JPM-0702-China Consumer What's in Store For 2H

Asia Pacific Equity Research
02 July 2012
China Consumer
What's in store for 2H?
China, Hong Kong, Singapore,

Luxembourg
Consumer
Ebru Sener Kurumlu
AC
(852) 2800-8521
ebru.sener@jpmorgan.com
J.P. Morgan Securities (Asia Pacific) Limited
Jessica Hong
AC
(852) 2800-8559
jessica.ch.hong@jpmorgan.com
J.P. Morgan Securities (Asia Pacific) Limited
Kshitij Gupta
(91-22) 6157-3283
kshitij.x.gupta@jpmorgan.com
J.P. Morgan India Private Limited
8%
14%
15%
19%
15%
6%
9%
19%
11%
20%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
22%
Retailers SSSG (excluding sportswear)
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
1H11
2H11
1Q12
Following a weak 1Q and stable 2Q, retailers sales performance is

generally tracking in line with our estimates, but it is unlikely to reach
corporates expectations of a rebound in 2H. While we do not see a big
risk to our sales estimates, cost pressure could be slightly worse than we
thought, and we lower our 2012 earnings estimates for the discretionary
space on average by 5% to account for this. On the staples front we are
not making across-the-board changes to estimates but have some stockspecific revisions. We do expect 1H results to be weak for the retail space
and 3Q SSSG to not show a big recovery, but these are all well flagged by
now and in the price, in our view. We do not expect further negative news
on the retail front and believe 4Q12 and 1Q13 will show a sequential
improvement. We reiterate our view that discretionary space at 12x 1-yr
forward P/E is compelling. Staples valuations look stretched; the space is
trading at 20x 1-yr forward P/E with high expectations built into earnings.
Retailers earnings lowered on cost pressures: SSSG for discretionary
stabilized at a high-single-digit rate in 2Q. Based on recent activity on
the ground, 3Q is not like to show a strong recovery. This is no surprise
to us, as we have already been building in conservative sales estimates
for 2H. However we think cost pressures could be slightly worse than we
thought and hence cut our earnings estimates by 5% on average.
Retailers top picks: We focus on companies offering strong, sustainable
long-term growth. Our top picks among department stores are Golden
Eagle and Lifestyle (upgraded to OW). Among apparel and shoe retailers
our top picks are Belle, Trinity, and I.T. Limited. We continue to be
cautious on the sportswear sector, Parkson and Ports Design.
In staples, stock-selective earnings revisions: In the staples universe
we keep most of our estimates unchanged. However, we increase our
Want Want earnings estimates by 10% to account for lower-thanexpected milk powder prices, and we lower our Ajisen, Mengniu and
Tibet Water earnings estimates by 50%, 7% and 21%.
Staples top picks: Given stretched valuations we remain cautious on
staples and have an UW rating on Hengan, Tsingtao, UPC, and Yurun.
Our top picks in the space are China Foods and Mengniu. On Mengniu in
the short term, sentiment is likely to be weak as the company will see a
23% decline in 1H12 net profit, based on our estimates. We see shortterm share price weakness as a buying opportunity, as a key attraction of
Mengniu is its multi-year margin expansion potential driven by product
mix improvement. We rate China Foods OW as we are positive on the
margin improvement on the back of product mix upgrades in the wine
division. Further earnings upside in 2013 could come from potential
acquisitions the company is looking into areas such as Chinese white
wine (Baiju), and seasoning and spices products.
Source: J.P. Morgan estimates Company data.
See page 158 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.morganmarkets.com

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Equity Ratings and Price Targets

Company
Ajisen China Holdings Ltd
Anta Sports Products Ltd.
Belle International Holdings Ltd.
Cafe de Coral Holdings Ltd
China Foods Ltd
China Lilang Ltd.
China Mengniu Dairy Co. Ltd.
China Resources Enterprise
China Yurun Food Group
Chow Tai Fook Jewellery Company Ltd.
Dairy Farm International Holdings Limited
Giordano
Golden Eagle Retail Group Ltd
Hengan International Group Ltd
I.T Ltd.
L'Occitane International SA
Li Ning Co Ltd
Lifestyle International Holdings
Parkson Retail Group Ltd
Ports Design
Sa Sa International Holdings Limited
Tibet 5100 Water Resources Holdings Ltd
Tingyi (Cayman Islands) Holding Corp
Tsingtao Brewery - A
Trinity Limited
Uni-President China Holdings Ltd
Want Want China Holdings Ltd
Xtep International Holdings Limited
Symbol
0538.HK
2020.HK
1880.HK
0341.HK
0506.HK
1234.HK
2319.HK
0291.HK
1068.HK
1929.HK
DAIR.SI
0709.HK
3308.HK
1044.HK
0999.HK
0973.HK
2331.HK
1212.HK
3368.HK
0589.HK
0178.HK
1115.HK
0322.HK
600600.SS
0891.HK
0220.HK
0151.HK
1368.HK
Mkt Cap
($ mn)
737.55
1,504.39
14,261.59
1,519.90
2,740.79
818.64
4,636.24
7,098.80
1,585.56
12,370.50
14,339.12
1,084.57
3,938.38
11,870.88
530.25
4,064.03
590.56
3,629.77
2,484.60
586.60
1,762.19
490.05
14,283.47
7,893.91
1,075.88
3,339.78
16,195.63
757.28
Price
CCY
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
USD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
CNY
HKD
HKD
HKD
HKD
Rating
Price
5.33
4.68
13.12
20.65
7.61
5.29
20.35
22.95
6.75
9.60
10.62
5.47
15.74
74.95
3.35
21.35
4.34
16.92
6.86
8.05
4.85
1.48
19.82
38.19
4.87
7.20
9.50
2.70
Cur
N
UW
OW
N
OW
OW
OW
N
UW
OW
N
OW
OW
UW
OW
N
UW
OW
N
UW
N
OW
N
UW
OW
UW
N
UW
Prev
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
N
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
n/c
Price Target
Cur
Prev
6.00
9.00
4.00
5.50
15.50
16.00
18.70
n/c
8.40
n/c
8.30
10.00
25.00
26.00
24.50
n/c
7.60
n/c
12.00
n/c
9.00
n/c
6.50
7.00
22.50
24.00
53.00
n/c
5.50
8.00
18.00
n/c
4.50
n/c
19.00
n/c
7.50
n/c
7.00
10.00
5.30
5.00
2.20
2.60
16.50
n/c
26.80
n/c
8.00
10.00
5.00
n/c
7.60
7.00
2.20
2.60
Source: Company data, Bloomberg, J.P.Morgan estimates. n/c = no change. All prices as of 29 Jun 12.
Table 1: Top picks and stocks to avoid

