoguole
30% 1.88L Orange, peach, hawthorn Guo xianmei series 30% PET500ml,PET1.88L(composite) Orange, peach, pear, hawthorn; Seabuckthorn juice
30%
2.5L Seabuckthorn Children’s series
40%
1L Seabuckthorn ——Bellywashers
30% PET180ml,PET240ml Peach juice, mango juice compound ——Huiyuan 5+7
100% 200ml125ml Mango ——Gululu
10% PET250ml Carbonated composite juice Pulp series
——Huiyuan pulp
New launching series
Health diary
50%
500ml Composite: Blueberry+Apple crystal sugar pear juice
10%
250ml,500ml, 1.5L, 2L ,2.5L
pear Huiyuan C MeiliGuolicheng 汇
10% 420ml Orange Hawthorn based juice drink 10% 450ml Hawthorn Carbonated crystal sugar pear
10% 500ml Pear Juizee Pop 10% PET1.8L, PET500ml,PET250ml Orange, lemon, apple, grape Juice drink series
——Xian guoyin
10%
250ml,2L Orange, peach, pineapple, crystal ——Juice drink
10% PET500ml,PET1.5L Orange, peach, white grape, guava Source:Company data,Guosen Securities (HK)
Founded in 1992, Huiyuan has successfully built a strong brand in the fruit and vegetable
juices industry in China through customer education, investment in grass-roots
promotions, in-store profile, sponsored television events and advertising campaigns as
well as online promotions. The company was the only authorized supplier of fruit juice
beverage products for the China Lunar Exploration Program and Deep Space
Exploration Program. Its brand is nationally recognized by numerous awards. In 2012,
the company was awarded:
¾
“Leading Company in China Beverage Industry”
¾
“First Choice of Juice Brand for China Consumers”
¾
“China’s Top 100 Green Companies of 2012”
¾
“2012 Annual Influential Group in Beverage Industry”
¾
“Platinum Award in Reader’s Digest Trusted Brand”
¾
“China Food Health Seven Star Award”
¾
“Hua Pu China Brand Award 2012”
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 2.2 Strong competitiveness in 100% juice and Nectar
On the back of a strong brand, a wide range of quality products, various individual
serving size juice boxes and continuous promotion/advertising efforts, the company
continues to enjoys a dominant position in the 100% juice and nectar markets. According
to Nielsen, Huiyuan had the largest market share of the 100% juice and nectar market for
the past few years.
In 2012, the company sold 127,000 tons juice and had market share of 54.2% by volume
and 47.5% by value in the 100% juice market. They were substantially higher than the
23.1% and 28.8% for Wei-Chuan, the second largest player in the market. Huiyuan sold
303,000 tons of nectars and its market share in the nectar market was 44.1% by volume
and 38.6% by value in 2012 compared with 30.2% and 25.0% for Nongfu Spring, the
second largest player in the market.
More importantly, the 100% juice and nectar markets are virtually duopoly with extremely
high market concentration ratios which limit competition from new entrants. The two
largest players in the 100% juice market, Huiyuan and Wei-Chuan, accounted for 77.3%
of the market by volume and 76.3% by value in 2012. In the nectar market, the two
largest players, Huiyuan and Nongfu Spring, accounted for 74.3% of the market by
volume and 63.6% by value in 2012.
Exhibit 10:Huiyuan dominates 100% juice and nectars market in China (2012)
60%
50%
54%
50%
44.1%
40%
30.2%
40%
30%
30%
23%
23%
25.7%
20%
20%
10%
10%
0%
0%
Huiyuan
Wei‐Chuan
Others
Huiyuan
NONGFU SPRING
Others
Source: Neilson, Guosen Securities (HK)
2.3 Continuous flow of new juice drinks
Although Huiyuan has a strong brand in the fruit and vegetable juice market in China, it is
less strong in the juice drinks market compared with its position in the 100% juice and
nectar markets. In the past 10 years, Huiyuan launched various new juice drinks.
¾
2003, “zhen xiancheng”, an imitation of “xian chengduo” from Uni-president,
¾
2006, Guo Xianmei,
¾
2009, “Lemon me”, “Super Berry Fruit”
¾
2010, Juizee Pop
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 ¾
2013, Bingtanghulu juice drink,( which we estimate generated RMB300 million in
sales in 2013)
However, the company is still unable to gain substantial market share. The key reason
being that competition has been intensifying given the relatively low market concentration
compared with the 100% juice and nectar markets. Sales of juice drinks dropped from
RMB1,054m in 2010 to RMB852m in 2012 and the company’s share in juice drink market
dropped from 6.3% to 2.9% by volume and from 5% to 2.3% by value.
