Consumers Sector

Re: Consumers Sector

Postby winston » Mon Feb 21, 2011 9:50 am

China Consumer

DJ MARKET TALK: UOBKH Prefers High-End China Consumer Sector

0921 [Dow Jones] After an average of more than 40% rally in 1Q10-3Q10, UOB KayHian says share prices of most Chinese consumer stocks under its coverage have dropped 10%-20% from 4Q10 on the worry of further monetary tightening amid escalating inflation.

"We found a divergence in fortune in China's consumer sector over the last quarter, with resilience in luxury retailing and consumer staples and lacklustre performance in sportswear, apparel and food & beverage."

It notes, while retailers of luxury and necessities continued to enjoy rapid growth, consumer discretionary showed signs of slowing earnings momentum, with margins and sales affected by escalating inflation.

The house prefers high-end segment in China, as the upper class remains the primary beneficiary of economic growth and the last to be affected by austerity measures.

Its top picks include Hengdeli (3389.HK), Luk Fook (0590.HK) and Emperor Watch & Jewellery (0887.HK).

Hengdeli shares ended down 0.7% at HK$4.46 Friday, Luk Fook added 1.3% to HK$23.70 and Emperor Watch rose 0.6% to HK$1.09.

Source: Dow Jones Newswire
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Re: Consumers Sector

Postby winston » Mon Mar 21, 2011 11:22 am

China Consumer Sector

PE of 20 is a buy ?

DJ MARKET TALK: Accumulate China Consumer Stocks On Weakness - UOB

1049 [Dow Jones] UOB KayHian tips accumulating China consumer-sector stocks on weakness, keeping an Overweight call.

The house notes sector plays dropped around 10% on average over the past week, after the Japanese earthquake, with the department store sector, supermarket sector and food & beverage sector's share prices falling 22.6%, 24.1% and 27.2% respectively from their one-year highs.

"We believe (China) consumer stocks are oversold due to the Japan earthquake and it is expected that consumer stocks will rebound soon."

It notes the department store sector is at 20X FY11 P/E, 22.6% below the one-year high, while the supermarket sector is at 21.7X FY11 P/E, 24.1% below the one-year high.

It believes moderate inflation will benefit supermarket operators, such as Lianhua Supermarket (0980.HK), Wumart (8277.HK) and China Resources Enterprise (0291.HK).

Wumart rises 1.2% to HK$15.40, Lianhua Supermarket eases 0.3% to HK$30.85, while China Resources Enterprise adds 0.5% to HK$29.25.


Source: Dow Jones Newswire
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Re: Consumers Sector

Postby winston » Sat Apr 30, 2011 12:40 pm

Consumer Staples

Why This Safe-Haven Sector is No Longer Safe By Frank Curzio

After months of rising commodity prices, the "big name" consumer staples rally is ready to fizzle...

Consumer staples have long been considered a "safe haven" sector... an area investors can flock to when they get worried about the economy or the general health of the stock market.

"Staples" are products that consumers can't live without. Proctor & Gamble, Colgate-Palmolive, Kimberly Clark, and Coca-Cola are considered staple stocks. They make diapers, detergent, toothpaste, tissue paper, and soda.

These companies are usually slow growers... But they have steady cash flows and pay dividends of about 3%. More important, these companies typically have "pricing power." That means they have an easier time passing off higher raw-material costs to consumers during inflationary times.

Staples tend to outperform the S&P 500 during bear markets. With deficits surging and stocks getting expensive after a huge two-year rally, investors have been moving into these stocks and pushing the price of many of them higher. I suggest thinking twice before piling in right now.

You see, commodity costs have soared over the past 45 days. The prices of wheat, corn, and oats are up more than 20%. Gasoline prices are up more than 10%. Oil prices have climbed past $110 per barrel.

Under normal circumstance – or mild inflation – companies like Proctor & Gamble and Kimberly-Clark can simply raise prices to offset higher raw-material costs. But these are not normal times. Commodity prices are moving up so fast, margins for most companies in this sector are beginning to contract.

For example... last week, Kimberly-Clark said, "The rapid run-up in commodity costs has influenced our near-term profitability and a number of our businesses will be raising selling prices." The company reported a 9% decrease in first-quarter sales. Also, management said its costs for key raw materials would be roughly $500 million in 2011 – more than double the original estimates.

On Monday, Proctor & Gamble said it's raising prices on Pampers diapers by 7%. It will also increase prices on its Charmin and Bounty paper brands by 5%. Coca-Cola is raising prices on its beverages by up to 15%.