Company
Top picks
Belle
China Foods
China Lilang
China Mengniu
Giordano
Golden Eagle
I.T Ltd.*
Lifestyle
Tibet 5100
Trinity
Top picks
Anta
China Yurun
Hengan
Li Ning
Ports Design
Tsingtao Brewery - H
Uni-President China
Xtep
Ticker
Rating
PT
(HK$)
CP
(HK$)
Mcap
(US$MM)
12E P/E
(x)
13E P/E
(x)
12E
P/BV (x)
13E
P/BV (x)
12E ROE
(%)
13E ROE
(%)
1880 HK
506 HK
1234 HK
2319 HK
709 HK
3308 HK
999 HK
1212 HK
1115 HK
891 HK
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
15.5
8.4
8.3
25.0
6.5
22.5
5.5
19.0
2.2
8.0
13.1
7.6
5.3
20.4
5.5
15.7
3.4
16.9
1.5
4.9
14,266
2,742
819
4,638
1,085
3,940
530
3,631
490
1,076
19.3
23.8
8.1
16.3
10.8
18.8
7.9
15.7
9.3
14.6
15.7
18.5
6.9
13.8
8.6
15.1
6.6
13.9
6.9
11.6
4.0
2.9
2.0
2.3
2.8
4.8
1.6
3.0
1.4
2.5
3.5
2.7
1.8
2.1
2.5
4.1
1.4
2.7
1.1
2.3
22.4
12.8
27.2
13.0
26.9
27.2
21.4
20.3
21.4
17.3
23.7
15.1
27.4
14.9
31.0
29.4
22.3
20.3
23.3
20.7
2020 HK
1068 HK
1044 HK
2331 HK
589 HK
168 HK
220 HK
1368 HK
UW
UW
UW
UW
UW
UW
UW
UW
4.0
7.6
53.0
4.5
7.0
33.0
5.0
2.2
4.7
6.8
75.0
4.3
8.1
44.1
7.2
2.7
1,505
1,586
11,876
591
587
7,902
3,341
758
6.6
9.2
25.3
13.9
8.2
24.4
33.7
5.7
7.6
7.1
21.3
9.2
7.3
20.6
25.4
7.7
1.4
0.7
6.8
1.0
1.8
3.8
2.9
1.1
1.3
0.7
6.1
0.9
1.6
3.2
2.7
1.0
21.8
9.5
28.0
7.2
23.4
16.7
9.0
20.5
17.9
12.2
30.1
10.2
23.4
17.0
11.1
13.9
Source: Company, Bloomberg, J.P. Morgan estimates. Prices as of June 29, 2012. *FY13 figures given under 2012 as the year ends in Jan-Jun.
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table of Contents
2H is not likely to show a major recovery but that is no
surprise to us............................................................................................ 4
Changes to our estimates ....................................................................... 4
For discretionary we believe weak expectations are already
priced in..................................................................................................... 6
Outlook from J.P. Morgan macro team.................................................. 7
Long-term drivers for consumption still in place ................................. 7
Company section - Discretionary......................................................... 18
Company section Staples .................................................................. 37
Appendix 1: Forward PE charts: Retailers .......................................... 62
Appendix 2: Forward PE charts: Staples............................................. 65
Appendix 3: Raw material price charts ................................................ 68
Companies .............................................................................................. 71
Ajisen China Holdings Ltd ..................................................................................72
Anta Sports Products Ltd. ....................................................................................75
Belle International Holdings Ltd. ........................................................................78
Cafe de Coral Holdings Ltd .................................................................................81
China Foods Ltd ..................................................................................................84
China Lilang Ltd. .................................................................................................87
China Mengniu Dairy Co. Ltd. ............................................................................91
China Resources Enterprise .................................................................................94
China Yurun Food Group ....................................................................................97
Chow Tai Fook Jewellery Company Ltd. .......................................................... 100
Dairy Farm International Holdings Limited ...................................................... 103
Giordano ............................................................................................................ 106
Golden Eagle Retail Group Ltd ......................................................................... 109
Hengan International Group Ltd ........................................................................ 112
I.T Ltd. ............................................................................................................... 115
L'Occitane International SA .............................................................................. 118
Li Ning Co Ltd .................................................................................................. 121
Lifestyle International Holdings ........................................................................ 124
Parkson Retail Group Ltd .................................................................................. 127
Ports Design....................................................................................................... 130
Sa Sa International Holdings Limited................................................................ 133
Tibet 5100 Water Resources Holdings Ltd........................................................ 136
Tingyi (Cayman Islands) Holding Corp ............................................................ 139
Tsingtao Brewery A & H ................................................................................ 142
Trinity Limited .................................................................................................. 146
Uni-President China Holdings Ltd .................................................................... 149
Want Want China Holdings Ltd ........................................................................ 152
Xtep International Holdings Limited ................................................................. 155
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
2H is not likely to show a major recovery

but that is no surprise to us
Since 4Q11 we have been witnessing a slowdown in retail sales generally in China,
and companies on the ground are seeing a slowdown in SSSG. Earlier in the year
expectations across the companies was for a recovery in 2H12. We now think this
will be pushed out to 4Q12, or more likely to 1Q13. This is generally in line with the
overall slowdown we are seeing in China (please see the extract from our macro team
below) and our macro teams expectation. After two cuts to GDP growth forecasts
our macro team now expects 2Q, 3Q and 4Q12 y/y real GDP growth to be at 7.7%,
7.5% and 7.4%. They expect further policy easing to come before end of 3Q.
Figure 1: Retailers SSSG (excluding sportswear)
25.0%
22%
20%
19%
20.0%
19%
15.0%
14%
11%
15%
15%
9%
10.0%
8%
6%
5.0%
0.0%
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
1H11
2H11
1Q12
SSSG Retailers (ex sportswear)

Source: J.P. Morgan estimates Company data.
While companies have been expecting a recovery in second half, we have been more
cautious on this front and have built in conservative sales estimates for the second
half as well. Therefore, we do not see a big risk to our sales estimates on the
discretionary front as outlined below.
Changes to our estimates

Discretionary: We were already conservative on sales; now we build in some
further margin pressure
In the discretionary universe we are revising our discretionary 2012 earnings
estimates down by around 5%. This is the second major revision we are making
across the board to our 2012 estimates following the first one in October 2011. While
in the first round we had cut both sales and margin assumptions, it is worth
highlighting that this time we are revising largely our margin estimates. On the sales
front we believe we earlier had quite conservative estimates, and we have not built in
a big recovery in 2H; therefore the current environment does not prompt us to make
sizeable cuts to sales estimates across the board. However cost pressure is coming
through more than we expected on three fronts: i) greater-than-expected promotional
efforts summer promotions are starting earlier, with more sales coming via outlets;
ii) higher-than-expected pressure on staff costs companies telling us that in some
4
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
cases salaries were up by 20-25% with SSSG at a single-digit-rate; and iii) in some
cases, new stores that opened during 1H impacting margins given lower productivity.
As a result we cut our sales and earnings estimates by 2% and 5%, respectively, on
average. After the revision we expect the space to deliver c10% earnings growth in
2012.
Figure 2: Sales and earnings growth expectations for discretionary
35.0%
30.0%
30.0%
32.1%
25.0%
19.7%
20.0%
19.9%
15.6%
15.0%
9.7%
10.0%
5.0%
0.0%
2011
2012E
Sales
2013E
Earnings
Source: Company, J.P. Morgan estimates.
Staples: No significant across-the-board revisions

We are not making significant across-the-board changes for our staples universe. It is
true that some categories have seen slowdown but we do not see it across the board.
Therefore, our earnings revisions have been generally stock-specific.
After some stock-specific revisions (details on Table 12) we are trimming our
earnings estimates by c1% on average for the staples universe. We are now looking
for 21% sales and 31% earnings growth in 2012.
Figure 3: Sales and earnings growth expectations for staples
35.0%
30.0%
25.0%
31.0%
24.4%
20.9%
20.0%
19.0%
21.4%
15.0%
10.0%
7.7%
5.0%
0.0%
2011
2012E
Sales
2013E
Earnings
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
For discretionary we believe weak

expectations are already priced in
Discretionary at 12x P/E and we dont expect more negative surprises
Discretionary companies under our coverage have come down 19% ytd,
underperforming staples by 20% and MSCI China by 19%. We do expect upcoming
1H results to be weak for the retail space and 3Q SSSG to not show a big recovery,
but these are all well flagged by now and in the price, in our view. We do not expect
further negative news on the retail front and believe 4Q12 and 1Q13 will show a
sequential improvement. We reiterate our view that the discretionary space at 12x
one-year forward P/E is compelling. We suggest adding discretionary names at these
levels and over the course of next two months.
Figure 4: Retailers (ex sportswear) one-year forward P/E chart
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
23.7
19.2
14.8
12.2
9.0
P/E
-1SD
Mean
+1SD
Trough
Staples have been resilient, down only 2% YTD and underperforming MSCI China
by 2%. At current levels they trade at 20x one-year forward P/E, and we are having
difficulty seeing any further catalysts for the space to continue to outperform. We are
already building in strong earnings growth driven by gross margin expansion and we
think there could be some downside risk to earnings if the companies need to spend
more on A&P.
Figure 5: Staples one-year forward P/E chart
35.0
30.0
26.6
25.0
20.0
20.8
15.0
15.0
12.7
10.0
20.0
5.0
P/E
-1SD
Source: Company, J.P. Morgan estimates, Bloomberg.
Mean
+1SD
Trough
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Outlook from J.P. Morgan macro team