Historically, there was no single juice drink that could maintain sustainable strong sales
over a long period of time. As a result, Huiyuan will continue to bombard the market with
continuous flow of new juice drinks. Given the low base, there could be potential upside
surprises. In 1H13, the company recorded a substantial 53% yoy jump in juice drink sales
to RMB584m surpassed the previous peak of RMB563m in 2H10. In 2014, we expect the
company will continue to promote the hawthorn based juice drinks and probably launch
new carbonated juice beverages.
3 Ready to take off
3.1 Strong production and distribution
One of the most valuable assets of the company is its large and diversified production
facilities and distribution network. The company currently has 43 production facilities in
China locating mostly in the central, northern and eastern regions. Total annual
production capacity for fruit and vegetable juices amounts to approximately 5m tons, of
which 3.8m tons are for the production of concentrated juices. In terms of distribution, it
has a network of 14 direct sales branches with more than 4,000 full-time sales staffs
focusing on the northern, eastern and northeastern regions. This large and diversified
production facilities and distribution network is sufficient to serve majority of the
population in China. Future works will be focusing on operating efficiency enhancement
and production process improvements to reduce cost and enhance return.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Exhibit 11: Historical trend of production capacity
6,000
000’ ton 5,000
4,000
3,000
2,000
1,000
0
2008
2009
Total capacity
2010
2011
2012
Juice drink capacity
Source: Guosen Securities (HK)
Exhibit 12:Production facilities spreading across China
Main Sales territory
Production facility
Source:Company data,Guosen Securities (HK)
3.2 More professional sales and marketing
Engaging professional marketing experts
Huiyuan has appointed Ogilvy & Mather China (“O&M”) as its agency partner to carry out
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 its 2014 marketing communication initiatives. The objective of O&M is to help Huiyuan
Juice to become more consumer-oriented, grow its business and further expand its brand
influence in China’s fruit juice industry. O&M is famous for its 360 Degree integrated
marketing communications, including public relations, corporate image design,
advertising, promotions, and other interactive media deliveries. We believe that the
cooperation with O&M will transform its brand power into sales force eventually through
product design, packaging design, advertising and other, thus achieving rapid business
growth and further strengthening Huiyuan’s leading juice position.
Table 2:Ogilvy & Mather
Introduction Ogilvy & Mather is one of the largest marketing communications companies in the world. It was named both the Cannes Lions Network of the Year and the EFFIEs World's Most Effective Agency Network for two consecutive years, 2012 and 2013. The company is comprised of industry leading units in the following disciplines: advertising; public relations and public affairs; branding and identity; shopper and Ogilvy & Mather
retail marketing; health care communications; direct, digital, promotion and relationship marketing; consulting, research and analytics; branded content and entertainment; and specialist communications. O&M services Fortune Global 500 companies as well as local businesses through its network of more than 500 offices in 126 countries. It is a WPP company (NASDAQ: WPPGY). Source: Ogilvy & Mather,Guosen Securities (HK)
3.3 Vertical integration completed
Huiyuan completed the acquisition of a 100% stake in China Huiyuan Industrial Holding
Limited (CHI) from the Chairman Zhu Xinli on 21 October 2013 for HK$4,939m (the
consideration was settled by the issue of 447.3m new shares at HK$3.1 each, 655.3m
convertible preference shares at HK$3.1 each and the assumption of HK$1,521m in
debt). Based on net profit of HK$449m in 2012, CHI is valued at around 11x historical PE.
CHI is principally engaged in the production of fruit juice concentrates and purees and
external packaging material for the juice beverage industry. It offers a wide range of fruit
juice concentrates and purees including apple, strawberry, hawthorn, pear, peach and
other various types of fruit primarily selling in China. It comprises 15 companies, of which
13 are strategically located in China. At the end o 2012, it has an annual designed
production capacity of 380,000 tons of fruit juice concentrates and purees and
3,200million PET bottles.
