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Consumer Discretionary Sector - CGS-CIMB Research 2018-09-13: CGS-CIMB’s Consumer Day Wrap-Up

Consumer Discretionary Sector | SGinvestors.io THAI BEVERAGE PUBLIC CO LTD SGX:Y92 SHENG SIONG GROUP LTD SGX:OV8 MM2 ASIA LTD. SGX:1B0 SILVERLAKE AXIS LTD SGX:5CP

Consumer Discretionary Sector - CGS-CIMB’s Consumer Day Wrap-Up

  • At our Consumer Day held on 11 Sep, we hosted 11 companies (7 we cover, 4 non-rated) within the consumer staples, e-commerce and media/tech space. The event was attended by 101 buy-side analysts and fund managers.
  • Consumer staples names (Sheng Siong and Thai Beverage) received the most investor attention; e-commerce names also piqued investor interest.
  • Within the media and tech stocks, we hosted mm2 Asia, Silverlake and Spackman.
  • Overall, investors were positive on domestic supermarket plays and interested in learning about the key value propositions of the e-commerce companies.



Consumer staples: steady supermarket dynamics

  • Sheng Siong Group (SGX:OV8) guided that FY18 will be a record year, with eight stores opening, and anticipates a healthy Singapore supermarket open tender pipeline over the next three years.
  • Thai Beverage (SGX:Y92)’s focus is on rebranding and rejigging the procurement processes of SABECO whilst it waits for the consumption conundrum in Thailand to abate.
  • Japfa (SGX:UD2) sees sustainable Vietnam swine prices post supply rundown during the last swine demand slowdown.
  • Fraser & Neave FNN (SGX:F99) aims to increase its stake in Vinamilk given the latter’s robust growth prospects whilst preserving its existing beverage and dairy business.


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Embracing the rise of e-commerce in Asia Pacific

  • Y Venture Group (SGX:1F1) reiterated its optimism that its upcoming AORA platform will allow it to ride the growing cross-border purchases segment in Asia for growth.
  • Synagie (SGX:V2Y) expressed confidence of a turnaround in the near term as it continues to ramp up its e-commerce and Insurtech businesses.
  • ShopBack shared interesting insights on growing digital ad spend by e-commerce merchants and other non-e-commerce brands in efforts to drive online consumer purchases and user re-engagement on mobile websites and apps, respectively.


Media – growing popularity of Asian movies

  • mm2 Asia (SGX:1B0) attributes its recent share price weakness to possible uncertainty over China’s tax evasion crackdown on the country’s TV and movie industries, a longer turnaround in its cinema operations and focus shifting towards Vividthree’s potential listing. Investors view its current valuation (9x 12M forward P/E) as attractive given the group’s prospects but may prefer to await the emergence of stronger catalysts.
  • A proxy for Korean entertainment, Spackman Entertainment (SGX:40E) returned to profitability and net cash position in FY17.


Maintain Overweight on consumer sector

  • We stay sector Overweight. 
  • Catalysts are
    1. better-than-expected GDP growth rate in 2018F which could spur retail consumption and
    2. higher earnings growth momentum from consumer staple companies.
  • Downside risks to our sector call are the vice-versa.


Sector top picks

  • Our top picks for the consumer sector are Sheng Siong and Synagie
  • We like Sheng Siong’s stalwart supermarket business; its new store pipeline should help drive revenue growth in FY19F. Within the e-commerce space, we prefer Synagie as we believe its Insurtech business will catalyse near-term sales growth.
  • Meanwhile, we are positive on Silverlake’s strong order book, which we believe will support 11-50% EPS growth in FY19-20F.


Key highlights from participating companies



See report attached for details. 




Cezzane SEE CGS-CIMB Research | Colin TAN CGS-CIMB Research | https://research.itradecimb.com/ 2018-09-13
SGX Stock Analyst Report ADD Maintain ADD 0.880 Same 0.880
ADD Maintain ADD 1.250 Same 1.250
ADD Maintain ADD 0.720 Same 0.720
ADD Maintain ADD 0.560 Same 0.560



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