The slowing in economic growth has been driven by both external and internal
factors. On the external front, uncertainties surrounding the euro-area sovereign debt
crisis persist, and in fact have returned to center stage in recent weeks. The US
economy has been an outperformer among developed economies, but has also
showed signs of slowing in recent weeks. The sluggish external environment has
caused stresses on Chinas export sector, and trade data have been very choppy but
overall on the weak side.
On the domestic front, the slowdown in domestic demand has been largely due to the
governments efforts to address imbalances in the economy. Such imbalances include
high investment but low consumption as a share of GDP, rapid economic growth at
high social/environment/energy costs, housing bubbles, and income inequality.
Tightening in the housing market and sectors with overcapacity (e.g., autos and steel)
is an important part of these efforts. While these restructuring efforts are positive for
Chinas long-term growth, they have been a drag on economic growth in the near
term. As economic activity likely will remain on the weak side in the near term, we
expect further policy easing to be introduced in the coming months: we expect one
more interest rate cut and two more RRR cuts before the end of 3Q. The next RRR
cut is likely to occur in July (or even as early as late June), which could help
introduce stable liquidity into the banking system. (Extracted from Greater China by
Haibin Zhu, dated June 22, 20112)
Long-term drivers for consumption still in

place
While for the next 3-6 months SSSG numbers are likely to hover around a highsingle-digit rate to 10% for most retailers in China, long-term drivers for
consumption are still in place, in our view.
1) Favorable demographics: Urbanization, growing middle income
consumer, high-net-worth individuals, new migrant workers that have more
tendency to spend though the increasing dependency ratio is one negative
among all these.
2) Rising disposal income: Increases in wages, increase in share of services
employment as well as well as potential adjustments in personal income tax.
3) Pick-up in modern retail channels: Consumers are getting more
sophisticated. This means more POS for high-end brands but at the same
time presents some challenges to the traditional distributional channels such
as department stores.
4) Improvement in healthcare coverage and pension plans: That will serve
to help precautionary savings.

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 2: Urban household income distribution

% of urban households
<55K Rmb
87.7
83.8
77.2
68.3
62.1
55.3
2005
2006
2007
2008
2009
2010
Between 55-100K Rmb

10.2
13.1
18.3
24.3
28.4
32.5
>100 Rmb
2.1
3.0
4.5
7.5
9.5
12.2
Source: CEIC, J.P. Morgan.
Table 3: Disposable income per capita by income levels for urban households
Rmb
Low
Income
3,634
4,885
9,285
9.8%
2000
2005
2010
CAGR over (2000-10)
Lower Middle
Income
4,624
6,711
12,702
10.6%
Middle
Income
5,898
9,190
17,224
11.3%
Upper Middle
Income
7,487
12,603
23,189
12.0%
High
Income
9,434
17,203
31,044
12.6%
Highest
Income
13,311
28,773
51,432
14.5%
Source: CEIC, J.P. Morgan
Figure 6: Nominal GDP vs retail sales growth
Figure 7: Urbanization rate trend
25.0
20.0
15.0
10.0
5.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail sales
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
GDP
Source: CEIC, Euromonitor, J.P. Morgan. Retail sales is defined as retail sales of personal and
household consumption (ex auto and foodservice).
Figure 8: CNY to USD quarterly period-end rates

0.1700
0.1600
0.1500
0.1400
0.1300
0.1200
Mar-13
Mar-12
Sep-12
Mar-11
Sep-11
Mar-10
Sep-10
Mar-09
Sep-09
Mar-08
Sep-08
Mar-07
Sep-07
Sep-06
Mar-06
Mar-05
Sep-05
0.1100
Source: Bloomberg, J.P. Morgan FX Research.
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Source: United Nations, Department of Economic and Social Affairs, Population Division
(2012). World Urbanization Prospects: The 2011 Revision. Urbanization rate is the percentage
of urban population out of the total population.
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Figure 9: Urban household consumption pattern by income levels (2010)

%
3%
11%
3%
10%
3%
10%
4%
9%
4%
10%
5%
9%
10%
11%
11%
12%
13%
9%
6%
6%
11%
14%
11%
13%
7%
6%
15%
7%
7%
17%
7%
7%
11%
44%
41%
Low Income
Lower Middle Income
11%
21%
6%
7%
11%
6%
7%
11%
38%
35%
Middle Income
Upper Middle Income
10%
32%
27%
High Income
Highest Income
Food
Clothing
Household Facility, Article & Service
Medicine & Medical Service
Transport & Communication
Recreation, Educational & Cultural Service
Residence
Miscellaneous
Source: CEIC, J.P. Morgan.
Figure 10: Share of urban household by urban income class

CAGR
('10-'15)
Percent
>200K
100-200K
223
6
273
4
28
4
2010 2015 CAGR
0.2
>1MN
300K-1MN 1.2
200-300K 0.7
0.4
2.0
1.2
2.0
15
18
43
55-100K
<55K
54
43
25
-4
38
2010
2015
Source: McKinsey Insights China - Wealthy Consumer Studies (2008, 2010); team analysis 2 Including households with assets over
10MN

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Figure 11: No. of millionaires
Figure 12: Breakdown of millionaires by regions (2011)
1,000,000
Henan
2%
10%
950,000
Sichuan
2%
6%
900,000
800,000
Liaoning
3%
Shandong
3%
Fujian
4%
960,000
850,000
875,000
825,000
750,000
2009
No. of millionaires*
2010
Jiangsu
7%
2011
% chg y/y
Others
18%
Beijing
18%
Guangdong
16%
Shanghai
14%
Zhejiang
13%
Source: Hurun 2011 Wealth Reports. *Individuals in China with personal wealth of 10 million
Yuan or more
Source: Hurun 2011 Wealth Reports. *Individuals in China with personal wealth of 10 million
Yuan or more
Table 4: Income tax calculation for 2011 (Threshold: 3,500)
Table 5: Income tax calculation for 2007 (Threshold: 2,000)
Tier
1
2
3
4
5
6
7
Whole month taxable income

excess part lower than 1,500
excess part higher than 1,500, but lower than 4,500
excess part higher than 800,000
Source: http://finance.ifeng.com/news/macro/20120618/6623064.shtml
Tax rate
3%
10%
20%
25%
30%
35%
45%
Tier
1
2
3
4
5
6
7
Whole month taxable income

excess part lower than 500
excess part higher than 500, but lower than 2,000
excess part higher than 2000, but lower than 5,000
excess part higher than 60,000, but 80,000
Tax rate
5%
10%
15%
20%
25%
30%
35%
Source: http://news.qq.com/a/20090831/002478.htm
Table 6: Changes to our earnings estimates discretionary

