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.


~ SGinvestors.io ~ Where SG investors share

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



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......