Following the acquisition, Huiyuan has gained access to major suppliers who are
individual fresh fruit farmers. CHI has annual supply agreements with agents which
procure fresh fruits from a total of about 1.15m farmers and 251 cooperatives covering
total fruit plantation area of 6m acres mostly within close proximity to Huiyuan’s
production bases.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Table 3:Production facilities of fruit juice concentrates and purees
Location Designed capacity
Production lines
Types of fruits processed
Shunping,Hebei 56,000 3 Peaches; apples; pears;strawberries
Wanrong,Shanxi
72,000 3 Apples; pears; peach;purees
Miyun,Beijing
81,000 2 Peaches; hawthorns;pears; strawberries
Leling,Shandong
24,000 1 Dates; peaches
Youyu,Shanxi
4,000 1 Sea buckthorns
Dangshan,Anhui
24,000 2 Pears; peaches
Pingyi,Shandong
36,000 3 Peaches; apples
Hengshui,Hebei
49,000 2 Peaches; apples
Yangling,Shaanxi
24,000 1 Kiwi fruits; pears;
Longhua,Hebei
10,000 1 Hawthorns
Total 380,000 19 Source:Company data,Guosen Securities (HK)
Table 4:Production facilities of PET bottles
Production facility Location Tai’an Huiyuan Food & Beverage
Tai’an,
Beijing Huiyuan Group Wanrong
Wanrong,
Total Design capacity Production lines Products 2,600
28 PET bottles
600
6 PET bottles
3,200
34 Source:Company data,Guosen Securities (HK)
Huiyuan is the largest customer of CHI which accounted for 79.4% of CHI’s RMB1.39b
revenue or 78.4% of CHI’s RMB318.6m gross profit in 2012. At the same time, CHI is
also one of the major suppliers of Huiyuan. In 2012, CHI accounted for 50% of
purchasing cost and 39% of sales cost of Huiyuan. As a result, Huiyuan’s successful
acquisition of CHI will help improve transparency of the company and save substantial
cost which will help improve Huiyuan’s margin significantly.
CHI earned a net profit margin of 28.1% in 2010, 27.7% in 2011 and 25.8% in 2012
compared with 5.3%,8.1% and 0.4% for Huiyuan over the period. In addition, CHI’s net
profit growth was 41.6% from RMB194m in 2010 to RMB275m in 2011 and another 30.1%
to RMB358m in 2012 while Huiyuan’s underlying net profit went down from RMB132.2m
to RMB16.2m over the period. Given CHI’s stronger momentum, there should be positive
impact on Huiyuan’s net margin following the acquisition.
The acquisition was priced at 11x 2012 PE. With reasonable growth for CHI going
forward, the PE would be even lower at below 10x going forward. Comparing with the
14.2-55.8x PE and 6.29% borrowing cost for Huiyuan, the CHI acquisition should be
valued enhancing. Meanwhile, the CHI acquisition will also help Huiyuan to diversify its
revenue base given CHI’s rapid growth in sales to third parties. Third party sales of CHI
increased 113% from RMB45m in 2010 to RMB96m in 2011 and 198% to RMB286m in
2012.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Exhibit 13:The upstream company relies on Huiyuan
1,600,000
Exhibit 14:The most important supplier of Huiyuan
60%
100%
1,400,000
1,200,000
90%
1,000,000
40%
90%
800,000
79%
400,000
200,000
0
2010
2011
Revenue of upstream company
80%
20%
75%
10%
70%
0%
2010
2012
39%
39%
32%
35%
28%
30%
85%
600,000
50%
50%
95%
95%
2011
2012
Purchasing from upstream company/ Total cost of Huiyuan Proportion of sales to Huiyuan
Purchasing from upstream company/ Raw material of Huiyuan Source: Company data,Guosen Securities (HK)
Source: Company data,Guosen Securities (HK)
Table 5:Assumption --How does the merger of upstream affect the GM of Huiyuan
RMB million 2010 Revenue(Huiyuan)
3,708 2011 2012 3,826 3,981
Gross profit(Huiyuan)
1,362 964 1,115
Gross margin(Huiyuan)
36.7% 25.2% 28.0%
Gross profit from Huiyuan(CHI)
236 275 319
Gross profit after merger (Huiyuan)
1,598 1,239 1,434
Gross margin after merger (Huiyuan)
43.1% 32.4% 36.0%
Percentage point increase for GM (Huiyuan)
6.4% 7.2% 8.0% Note:Does not consider third parties sales and assuming the inventory cost is expensed in the period occurred
Source:Company data,Guosen Securities (HK)
3.4 Strengthened management
Performance of Huiyuan has been volatile since its listing in 2007. Excluding
RMB206.8m interest on subscription monies from the IPO and RMB136.1m gain from fair
value change of Convertible Bonds), the company reported a 34% surge in underlying
earnings to RMB297.4m in 2007. It reported net profit of RMB88.9m in 2008,
RMB233.5m in 2009, RMB198.3m in 2010, RMB310.5m in 2011 and RMB16.6m in 2012.