Department Stores
Golden Eagle (RMBm)
Lifestyle (HK$m)
Parkson (RMBm)
Sportswear Brands
Anta (RMBm)
Li Ning (RMBm)
Xtep (Rmbm)
Jewellery & Watch Retailers
Chow Tai Fook* (HK$m)
Shoes and Clothing
Belle (RMBm)
Trinity (HK$m)
Giordano (HK$m)
China Lilang (RMBm)
Ports (RMBm)
I.T* (HK$m)
Cosmetics
Sa Sa* (HK$m)
Average
Average (ex sportswear)
Average (ex sportswear, Lifestyle
and Sa Sa, and incl. CTF)
2011
2012E-new
% chg y/y
2012E-old
New vs old
1,193
1,576
1,123
1,331
1,816
1,150
11.6%
15.2%
2.4%
1,392
1,757
1,150
-4.4%
3.3%
0.0%
1,730
386
965
1,443
314
848
-16.6%
-18.6%
-12.2%
1,516
314
857
-4.8%
0.0%
-1.1%
6,341
7,296
15.1%
7,296
0.0%
4,255
513
728
623
428
474
4,689
579
768
643
456
519
10.2%
12.9%
5.5%
3.2%
6.4%
9.4%
4,863
614
818
663
472
539
-3.6%
-5.7%
-6.1%
-3.0%
-3.5%
-3.8%
690
793
15.0%
4.3%
9.7%
765
3.7%
-2.1%
-2.1%
8.5%
-4.7%
Source: Company, J.P. Morgan estimates. Average (ex sportswear, Lifestyle and Sa Sa, and incl. CTF) includes 12% earnings cut on
27 June 2012 for CTF.
10

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 7: Changes to our sales estimates discretionary

Department Stores
Golden Eagle - Gross Sales (RMBm)
Golden Eagle - Net Sales (RMBm)
Lifestyle - Gross Sales (HK$m)
Lifestyle - Net Sales (HK$m)
Parkson - Gross Sales (RMBm)
Parkson - Net Sales (RMBm)
Sportswear Brands
Anta (RMBm)
Li Ning (RMBm)
Xtep (Rmbm)
Shoes and Clothing
Belle (RMBm)
Trinity (HK$m)
Giordano (HK$m)
China Lilang (RMBm)
Ports (RMBm)
I.T* (HK$m)
Cosmetics
Sa Sa* (HK$m)
Average
Average (ex sportswear, Lifestyle
and Sa Sa, and incl. CTF)
2011
2012E-new
% chg y/y
2012E-old
New vs old
14,340
3,217
12,052
5,132
16,426
4,938
17,633
3,912
13,184
5,536
18,212
5,462
23.0%
21.6%
9.4%
7.9%
10.9%
10.6%
18,105
4,017
12,652
5,472
18,212
5,462
-2.6%
-2.6%
4.2%
1.2%
0.0%
0.0%
8,905
8,929
5,540
8,168
8,041
5,653
-8.3%
-9.9%
2.0%
8,532
8,041
5,953
-4.3%
0.0%
-5.0%
56,571
69,818
23.4%
69,818
0.0%
28,945
2,607
5,614
2,708
1,985
5,742
35,166
3,101
5,791
3,148
2,190
6,684
21.5%
18.9%
3.1%
16.3%
10.3%
16.4%
35,587
3,082
6,088
3,265
2,219
6,838
-1.2%
0.6%
-4.9%
-3.6%
-1.3%
-2.3%
6,405
7,596
18.6%
11.1%
15.6%
7,189
5.7%
-1.0%
-0.5%
16.0%
-2.4%
Source: Company, J.P. Morgan estimates. Average (ex sportswear, Lifestyle and Sa Sa, and incl. CTF) includes 7% sales cut on 27
June 2012 for CTF.
Table 8: JPM vs BBG Discretionary sales
Department Stores
Golden Eagle (RMBm)
Lifestyle (HK$m)
Parkson (RMBm)
Sportswear Brands
Anta (RMBm)
Li Ning (RMBm)
Xtep (RMBm)
Shoes and Clothing
Belle (RMBm)
Trinity (HK$m)
Giordano (HK$m)
China Lilang (RMBm)
Ports (RMBm)
I.T* (HK$m)
Cosmetics
Sa Sa* (HK$m)
Average
Table 9: JPM vs BBG Discretionary earnings
2012E JPM
2012E BBG
JPM vs
BBG
3,912
5,536
5,462
4,060
5,857
5,400
-3.6%
-5.5%
1.1%
8,168
8,041
5,653
8,589
8,551
5,675
-4.9%
-6.0%
-0.4%
69,818
70,715
-1.3%
35,166
3,101
5,791
3,148
2,190
6,684
34,189
3,116
6,256
3,288
2,250
6,574
2.9%
-0.5%
-7.4%
-4.2%
-2.7%
1.7%
7,596
7,541
0.7%
-2.2%
-1.7%
Source: Company, J.P. Morgan estimate, Bloomberg.
Department Stores
Golden Eagle (RMBm)
Lifestyle (HK$m)
Parkson (RMBm)
Sportswear Brands
Anta (RMBm)
Li Ning (RMBm)
Xtep (Rmbm)
Shoes and Clothing
Belle (RMBm)
Trinity (HK$m)
Giordano (HK$m)
China Lilang (RMBm)
Ports (RMBm)
I.T* (HK$m)
Cosmetics
Sa Sa* (HK$m)
Average
2012E JPM
2012E BBG
JPM vs
BBG
1,331
1,816
1,150
1,401
1,959
1,236
-5.0%
-7.3%
-6.9%
1,443
314
848
1,503
312
891
-3.9%
0.6%
-4.9%
7,296
7,590
-3.9%
4,689
579
768
643
456
519
4,850
603
814
692
461
527
-3.3%
-3.9%
-5.7%
-7.0%
-1.0%
-1.6%
793
807
-1.7%
-4.0%
-4.3%
Source: Company, J.P. Morgan estimate, Bloomberg.
11

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 10: Earnings growth trend for discretionary

Department Stores
Golden Eagle
Lifestyle
Parkson
Sportswear Brands
Anta
Li Ning
Xtep
Chow Tai Fook*
Shoes and Clothing
Belle
Trinity
Giordano
China Lilang
Ports
I.T*
Cosmetics
Sa Sa*
Average
Average (ex. Sportswear)
12
1H08
2H08
2008
1H09
2H09
2009
1H10
2H10
2010
1H11
2H11
2011
2012E
2013E
65.4%
3.0%
35.7%
35.4%
3.9%
15.2%
47.8%
3.5%
24.4%
44.0%
-7.3%
12.2%
43.9%
6.4%
4.5%
44.0%
0.1%
8.3%
43.1%
36.6%
9.3%
27.1%
23.5%
8.5%
34.7%
29.0%
8.9%
30.2%
39.1%
15.8%
23.4%
17.9%
10.6%
26.6%
27.4%
13.2%
11.6%
15.2%
2.4%
24.6%
12.7%
14.7%
113.6%
68.3%
214.1%
37.7%
40.8%
80.0%
66.4%
52.3%
129.0%
40.1%
41.6%
20.4%
39.5%
21.8%
34.5%
39.8%
31.0%
27.4%
25.0%
23.1%
21.8%
23.1%
14.1%
29.1%
24.0%
17.4%
25.7%
22.0%
-49.5%
24.8%
1.5%
-82.9%
13.4%
11.5%
-65.2%
18.6%
-16.6%
-18.6%
-12.2%
-12.5%
29.1%
-26.0%
NA
NA
NA
NA
NA
12.8%
NA
NA
65.4%
129.0%
54.5%
79.2%
15.1%
22.7%
-1.4%
NA
45.9%
NA
42.5%
-42.3%
4.7%
NA
-52.2%
NA
3.0%
-29.9%
1.6%
NA
-7.1%
NA
17.5%
-33.0%
14.9%
-44.8%
-77.6%
29.8%
12.6%
71.9%
36.7%
NM
215.8%
151.2%
3.0%
149.2%
26.0%
35.3%
5.5%
96.6%
7.3%
132.3%
37.0%
116.4%
320.8%
55.6%
1.4%
178.7%
33.7%
61.6%
39.6%
30.9%
7.6%
27.0%
35.2%
85.0%
91.0%
38.2%
4.7%
51.4%
29.0%
63.5%
63.2%
63.1%
-17.4%
28.9%
20.3%
40.7%
13.0%
41.7%
1.4%
14.8%
24.2%
50.5%
32.4%
48.8%
-7.2%
19.0%
10.2%
12.9%
5.5%
3.2%
6.4%
9.4%
23.1%
26.2%
25.4%
17.6%
12.3%
18.8%
-2.6%
49.3%
18.3%
24.4%
14.8%
0.6%
14.4%
28.8%
8.6%
41.4%
15.3%
9.7%
13.8%
60.0%
69.4%
21.4%
34.8%
35.4%
33.6%
69.4%
83.2%
28.1%
27.2%
28.8%
29.9%
38.6%
43.0%
42.8%
34.6%
44.3%
36.3%
14.7%
24.9%
38.4%
22.7%
32.1%
15.0%
4.3%
9.7%
20.5%
14.9%
19.9%
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 11: Sales growth trend for discretionary