In January, Colgate-Palmolive said it would raise prices by 2% to account for higher commodity costs. There is no way Colgate can meet earnings estimates by raising its prices by 2% – when raw material costs are up 20% in less than two months.

These companies must raise prices by a huge amount to maintain margins. My question is ... How much can these companies raise costs before consumers switch to cheaper brands?

Are consumers going to pay more than $40 for Pampers when BJ's Wholesale is selling its brand of diapers for $25? Will consumers pay $5 for a box of Frosted Flakes... or buy the generic cereal for almost half the price?

My point is consumer staples don't have pricing power right now. In other words, consumers are not paying up for brand name products. Wages and job openings are still weak. People don't have enough money to splurge on brands like they did in 2007. This is why discount stores like Dollar Tree, 99 Cents Only Stores, and Dollar General are at 52-week highs. Business is booming for the companies that sell cheaper brands.

I'd be careful buying consumer staples as a safe-haven investment. Sure, their dividends are attractive in a zero-interest rate environment. But these yields are meaningless if these stocks decline 10%-20%.

If you're focused on safety right now, I recommend simply heading for the sidelines and waiting in cash.

http://www.growthstockwire.com/2708/Why ... onger-Safe
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Re: Consumers Sector

Postby winston » Mon May 23, 2011 1:41 pm

China

DJ MARKET TALK:UOB Prefers China Retailer Segment Over F&B Firms


1303 [Dow Jones] China's F&B sector is trading at 22.8X FY11 P/E and 18.1X FY12 P/E, in line with that of department store and supermarket segments, says UOB KayHian; it adds that leading F&B producers are trading at more than 27X FY11 P/E - Tingyi (0322.HK) at 32.0X, Want Want China (0151.HK) 28.3X, and Tsingtao Brewery (0168.HK)27.8X.

Based on similar valuations, "we prefer the retail segment which has lower risks (low food safety risk, low inventory risk, low cost pressures)."

The house adds that leading F&B firms are reducing their product weighting through re-packaging while maintaining the ASP, such as some RTD tea products have been downsized from 500ml per bottle to 450ml per bottle, but expects that re-packaging can only partially offset the cost pressure.

Source: Dow Jones Newswire
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Re: Consumers Sector

Postby winston » Sat Jul 02, 2011 8:58 am

Consumer Discretionary Getting Close to a Bull Market High

Don't look now, but the Consumer Discretionary sector is less than 10 basis points away from its bull market closing high reached on May 12th.

With a gain of 8.3% since June 16th, Consumer Discretionary has definitely led the overall market higher during the current run.

As shown in the second chart below, Consumer Discretionary is the closest to its bull market closing high out of all ten sectors at -0.09%.

With the way the market is moving today, the sector could easily close at a new bull market high. The S&P 500 as a whole is now just 2.27% from its bull market closing high.

http://www.bespokeinvest.com/thinkbig/2 ... -high.html
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Re: Consumers Sector

Postby winston » Sat Jul 16, 2011 5:22 am

"Made in China" or "Made in Italy" ? :lol: :lol: :lol:


Chinese store under fire over 'fake' imports

A Chinese retailer is being investigated over claims it passed off locally-made furniture as high-end Italian imports by shipping it back into the country to get import documents.

Da Vinci is alleged to have charged thousands of dollars for furniture labelled as imported -- even though it was actually manufactured in eastern China.

It denies the charge, but hundreds of furious customers have demanded refunds after state broadcaster CCTV first made the allegations in an expose of practices at the company, which is now facing an official probe.

State news agency Xinhua said that in the first half of this year, Da Vinci brought 11 batches of furniture that was made in China back into the country through Shanghai, citing local customs officials.

The manufacturers shipped the products to a special trade zone in the city where they were purchased by Da Vinci, along with import documents, the report said.

The Shanghai Administration for Industry and Commerce told AFP it was probing claims Da Vinci misled consumers about where its products were made, and would fine the company if it was found guilty.

"We will order Da Vinci to stop selling the relevant products and fine the company if detailed testing reports, which will be released very soon, confirm the initial findings," spokesman Xu Shang said.

The official investigation had already discovered products on sale for many times their true value, Xu said, including a 92,800 yuan ($14,300) bedstand sold as solid wood but actually made of fibre board.

Da Vinci officials declined to comment to AFP, but in a statement earlier this week, it insisted all its Italian brands were made in Italy.

The company has stores in major cities, including Beijing and Shanghai, that cater to the growing ranks of China's rich.