Excluding gains/losses from fair value change of Convertible Bonds, underlying earnings
plunged 33.2% to RMB198.6m in 2008, turned to underlying losses of RMB167.1m in
2009, back to underlying earnings of RMB132.4m in 2010, turned to underlying losses of
RMB30.1m in 2011 and back to underlying earnings of RMB5.4m in 2012. In addition,
Huiyuan reported Government Subsidy Income of RMB16.8m, RMB108.2m,
RMB200.5m and RMB250.8m from 2009-12.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 In our view, the volatility of underlying earnings was mainly due to the surge in selling and
marketing expenses as well as administrative expenses resulting from continuous
restructuring of its sales and marketing systems. In the past few years, management had
put in place marketing headquarter system, large district system, sales subsidiaries
system, etc.
It also introduced various sales models. In 2006, management launched the project
department system. However, this caused unexpected internal competition. In 2008, the
market contracting system was launched where sales personnel were changed to small
distributors. However, this caused massive layoffs. In 2010, market organization system
was formed with factory marketing districts, provincial districts and direct sales
companies.
As a result, selling and marketing expenses surged from RMB603.6m in 2008 to
RMB1,044.5m in 2010. While selling and marketing expenses came down in 2011 and
2012, they remained high at RMB933.9m and RMB980.6m respectively. Despite the rise
in revenues, selling and marketing expenses as a % of sales was still high at 24.6% in
2012. Meanwhile, administrative expenses jumped 69% from RMB164.3m in 2008 to
RMB277.8m in 2012 (accounted for 7% of sales).
Exhibit 15:Selling and marketing expenses ratio decline since 2008
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Huiyuan
Tingyi
Uni‐president
Vitasoy Int'l
Source:Company data,wind,Guosen Securities (HK)
To address the issues, the company appointed Daniel Saw as new CEO of the company
in July 2013. Mr. Saw has extensive sales and marketing experience in the food and
beverage industry with a strong track record of leading and developing successful food
businesses in Greater China and across Asia Pacific. More importantly, the appointment
indicates the determination of Chairman Zhu Xinli to turn around the company as it is the
first time for him to delegate his management duties to a professional manager.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Table 6:New manager
Daniel Saw Introduction Mr. Saw, aged 54, has over 30 years of experience in sales and marketing in the food and beverage industry with a strong track record of leading and developing successful food businesses in Greater China and across Asia Pacific. Before joining the Company, Mr. Saw was the President of Asia at Campbell Soup Company, New York Stock Exchange listed company. In this role, he was primarily responsible for overseeing its business in Asia, including Greater China. Previously, he served as the Chief Executive Officer and a member of the board of Lee Kum Kee Sauce Group from 2009 to 2012. Prior to that, he was President of the company’s China Region. During a career spanning more than 30 years, Mr. Saw has held a range of senior leadership and sales and marketing positions with Philip Morris International, Kraft Foods International and Cadbury Schweppes in Greater China, South East Asia, Australia and the Pacific Region.
Source:Company annual report,Guosen Securities (HK)
While it is too early to conclude, we believe Mr. Saw will aggressively revamp the existing
sales system in order to increase sales productivity and lower the ratio of selling and
marketing expenses to sales. One major area that Mr. Saw is likely to focus on is to lift
the revenue per salesman to the industry average. In 2007, revenue per salesman was 5%
higher than the juice industry at RMB677,000. In order to boost the number to facilitate
the sales of the company to Coca-Cola, Huiyuan aggressively cut the number of
salesman by 70.5% from 3,926 in 2007 to 1,160 in 2008. While revenue per salesman
jumped to RMB2.4m in 2008, the sales force was collapsed. Following the cancellation of
the acquisition by Coca-Cola, the company aggressively rebuilt its sales with the number
of salesman surged by more than 10x to 13,036 in 2009 causing the revenue per
salesman to tumble 91% to RMB217,000, substantially lower than the RMB772,000 for
the juice industry. Since then, the company has been adjusting its number of salesman
and revenue per salesman has recovered. However, it has yet achieved an optimal level.
For 2010-12, revenue per salesman ranged from RMB635,000–973,000, approximately
14-25% below the juice industry.
As a result, there should be plenty of room for further improvement in the future. We
expect the number of salesman will continuously be reduced in the next 1-2 years.
Together with sales channel streamlining and efficiency improving, we believe selling and
marketing expenses and administrative expenses will be under control. With sales
steadily growing, the selling and marketing expenses to sales ratio will also be lowered to
a more reasonable level.