Department Stores
Golden Eagle - Gross Sales
Golden Eagle - Net Sales
Lifestyle - Gross Sales
Lifestyle - Net Sales
Parkson - Gross Sales
Parkson - Net Sales
Sportswear Brands
Anta
Li Ning
Xtep
Chow Tai Fook*
Shoes and Clothing
Belle
Trinity
Giordano
China Lilang
Ports
I.T*
Cosmetics
Sa Sa*
Average
Average (ex. Sportswear)
1H08
2H08
2008
1H09
2H09
2009
1H10
2H10
2010
1H11
2H11
2011
2012E
2013E
34.3%
32.9%
19.5%
20.7%
21.0%
18.6%
23.8%
25.2%
7.9%
7.0%
16.7%
12.8%
28.6%
28.8%
13.2%
13.2%
18.7%
15.6%
24.7%
27.7%
4.7%
2.5%
17.0%
11.2%
37.0%
31.5%
13.8%
10.5%
14.4%
9.9%
31.1%
29.7%
9.4%
6.6%
15.7%
10.5%
34.2%
32.3%
17.5%
14.6%
12.8%
10.2%
33.2%
32.6%
16.8%
15.2%
15.3%
15.0%
33.7%
32.4%
17.1%
15.1%
14.1%
12.6%
37.1%
37.1%
24.5%
20.7%
18.5%
14.1%
25.7%
27.8%
20.8%
17.4%
14.5%
10.4%
31.0%
31.3%
22.5%
18.7%
16.5%
12.2%
23.0%
21.6%
9.4%
7.9%
10.9%
10.6%
32.5%
33.0%
15.3%
13.2%
18.5%
17.9%
47.2%
60.3%
174.3%
62.4%
48.8%
71.3%
54.8%
53.8%
110.1%
27.7%
32.4%
19.1%
26.3%
19.4%
28.0%
27.0%
25.4%
23.7%
22.6%
11.2%
21.6%
29.4%
13.2%
29.4%
26.1%
13.0%
25.7%
28.9%
-4.8%
26.0%
12.6%
-5.5%
22.9%
20.2%
-5.8%
24.3%
-8.3%
-9.9%
2.0%
6.0%
5.9%
4.5%
NA
NA
NA
NA
NA
24.6%
NA
NA
52.8%
79.3%
50.5%
61.4%
23.4%
23.9%
60.4%
NA
11.6%
NA
19.9%
46.1%
47.2%
NA
1.6%
NA
2.4%
28.0%
53.0%
NA
6.3%
NA
9.8%
35.2%
13.1%
1.2%
-14.5%
24.0%
5.5%
5.2%
8.6%
14.0%
-5.8%
47.3%
1.4%
13.0%
10.7%
7.6%
-10.1%
37.4%
3.3%
9.6%
19.8%
20.3%
6.7%
31.1%
7.9%
20.8%
20.1%
23.9%
16.3%
31.9%
15.1%
33.1%
20.0%
22.3%
11.8%
31.6%
11.7%
28.0%
24.6%
30.4%
24.0%
31.2%
13.8%
60.3%
19.9%
29.0%
14.3%
32.4%
17.0%
42.9%
22.1%
29.6%
18.7%
31.9%
15.5%
49.7%
21.5%
18.9%
3.1%
16.3%
10.3%
16.4%
18.0%
22.3%
19.4%
21.7%
11.2%
16.9%
16.5%
46.5%
28.7%
8.6%
29.0%
17.0%
12.0%
36.0%
22.1%
8.3%
13.0%
8.9%
18.6%
18.1%
16.2%
13.9%
16.4%
13.9%
19.0%
18.9%
19.0%
19.4%
22.9%
22.5%
19.2%
23.4%
23.8%
32.7%
30.5%
34.2%
29.2%
23.3%
26.9%
30.7%
26.3%
30.0%
18.6%
11.1%
15.6%
17.0%
16.7%
19.7%
13
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 12: Changes to our earnings estimates staples

Breweries
China Resources Enterprise (HK$m)
Tsingtao Brewery (RMBm)
Dairies
China Mengniu Dairy (RMBm)
Instant noodles & juices
Tingyi (US$m)
Uni President China (RMBm)
Meat Processors
China Yurun (RMBm)
Snack manufacturers
Want Want (US$)
Personal Care
Hengan (HK$m)
Wines and beverages
China Foods (HK$m)
Tibet 5100 Water Resources (RMBm)
Restaurants and Supermarkets
Ajisen (HK$m)
Dairy Farm (US$m)
Caf de Coral* (HK$)
Average (ex Tibet)
Average (ex Ajisen, Yurun, Tibet)
2011
2012E-new
% chg y/y
2012E-old
New vs old
1,889
1,738
2,393
2,000
26.7%
15.1%
2,393
2,000
0.0%
0.0%
1,726
1,793
3.9%
1,934
-7.3%
381
312
437
630
14.8%
101.9%
437
630
0.0%
0.0%
1,071
1,465
36.8%
1,465
0.0%
372
538
44.7%
490
9.9%
2,649
3,637
37.3%
3,637
0.0%
647
268
894
336
38.2%
25.6%
894
426
0.0%
-21.1%
350
484
428
196
551
547
-43.9%
13.7%
28.0%
26.4%
32.4%
391
551
547
-49.8%
0.0%
0.0%
-3.9%
0.3%
Source: Company, J.P. Morgan estimates. Core earnings estimates used in the table.
Table 13: Changes to our sales estimates staples