Source: AFP Asian Edition
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Re: Consumers Sector

Postby winston » Wed Aug 17, 2011 6:38 am

China inflation heats up cup noodles
Wednesday, August 17, 2011

Instant noodles makers Tingyi (0322) and Uni-President China Holdings (0220) have raised the prices of some of their cup noodle products to compensate for accelerating costs.

Tingyi, which owns the Master Kong brand, said it had increased prices on some of its cup noodles to distributors by 4.79 percent, effective August 1, while prices to large supermarket chains remain unchanged.

"The increase was to address rising costs in raw materials and labor," a Tingyi spokesperson said.

The move was followed by smaller rival Uni-President China. A spokesman said it had boosted retail prices for some of its cup noodles by 30 fen (36.6 HK cents) - a rise of 8.6 percent.

Accelerating inflation in the mainland has prompted multi-national companies, including McDonald's and Starbucks, to raise prices.

China's average inflation rate is likely to climb in the third quarter to 6.2 percent from 5.7 percent in the previous quarter, a state think tank forecast yesterday, warning that food price pressures will persist.

Source: REUTERS
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Re: Consumers Sector

Postby winston » Thu Sep 15, 2011 1:40 pm

DJ MARKET TALK: Deutsche Bank Neutral On HK/China Consumer Space

1318 [Dow Jones] Deutsche Bank says it's neutral on the HK/China consumer space, as the overall 1H11 results in the sector, were broadly inline with its expectations.

"By sector, discretionaries and HK retailers have been doing well, while staples were generally weak."

Investors' major concern currently is whether a macro slowdown will affect China's domestic consumption, but it notes that so far, most retailers/brands have said they do not see any major slowdown in domestic consumption in China, though there is some softness in tier-1 cities.

For the rest of 2011, it recommends a more balanced portfolio between discretionaries/staples (vs 1H11 overweighting of discretionaries) with trading liquidity and a healthy balance sheet as two of the additional criteria in stock picking.

Of the 32 stocks in the sector under its coverage, its three top picks are China Mengniu (2319.HK), Hengan (1044.HK) and Belle (1880.HK).

Mengniu loses 0.6% to HK$26.60 at midday, Hengan adds 1.2% to HK$65.55 and Belle drops 1.4% to HK$13.90.

Source: Dow Jones Newswire
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Re: Consumers Sector

Postby winston » Mon Sep 19, 2011 1:58 pm

not vested

China Applicance Makers

DJ MARKET TALK: China Appliance Makers Down; Subsidies To End-Report

1337 [Dow Jones] HK-listed China home appliance companies are sharply lower after the state-run Securities Daily reported over the weekend, citing a notice from three government bodies, that China will withdraw a stimulus package subsidizing rural residents' household appliance purchases, in place since December 2007.

"The suspension of government subsidy will surely affect the sales growth of these companies, so I think the shares are reacting to the news report," says Tanrich's investment manager Jackson Wong.

But he adds, further downside in the sector shares may be limited, as sales of white goods, for instance, are expected to be stable given constant demand in line with residential property units.

Within the sector, Haier (1169.HK) is the worst-performing, down 22.1% at HK$5.44, Skyworth (0751.HK) is down 10.0% at HK$3.61, Hisense Kelon (0921.HK) drops 5.9% to HK$1.75 and TCL Multimedia (1070.HK) loses 6.2% to HK$2.44.

Source: Dow Jones Newswire
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Re: Consumers Sector

Postby winston » Mon Oct 10, 2011 2:00 pm

not vested

DJ MARKET TALK: China Consumption Growth Has Begun To Moderate - GS

1302 [Dow Jones] Goldman Sachs says China consumption growth has begun to moderate after an exceptionally robust 1H11.

The Golden Week (Oct. 1-7) sales growth of 17.5% on-year is lower than the 19.7% growth delivered during the 3-day Labor Day long weekend in May and 19% growth during the Chinese New Year in February.

"We believe the recent steep share price drop indicates a high degree of concern for a 2008/2009-type slowdown to re-occur in the next 12 months."

While the house expects more moderation in growth, it doesn't think such slowdown will be as sharp as in 2008/09. It notes value has emerged in the sector, as valuation has corrected to 16X forward P/E, the lowest level since March 2009 and more importantly, now at par with the U.S. retail average P/E over the last 20 years.

Its top Buy picks are Belle (1880.HK), Sun Art (6808.HK), Intime (1833.HK) and Maoye (0848.HK).

Belle rises 0.1% to HK$14.00 at midday and Maoye gains 4.7% to HK$1.80.

Source: Dow Jones Newswire
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