Table 7:Per capita sales are expected to rise constantly
RMB000’ 2007
2008
2009
2010 2011
2012
Huiyuan 677 2,431 217 635 992 973 Juice Industry 644 671 772 842 1,160 1,198 Relative to industry % 5%
262%
‐72%
‐25% ‐14%
‐19%
Sales men of Huiyuan 3,926
1,160
13,036
5,843 3,856
4,090
Source:Company data,NBSC,Guosen Securities (HK)
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 4 Financials & valuation
4.1 Revenue and margin
Huiyuan reported a strong earnings recovery in FY1H13. Earnings jumped to RMB114m
compared with a loss of RMB43m in FY1H12. This was mainly due to strong growth in
revenue and significant improvement in margin. Revenue increased 22.1% yoy to
RMB2,063m mainly driven by sharp increase in sales of Nectar (+47.2% yoy) and juice
drink (+53.1% yoy). GPM increased 5.9 percentage points from 24.9% in FY1H12 to 30.8%
in FY1H13 primarily attributable to stronger sales of higher margin products such as 100%
juices and nectars.
We expect to see a stronger FY2H13 due to seasonality. Because of Spring Festival,
Huiyuan normally records higher revenue in the second half than the first half of the year.
For the full year of FY13, we forecast the company to report a 1,235% yoy growth in
underlying earnings to RMB205m driven by a 15.5% growth in revenue and an
improvement in GPM to 31.3%.
Exhibit 16:Revenue growth of Huiyuan from 2009 to 2013
3000
80%
RMB m
2500
60%
2000
40%
1500
20%
1000
0%
500
‐20%
0
‐40%
2009H1 2009H2 2010H1 2010H2 2011H1 2011H2 2012H1 2012H2 2013H1 F2013H2
Revenue of Huiyuan
yoy%
Source:Company data,Guosen Securities (HK)
Going forward, we believe Huiyuan will be able to reap substantial efficiency gain. The
realignment of its sales forces and distribution channels would substantially improve
productivity of its sales. Sales of 100% juice and nectar will continue to be major revenue
drivers. In addition, sales of the newly launched Hawthorn based juice drink will likely
gain momentum. Launched in 2013, Hawthorn based juice drink is estimated to have
generated RMB300m in sales. The introduction of new carbonated juice drink will provide
additional revenue. Meanwhile, the vertical integration of CHI and more disciplined SG&A
expenses should help further margin improvement.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 On this basis, we forecast revenue will increase 31.4% to RMB 6,043m in FY14 and 20%
to RMB 7,255m in FY15 while GPM will also improve to 38.7% and 39.2% respectively.
We forecast the company to report 110% growth in underlying earnings to RMB 430m in
FY14 and 30% to RMB 561m in FY15.
Table 8:Income forecast in 2013-15
2011 2012 2013E 2014E 2015E Total 3,826
3,981
4,600
6,043
7,255
+%
3.2%
4.1%
15.5%
31.4%
20.1%
939
1,108
1,221
1,580
1,933
+%
7.1%
18.0%
10.2%
29.4%
22.4%
Nectars
1,304
1,050
1,457
1,921
2,449
+%
-11.1%
-19.5%
38.8%
31.8%
27.5%
1,041
852
1,059
1,262
1,466
-1.2%
-18.2%
24.3%
19.2%
16.2%
541
971
863
906
951
74.2%
79.3%
-11.2%
5.0%
5.0%
Others
0
0
0
374
455
Gross margin
25.2%
28.0%
31.3%
38.7%
39.2%
Net profit margin 8.1%
0.4%
4.7%
7.1%
7.7%
Revenue / million
100% Juice
Juice drink
+%
Other beverage
+%
Source:Company data,Guosen Securities (HK)
4.2 Financial position
Lower capex. Thanks to the capital raised from IPO, Huiyuan expanded its production
capacity from less than 2 million tons in 2007 to the current 5 million tons which should be
sufficient to meet the company’s need. As a result, capex is likely to be reduced going
forward. We estimate capex in the next 2-3 years will amount to around RMB 3 billion.
Positive free cash flow. Due to heavy capex for expansion, the company recorded
negative cash flow in the past few years. With operating cash flow improving and capex
reducing, we expect the company to see positive cash flow starting in FY13. We estimate
positive operating cash flow of RMB 404m, RMB 191m and RMB 445m for FY13-15.