Breweries
Dairies
Tingyi (US$m)
Meat Processors
China Yurun (RMBm)
Snack manufacturers
Want Want (US$)
Personal Care
Hengan (HK$m)
Wines and beverages
China Foods (HK$m)
Ajisen (HK$m)
Dairy Farm (US$m)
Caf de Coral* (HK$)
Average (ex Tibet)
14
2011
2012E-new
% chg y/y
2012E-old
New vs old
110,164
23,158
135,786
26,508
23.3%
14.5%
135,786
26,508
0.0%
0.0%
37,388
40,363
8.0%
43,066
-6.3%
7,867
16,932
11,001
21,931
39.8%
29.5%
11,001
21,931
0.0%
0.0%
32,315
30,825
-4.6%
30,825
0.0%
2,947
3,592
21.9%
3,592
0.0%
17,051
21,573
26.5%
21,573
0.0%
28,011
633
34,151
814
21.9%
28.6%
34,151
1,139
0.0%
-28.5%
3,075
9,134
5,956
3,096
10,215
6,635
0.7%
11.8%
11.4%
17.1%
20.9%
3,425
10,215
6,635
-9.6%
0.0%
0.0%
-1.3%
-0.6%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 14: JPM vs BBG Staples sales
Breweries
Dairies
Tingyi (US$m)
Meat Processors
China Yurun (RMBm)
Snack manufacturers
Want Want (US$)
Personal Care
Hengan (HK$m)
Wines and beverages
China Foods (HK$m)
Ajisen (HK$m)
Dairy Farm (US$m)
Caf de Coral* (HK$)
Average (ex Tibet)
Table 15: JPM vs BBG Staples earnings

2012E JPM
2012E BBG
JPM vs
BBG
135,786
26,508
132,160
26,106
2.7%
1.5%
40,363
41,719
-3.2%
11,001
21,931
9,810
22,112
12.1%
-0.8%
30,825
31,370
-1.7%
3,592
3,645
-1.5%
21,573
21,275
1.4%
34,151
814
33,877
906
0.8%
-10.1%
3,096
10,215
6,635
3,473
10,065
6,615
-10.9%
1.5%
0.3%
0.2%
1.5%
2012E JPM
2012E BBG
JPM vs
BBG
2,393
2,000
2,596
2,043
-7.8%
-2.1%
1,793
1,705
5.2%
437
630
491
742
-11.1%
-15.2%
1,465
1,481
-1.1%
538
546
-1.4%
3,637
3,569
1.9%
894
440
886
453
0.9%
-2.9%
196
551
547
333
552
538
-41.1%
-0.3%
1.8%
-5.8%
-2.8%
Breweries
Dairies
Tingyi (US$m)
Meat Processors
China Yurun (RMBm)
Snack manufacturers
Want Want (US$)
Personal Care
Hengan (HK$m)
Wines and beverages
China Foods (HK$m)
Ajisen (HK$m)
Dairy Farm (US$m)
Caf de Coral* (HK$)
Average (ex Tibet)
15
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 16: Earnings growth trend for staples

Breweries
Tsingtao Brewery
Dairies
China Mengniu Dairy
Tingyi
Uni President China
Meat Processors
China Yurun
Snack manufacturers
Want Want
Personal Care
Hengan
Wines and beverages
China Foods
Tibet 5100 Water Resources
Ajisen
Dairy Farm
Caf de Coral*
Average (ex Tibet 5100)*
Average (ex Tibet 5100, Ajisen and Yurun)*
16
1H08
2H08
2008
1H09
2H09
2009
1H10
2H10
2010
1H11
2H11
2011
2012E
2013E
NA
32.4%
NA
17.8%
NA
25.3%
NA
67.9%
NA
91.6%
11.6%
78.7%
4.5%
29.7%
15.3%
13.1%
9.2%
21.6%
18.2%
19.3%
-22.0%
8.3%
-0.3%
14.3%
26.7%
15.1%
21.4%
18.2%
25.2%
-398.7%
-186.8%
13.4%
NA
NA
-6.5%
36.3%
10.9%
27.6%
29.3%
28.4%
-1.0%
27.4%
33.2%
34.7%
34.1%
54.8%
33.7%
42.7%
40.6%
25.4%
53.5%
4.4%
47.2%
16.4%
10.2%
-30.1%
37.0%
-20.6%
24.4%
-26.4%
15.9%
-40.8%
-31.8%
-38.7%
-12.0%
-39.9%
26.8%
101.9%
7.8%
32.8%
41.7%
-33.0%
-7.5%
25.2%
96.7%
59.4%
-16.0%
220.0%
54.0%
22.9%
-86.6%
-34.1%
-11.6%
38.8%
71.3%
31.8%
48.6%
-6.4%
43.6%
19.0%
33.5%
2.8%
14.6%
3.6%
28.0%
17.0%
35.7%
22.2%
33.4%
32.7%
33.0%
54.1%
61.2%
57.8%
24.4%
7.5%
15.2%
-1.7%
18.7%
8.6%
37.3%
19.3%
75.7%
NA
-41.6%
NA
-12.4%
NA
24.5%
NA
10.5%
NA
17.5%
300.8%
-40.6%
NA
-6.9%
NA
-24.7%
150.8%
81.9%
96.9%
29.2%
161.6%
51.2%
137.4%
38.2%
25.6%
28.4%
34.1%
8.3%
39.7%
14.6%
38.5%
41.9%
-16.3%
13.9%
-8.5%
8.6%
16.9%
-4.6%
24.0%
0.7%
18.3%
24.4%
12.1%
10.3%
10.3%
26.4%
28.3%
77.5%
16.5%
21.0%
47.7%
37.8%
42.4%
13.8%
16.2%
34.5%
30.9%
36.0%
16.9%
1.1%
5.3%
4.3%
65.0%
10.4%
-0.5%
31.6%
9.4%
51.0%
13.2%
0.2%
13.6%
5.8%
32.4%
24.2%
-14.7%
15.7%
13.3%
-60.2%
12.1%
-2.6%
-9.7%
3.1%
-21.8%
17.4%
-7.9%
1.8%
7.7%
-43.9%
13.7%
15.5%
21.2%
31.0%
40.6%
16.7%
19.7%
24.4%
21.4%
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 17: Sales growth trend for staples

Breweries
Tsingtao Brewery
Dairies
China Mengniu Dairy
Tingyi
Uni President China
Meat Processors
China Yurun
Snack manufacturers
Want Want
Personal Care
Hengan
Wines and beverages
China Foods
Ajisen
Dairy Farm
Caf de Coral*
Average (ex Tibet 5100)
Average (ex Tibet 5100, Ajisen and Yurun)
1H08
2H08
2008
1H09
2H09
2009
1H10
2H10
2010
1H11
2H11
2011
2012E
2013E
NA
15.7%
NA
18.1%
NA
16.9%
NA
15.2%
NA
9.9%
12.1%
12.5%
31.7%
9.0%
38.7%
11.8%
35.2%
10.4%
28.0%
21.4%
26.1%
11.4%
27.0%
16.4%
23.3%
14.5%
18.1%
14.1%
36.7%
-10.0%
11.9%
-11.7%
34.0%
7.7%
19.3%
16.3%
17.7%
28.7%
18.8%
23.5%
8.0%
17.5%
36.4%
13.1%
29.8%
0.0%
32.9%
6.8%
22.1%
-10.4%
16.0%
9.3%
18.9%
-1.4%
29.6%
36.6%
33.3%
39.8%
31.5%
38.2%
27.6%
42.8%
8.4%
26.5%
17.7%
34.5%
39.8%
29.5%
24.8%
23.0%
75.2%
34.6%
50.8%
-3.5%
15.1%
6.5%
49.0%
59.0%
54.8%
89.3%
24.1%
50.5%
-4.6%
25.3%
41.8%
42.1%
42.0%
12.5%
8.1%
10.1%
25.6%
36.0%
31.2%
27.6%
34.3%
31.3%
21.9%
19.0%
36.8%
44.3%
40.7%
36.2%
34.7%
35.4%
25.7%
22.4%
24.0%
27.4%
26.5%
26.9%
26.5%
25.0%
89.9%
NA
11.7%
NA
46.2%
NA
0.4%
NA
41.9%
NA
18.1%
80.6%
3.1%
NA
33.4%
NA
18.6%
67.1%
59.7%
51.2%
26.2%
90.8%
40.4%
75.6%
21.9%
28.6%
22.0%
26.7%
66.7%
18.6%
12.3%
40.3%
33.5%
46.0%
10.5%
6.1%
21.2%
16.9%
54.6%
14.4%
9.1%
29.7%
24.5%
24.3%
1.2%
1.9%
8.0%
7.5%
14.1%
7.5%
7.1%
18.0%
18.7%
18.7%
4.4%
4.5%
12.3%
12.2%
26.8%
13.1%
10.3%
23.3%
20.4%
42.3%
13.7%
8.1%
29.6%
25.4%
35.0%
13.4%
9.2%
26.6%
22.9%
40.1%
16.0%
10.2%
34.9%
28.9%
-5.5%
13.3%
13.2%
18.6%
20.5%
14.7%
14.6%
11.7%
25.8%
24.4%
0.7%
11.8%
11.4%
17.1%
20.9%
21.9%
13.0%
13.6%
19.8%
19.0%
17
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Company section - Discretionary

Anta
Changes to 2012 estimates: Following Antas 4Q order book announcement and FY
order book growth guidance of a high-single-digit decline we cut our 2012 sales and
earnings estimates by 4% and 5%, respectively.
Maintain UW: We believe 2012 will be another difficult year for all sportswear
brands across the board and continue to recommend staying away from the sector.
(refer to our note PRC Specialty Retail: Trade Sportswear for Fashion) We
maintain UW on Anta. We have further cut our PT to HK$4 (from HK$5.5) based on
the present value of the long-term target P/E of 10x 2014 earnings, which are based
on normalized margins. We have reduced our target P/E to 10x (pointing to c30%
discount to the international brands long-term average of 15-16x on brand
recognition) from 13x as we become more cautious on local sportswear brands longterm prospects. Risks to our PT include lower-than-expected A&P expenses at the
expense of long-term sustainability, and higher-than-expected trade-fair order growth
at the expense of retail inventory level.
Table 18: Changes to 2012 estimates - Anta
Rmb in millions
Sales
Gross profit
Operating profit
Net interest inc./(exp.)
Share of associates and JVs
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Recurring net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
8,905
3,762
2,011
149
0
0
2,160
-436
1,724
6
1,730
1,730
2012Enew
8,168
3,416
1,678
125
0
0
1,804
-361
1,443
0
1,443
1,443
% chg
y/y
-8.3%
-9.2%
-16.6%
New vs
old
-4.3%
-4.3%
-5.1%
2012E BBG
8,589
JPM vs
BBG
-4.9%
1,772
-5.3%
-4.8%
-4.8%
-4.8%
1,904
-5.3%
-16.6%
-16.6%
2012Eold
8,532
3,571
1,769
125
0
0
1,895
-379
1,516
0
1,516
1,516
1,503
-3.9%
42.3%
22.6%
19.4%
-20.2%
41.8%
20.5%
17.7%
-20.0%
-0.4%
-2.0%
-1.8%
0.2%
41.9%
20.7%
17.8%
-20.0%
0.0%
-0.2%
-0.1%
0.0%
-16.5%
-17.2%
-16.3%
-4.8%
-4.8%
Belle
Recent trading: After a weak 1Q during when the footwear segment posted 2.8%
SSSG and sportswear a small decline in SSSG, we believe Belle's SSSG improved
sequentially to a high single digit in footwear and flat to small positive in sportswear.
We have not seen aggressive discounting at Belle's counters during 1H12 and most
recently saw that summer sales started.
Changes to FY12 estimates: We are cutting our FY12 earnings estimate by 4% as
we now model i) slightly lower productivity at new stores added last year and this
year, and ii) higher pressure on operating margin of the sportswear segment as we
expect the promotion activity to pick up in this segment before the Olympics as
inventory levels are slightly higher than preferred levels. We now expect Belle to
18
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
post 21% revenue growth in 2012, i) 3% driven by the sportswear acquisition, ii) 7%
from SSSG, and iii) the remainder from new stores. We are looking for 10% net
profit growth as we expect 1% erosion in operating margin and we have built in
conservative assumptions for government grants (other income represented c3% of
net profit in 2011 we lower it to 1% in 2012). After this revision to estimates our
FY12 earnings estimates are now 4-5% below consensus mainly due to more
conservative sportswear margins.
1H12 results preview: For 1H12 we are looking for c14% sales growth and 7%
earnings growth as we expect pressure on operating margin due to sportswear
division. While we expect relatively weak 1H for Belle, we believe that a sequential
recovery in SSSG in 2Q will be generally taken positively for Belle. Since 4Q11 the
focus has been on Belles relatively weak footwear SSSG rather than how successful
the company was holding on to the margins. 4Q11 and 1Q12 SSSG of 8% and 3%,
respectively, led to lots of discussion about the brand losing its attraction in China
without taking into account the lack of promotional activity. If we see 2Q SSSG
accelerating to average levels of the sector, that will bring back confidence in the
brand, in our view.
Maintain OW: After 2012 we expect Belle to go back to c22% EPS CAGR, driven
by low teens SSSG and store additions. We believe current valuations are attractive
and already prices in the weak 1H at 16x one-year forward P/E, and we maintain our
OW rating. Our new Dec-12 PT of HK$15.5 (down from the previous PT of HK$16
due to earnings revisions) is based on 1x PEG and c22% two-year earnings CAGR
post 2012. Key risks are slower-than-expected SSSG and a sharp erosion in margins.
Management is planning to add mass market brands to its portfolio, and if it pursues
this strategy aggressively in 2012 this can pose downside risk to our 2012 and 2013
estimates and thus PT. Belle has not been doing aggressive discounting over the past
few months; if it changes this strategy and starts aggressive discounting, this could
pose a downside risk to our near-term estimates, especially in 2012.
Table 19: Changes to 2012 estimates Belle
Rmb in millions
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
28,945
16,556
5,151
205
0
114
5,471
-1,232
4,238
16
4,255
4,255
2012Enew
35,166
19,849
5,922
198
0
50
6,170
-1,481
4,689
0
4,689
4,689
% chg
y/y
21.5%
19.9%
15.0%
New vs
old
-1.2%
-1.2%
-3.7%
2012E BBG
34,189
JPM vs
BBG
2.9%
6,125
-3.3%
-3.6%
-3.6%
-3.6%
6,334
-2.6%
10.2%
10.2%
2012Eold
35,587
20,083
6,150
198
0
50
6,398
-1,536
4,863
0
4,863
4,863
4,850
-3.3%
57.2%
17.8%
14.7%
-22.5%
56.4%
16.8%
13.3%
-24.0%
-0.8%
-1.0%
-1.4%
-1.5%
56.4%
17.3%
13.7%
-24.0%
0.0%
-0.4%
-0.3%
0.0%
12.8%
20.2%
10.6%
-3.6%
-3.6%
Source: J.P. Morgan estimates.
19

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 20: 1H12 and 2H12 P&L summary Belle