Proceeds from asset disposals. Since 2013, the company has begun to sell its idle or
inefficient assets. It sold Shanghai Huiyuan for RMB 300 million in June 2013 and HuiFu
for RMB 350 million in August 2013. We expect the company will have more assets for
sales in the coming future.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Recent share placing. Huiyuan raised net proceeds of HK$376.7m from placing of
75,000,000 shares on 11 December 2013. We estimate that net gearing of the company
would have improved to 40% at the end of FY13.
Exhibit 17:Positive free cash flow in future
1,000
500
0
‐500
2008
2009
2010
2011
2012
2013E 2014E 2015E
‐1,000
‐1,500
‐2,000
‐2,500
Source: Company,Guosen Securities (HK)
4.3 Valuation and Rating
Based on our earnings forecast, EPS will be RMB 0.10 in FY13, RMB 0.16 in FY14 and
0.21 in FY15. The stock is trading at PEs of 34.3X in FY13, 21.5X in FY14 and 16.5X in
FY15. Given that Huiyuan is at an early stage of earnings recovery, we believe it
deserves higher valuation multiples than its peers. We initiate our coverage of Huiyuan
with a BUY rating and set our target price for the company at HK$6.70 which is based on
0.5X two-year PEG for FY13-15.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Table 9:Peer comparisons for HK and US listed stocks (2014 forecast)
Stock code Company name
MktCap(HK$ m) Revenue Net Profit PE PS 322 HK
Tingyi
120,300 94,111 4,207 28.6 1.3 220 HK
Uni‐president
27,600 35,830 1,084 25.5 0.8 345 HK
Vitasoy Int'l
11,200 5,110 376 29.8 2.2 151 HK
Want‐want
145,300 35,890 5,951 24.4 4.0 168 HK
Tsingtao brew
93,691 42,380 2,925 32.0 2.2 756 HK
China Tianyi 1,780 1,047 276 6.4 1.7 1219 HK
Tenwow Int'l
7,010 7,576 482 14.5 0.9 1262 HK
Labixiaoxin
6,500 2,905 488 13.3 2.2 2319 HK
Mengniu Dairy
72,600 64,841 2,586 28.1 1.1 DANOY
Danone
44,188 29,433 2,224 19.9 1.5 NSRGY
Nestle
241,640 104,454 12,309 19.6 2.3 Source:Bloomberg (based on share price on 10 Mar. 2014) ,Guosen Securities (HK)
Table 10:Historical valuation of Huiyuan
2012 2011 2010 2009 2008 2007 Ave PE 14.22 29.71 49.86 55.8 15.03 51.68 36.05 PB 0.6 1 1.5 1.77 1.89 5.47 2.04 PS 0.82 1.35 2.44 3.11 3.49 6.32 2.92 Source:Wind,Guosen Securities (HK)
5 Investment risk
Management team. The new CEO and his management team are engineering the
restructuring of the existing sales system in order to increase sales productivity and lower
the selling and marketing expenses to sales ratio. As such, the business turnaround
relies on a stable management team.
Government subsidies. In the past 3 years, Huiyuan received government subsidies of
RMB108m, RMB200m and RMB251m respectively. These are related to 1) local
investment and 2) agricultural related industry. The local investment subsidy
compensates Huiyuan for carrying investment activities such as setting up new
manufacturing factories. This is expected to decline gradually in the future as Huiyuan’s
pace of expansion slows. The subsidy for agricultural related industry should be
sustainable in the future due to government’s policy to support agriculture.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 6 Appendix
Company background. Founded in 1992, Huiyuan is principally engaged in the
production and sale of fruit juice, fruit and vegetable juice and other beverages. Through
20 years development, Huiyuan has become a nationwide recognized juice brand. On
February 23th, 2007, the company was listed on the Hong Kong Stock Exchange.
Table11:Huiyuan development milestones
Time Key Events 1992 Huiyuan was founded in Zibo, Shandong by Zhuxinli 1993 Import concentrated juice equipment from Germany and export AJC 1994 Headquarters to Beijing and started to explore domestic market 1995 Launching 250ml 100% juice 1996 Launching 1L family pack series 1997 Using advertising slogan "喝汇源果汁,走健康之路" 1998 Start capacity expansion national‐wide 1999 Being top 10 Chinese beverage companies 2000 Establish eight marketing area, build up national marketing network 2001 First to import aseptic cold filling line of PET bottle Deron invest in Huiyuan and hold 51% shares 2002 "Huiyuan" was identified as Chinese famous brand 2003 Be the first one got the certification from CSBC; Cooperated with IN ZONE
Deron quit 2005 Uni‐President got a stake in Huiyuan 2006 Danone invest in Huiyuan, holding 22.98% 2007 Listed in Hong Kong Stock Exchange 2008 Second December, issued a joint announcement with Coca‐Cola for the acquisition 2009 18 March, acquisition case was rejected by Ministry of commerce 2010 SAIF took all the holdings from Danone 2013 4.939 billion HK$ purchasing upstream business; sell Huiyuan Shanghai and HuiFu th
Source:Company data, Guosen Securities (HK)
Table 12:Management profile
Name Position Introduction ZHU Xinli
chairman
He has 33 years’ experience in enterprise operation and management, with over 22 years’ experience in juice and beverage industry. He received the Award for Prominent Contribution to Chinese Beverage Industry in 2003 JIANG Xu
executive director He has 16 years’ experience in juice and beverage production, sales and marketing. Since joining us in March 1997, he had held various positions. He was appointed as a director of the Board in September 2006. LEE vice Wen‐chieh president He holds a Master degree in Business Administration. He has 22 years’ experience in sales, marketing and operation in beverage industry. Before joining the Group in November 2009, he worked with Uni‐President Enterprises Corporation from 1985 to 2005 Source:Company annual report,Guosen Securities (HK)
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Exhibit 18:Shareholding structure
Huiyuan
Juice
Zhu Xinli (55.32%)
SAIF III GP Capital Ltd.
(16.87%)
Others
(27.81%)
Note:Before conversion of any of the Convertible Preference Shares, assuming the options granted under
the Share Option Schemes are not exercised and the Convertible Bonds are not converted
Source:Company data,Guosen Securities (HK)
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Financial Summary
ofit & Loss (RMB m)
2011A 2012A 2013F 2014F 2015F
100% Juice
939 Nectar
Juice Drink
Financial Ratios
2011A
2012A
2013F
2014F
2015F
Revenue growth (%)
3.2% 1,304 1,050 1,457 1,921 2,449 Operating profit growth (%)
‐92.9% 1553.7% 94.5% 81.1% 21.7%
1,041 852 1,059 1,262 1,466 Reported profit growth (%)
56.6% ‐94.8% 1235.0% 99.3% 30.4%
1,108 1,221 1,580 1,933 4.1% 15.5% 31.4% 20.1%
Water and other beverage products 541 971 863 906 951 Underlying profit growth (%)
Others
0 0 0 374 455 Underlying EPS growth (%)
56.6% ‐94.8% 1032.0% 73.7% 30.4%
Revenue
3,826 3,981 4,600 6,043 7,255 Diluted EPS growth (%)
‐99.8% ‐50.3% 828.4% 59.5% 30.4%
Cost of sales
‐2,861 ‐2,866 ‐3,159 ‐3,703 ‐4,411
Dividend growth (%)
NA NA NA NA NA Gross profit
964 1,115 1,441 2,340 2,844 Dividend payout (%)
0.0% 0.0% 0.0% 0.0% 0.0% Other net income
256 351 Gross profit margin (%)
25.2% 28.0% 31.3% 38.7% 39.2%
SG&A expenses
‐1,208 ‐1,258 ‐1,564 ‐1,858 ‐2,183
Operating profit margin (%)
0.3% 5.2% 8.8% Operating profit
13 208 404 732 891 Underlying profit margin (%)
Finance costs
113 15 37 22 22 ROE (%)
5.9% 0.3% 2.6% 4.8% 5.9% Finance expenses
‐110 ‐231 ‐198 ‐302 ‐323 ROA (%)
2.9% 0.2% 1.3% 2.4% 3.0% Associates & JCE
0 ‐1 ‐2 0 0 Others
341 11 11 0 0 Net debt/equity (%)
42.0% 46.6% 40.0% 38.3% 33.7%
Profit before taxation
356 2 252 453 590 Net debt/total assets (%)
21.0% 23.3% 20.0% 19.2% 16.9%
Taxation
‐45 15 ‐37 ‐23 ‐30 Current ratio (%)
69.3% 96.2% 130.8% 143.7% 156.8%
Non-controlling interests
0 0 0 0 0 Interest cover (x)
6 3 5 3 4 Net profit
310 16 216 430 561 Dividend cover (x)
NA NA NA NA NA 527 250 230 Balance Sheet (RMB m)
2011A 2012A 2013F 2014F 2015F
Cash Flows (RMB m)
2011A
2012A
2013F
12.1% 12.3%
2014F
2015F
Fixed assets
6,762 6,772 7,959 7,778 7,586 Operating profit
13 208 404 732 891 Associates & JCE
10 14 14 Depreciation & amortization
333 398 530 549 559 Others
573 705 2,602 2,584 2,567 Net Interest
‐8 216 ‐160 ‐279 ‐300 Non-current assets
7,345 7,491 10,575 10,376 10,167
Others
‐250 10 0 0 0 Inventories
1,150 1,605 1,817 2,130 2,538 Change in working capital
39 ‐132 ‐198 ‐302 ‐323 Debtors & prepayments
1,166 1,426 2,016 2,649 3,180 Tax paid
‐76 ‐41 ‐37 ‐23 ‐30 Restricted cash
109 116 116 Operating activities
cash & cash equivalents
277 521 1,123 1,105 1,325 Purchase of non-current assets
259 142 614 332 570 Current assets
2,701 3,668 5,073 6,000 7,159 Disposal of non-current assets
‐769 ‐465 ‐350 ‐350 ‐350 Bank & other borrowings
2,441 1,808 2,097 2,097 2,097 Associates & JCE (net)
0 0 0 0 0 Trade & payables
1,384 1,957 1,731 2,029 2,417 Interest received
‐10 ‐35 0 0 0 Others
75 Dividends received
6 13 11 22 22 Current liabilities
3,900 3,815 3,878 4,176 4,564 Investing activities
0 0 0 0 0 Bank & other borrowings
53 1,175 2,411 2,411 2,411 New loans raised
‐729 ‐367 ‐323 ‐350 ‐350 Convertible bonds
725 779 779 779 779 Repayment of loans
1,801 5,048 0 0 0 Others
92 104 128 128 128 Dividends paid
‐1,613 ‐4,580 0 0 0 Non-current liabilities
870 2,058 3,318 3,318 3,318 Others
‐49 0 0 0 0 Net assets
5,276 5,286 8,452 8,882 9,443 Financing activities
420 0 0 0 0 Share capital
0.115 0.115 0.189 0.189 0.189 559 468 297 0 0 Premium & reserves
5,276 5,286 8,452 8,882 9,443 Inc/(dec) in cash
89 243 587 ‐18 220 Shareholders' funds
5,276 5,286 8,452 8,882 9,443 Cash at beginning of year
192 277 536 1,123 1,105 Non-controlling interests
0 Foreign exchange effect
‐4 1 0 0 Total equity
5,276 5,286 8,452 8,882 9,443 Cash at end of year
277 521 1,123 1,105 1,325 51 0 14 116 51 51 0 0 14 116 51 0 0 Source: Guosen Securities (HK)
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 Information Disclosures
Stock ratings, sector ratings and related definitions
Stock Ratings:
Buy: A return potential of 10 % or more relative to overall market within 6 – 12 months.
Neutral: A return potential ranging from -10% to 10% relative to overall market within 6 – 12 months.
Sell: A negative return of 10% or more relative to overall market within 6 –12 months.
Sector Ratings:
Overweight: The sector will outperform the overall market by 10% or higher within 6 –12 months.
Neutral: The sector performance will range from -10% to 10% relative to overall market within 6 –12 months.
Underweight: The sector will underperform the overall market by 10% or lower within 6 – 12 months.
Interest disclosure statement
The analyst is licensed by the Hong Kong Securities and Futures Commission. Neither the analyst nor his/her associates serves as an
officer of the listed companies covered in this report and has no financial interests in the companies.
Guosen Securities (HK) (HK) Brokerage Co., Ltd. and its associated companies (collectively “Guosen Securities (HK) (HK)”) has no
disclosable financial interests (including securities holding) or make a market in the securities in respect of the listed companies. Guosen
Securities (HK) (HK) has no investment banking relationship within the past 12 months, to the listed companies. Guosen Securities (HK)
(HK) has no individual employed by the listed companies.
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汇源果汁 (1886.HK) 2014 年 3 月 12 日| 中国大陆及香港地区 信息披露 公司评级、行业评级及相关定义 公司评级 买入:我们预计未来 6-12 个月内,个股相对大盘涨幅在 10%以上;
中性:我们预计未来 6-12 个月内,个股相对大盘涨幅介于-10%与 10%之间;
减持:我们预计未来 6-12 个月内,个股相对大盘跌幅大于 10%。
行业评级 超配:我们预计未来 6-12 个月内,行业整体回报高于市场整体水平 10%以上;
中性:我们预计未来 6-12 个月内,行业整体回报介于市场整体水平-10%与 10%之间;
低配:我们预计未来 6-12 个月内,行业整体回报低于市场整体水平 10%以上。
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