Rmb in millions
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
1H11
13,891
7,921
2,500
86
0
27
2,613
-606
2,007
0
2,007
2,007
1H11
15,054
8,635
2,651
119
0
87
2,858
-627
2,231
0
2,248
2,248
1H12E
15,838
8,986
2,714
99
0
25
2,838
-681
2,157
0
2,157
2,157
2H12E
19,328
10,863
3,208
99
0
25
3,332
-800
2,532
0
2,532
2,532
Margins
Gross margin
Operating margin
Net margin
Tax rate
57.0%
18.0%
14.4%
-23.2%
57.4%
17.6%
14.9%
-21.9%
56.7%
17.1%
13.6%
-24.0%
56.2%
16.6%
13.1%
-24.0%
% chg y/y
1H12E
14.0%
13.4%
8.6%
2H12E
28.4%
25.8%
21.0%
As % of full year
1H12E
2H12E
45.0%
55.0%
45.3%
54.7%
45.8%
54.2%
50.0%
50.0%
8.6%
12.5%
7.5%
16.6%
27.6%
13.5%
46.0%
46.0%
46.0%
54.0%
54.0%
54.0%
7.5%
7.5%
12.7%
12.7%
46.0%
46.0%
54.0%
54.0%
-0.3%
-0.9%
-0.8%
-0.8%
-1.2%
-1.0%
-1.8%
-2.1%
Source: Company, J.P. Morgan estimates
China Lilang
Current trading: After some heavy discounting in Jan+Feb channel inventory is
quite healthy currently and discounting is back to normal levels since then. 1Q SSSG
was close to a mid-teen rate, April was at the same rate, and May was still up double
digits. While SSSG was largely driven by ASPs increases in 2011 this year so far it is
mostly driven by volumes which have been around a low-teen rate. Li Lang typically
opens around 250 stores per annum and management does not expect to see very
aggressive store openings from peers.
Changes to our 2012 estimates: We are cutting our 2012 earnings estimate by 3%
mainly on the back of the recent winter trade-fair data which came in lower than our
expectations. We are not making significant changes to our margin expectations and
expect Li Lang to post 16% sales, 18% operating profit and 3% net profit growth in
2012. Net profit will be impacted due to the increase in tax rate.
Maintain OW: Our new Dec-12 PT is HK$8.3, based on a two-year earnings CAGR
of 18% and 0.7x PEG (discount to 1x PEG used for our big-cap coverage to reflect
the risks associated with the overall franchising model). The revision in our PT is a
result of our earnings revisions for 2012 and two-year CAGR. We maintain our OW
rating on Li Lang as we believe at current valuation levels of one-year forward P/E
of 7x, risks associated with franchisee model are more than priced in. In addition to
this, we believe this is quite a remote risk for mainstream menswear names as the
sector is not as overcrowded as sportswear, there is higher degree of product/brand
differentiation, and brands are generally keeping channel inventory under control.
Key downside risks to our price target are a lower-than-expected ASP increase and
an abrupt increase in A&P expenses. Higher-than-expected wholesale discounts,
subsidies and A&P expenses could pose downside risks to our margin assumptions
and result in downside risks to our 2012 earnings estimates and PT. Worse-thanexpected performance of the sub-brand L2 are downside risks to our earnings
estimates and PT.
20
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 21: Changes to 2012 estimates China Lilang

Rmb in millions
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
2,708
1,055
704
44
0
6
753
-130
623
0
623
623
2012Enew
3,148
1,275
827
31
0
0
858
-214
643
0
643
643
% chg
y/y
16.3%
20.8%
17.5%
New vs
old
-3.6%
-2.4%
-3.1%
2012E BBG
3,288
JPM vs
BBG
-4.2%
870
-5.0%
-3.0%
-3.0%
-3.0%
914
-6.1%
3.2%
3.2%
2012Eold
3,265
1,306
853
31
0
0
884
-221
663
0
663
663
692
-7.0%
39.0%
26.0%
23.0%
-17.2%
40.5%
26.3%
20.4%
-25.0%
1.5%
0.3%
-2.6%
-7.8%
40.0%
26.1%
20.3%
-25.0%
0.5%
0.1%
0.1%
0.0%
13.9%
65.3%
3.2%
-3.0%
-3.0%
Chow Tai Fook

Chow Tai Fook (CTF) announced HK$6.34bn net profit for FY12, up 79% y/y and
in line with our estimate and with the profit forecast printed in the IPO prospectus.
Management noted that due to the high base there is some slowdown in recent
months. Given the broader slowdown we are seeing in the discretionary space in
China, we believe it is difficult for CTF to stay totally immune and thus cut our
earnings estimate by 12% for FY13, modeling low teens SSSG and a 0.4% decline in
operating margin. Our new Mar-13 PT is HK$12. We maintain our OW rating as we
believe a slowdown is more than priced in with the stock trading at 12.5x Mar-13E
earnings. Management will kick off quarterly updates next month, which should
improve transparency on the name. We continue to argue that with higher exposure
to lower-tier cities, a high ratio of self-operated stores and a policy of fully hedging
gold exposure, CTF should outperform peers in the space.
Good opex control but 2H GM under pressure. FY12 SSSG came in at 40% (1H
at c60%/2H at c20%) vs. our estimate of 45%. With better productivity at new stores,
revenue was in line. Ninety-two percent of new stores in PRC were outside of tier 1
cities. 2H gross margin was weaker than our expectation (1H GM at 29.9%/2H GM
at 28.5%). Management noted that this was partly due to annual sales and partly due
to terms given to franchises to promote gem-set sales. With operating expenses under
control, OPM was generally in line. Inventory days came in at 213.
Guidance for FY13 and long-term target: Management plans to open more than
200 stores in FY13. 1QFY13 SSSG data will be disclosed next month but
management noted that especially given a high base they are seeing a slowdown. In
FY13 gross margin is targeted to maintain at 28-29% levels and inventory days is
targeted to remain at current levels. Management targets to double revenue in three
years time, c26% CAGR.
Changes to our estimates: We cut our SSSG estimates to low teens for FY13 and
cut our gross margin estimates to 28.7% due to promotions, which led to a 12% cut
21
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
in our earnings estimates. For the next three years, we expect revenue to increase by
85% vs. the companys target of doubling sales.
Extracted from the note Chow Tai Fook Jewellery Company Ltd.: Maintain OW;
Valuations attractive even after building in conservative estimates, published by
Ebru Sener Kurumlu on 27 June 2012.
Table 22: FY12 estimates Chow Tai Fook
HK$ in millions
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
FY12
56,571
16,448
8,440
-274
0
0
8,166
-1,595
6,571
-230
6,341
6,341
FY13E
69,818
20,030
9,863
-363
0
0
9,501
-1,900
7,600
-304
7,296
7,296
% chg y/y
23.4%
21.8%
16.9%
FY13E - BBG
70,715
JPM vs BBG
-1.3%
10,413
-5.3%
16.3%
19.1%
15.7%
10,075
-5.7%
7,590
-3.9%
29.1%
14.9%
11.2%
-19.5%
28.7%
14.1%
10.5%
-20.0%
-0.4%
-0.8%
-0.8%
-0.5%
15.1%
15.1%
Giordano
Current trading: China performance in 2Q remains relatively weak though
management is seeing some sequential improvement from 1Q numbers (1Q12 China
SSSG was down 7.9% and China sales were down 9.1%). Management believes they
overdid the margin over volumes strategy in China especially in difficult times like
1H of this year. Management expects to see improvement in China as we move into
2H of 2012 on the back of a low base, new products of the new general managers and
lower costs which will help them to give a bit more better pricing. In Hong Kong, 2Q
is tracking better than 1Q, where local design and strategy is working very well.
Changes to our FY12 estimates: We are cutting our FY12 earnings estimates by
6% mainly to reflect the weak 1Q operational update and slightly weak 2Q in China.
After our revisions, we expect Giordano to post 3% sales and 5% earnings growth in
FY12. We do expect earnings growth to be back loaded in 2H12 and are looking for
flat earnings in 1H12. While we cut our FY12 estimates, we keep our FY13 and
FY14 estimates almost unchanged as we expect a favorable 7-8% earnings addition
from the Middle East acquisition that was announced recently. We have not built this
into our FY12 numbers.
Maintain OW: While we acknowledge that 1H12 will be a difficult period for
Giordano, leading to flat earnings, looking beyond that we maintain our OW rating.
With the first time consolidation of ME acquisition we are looking for 25% earnings
growth in FY13, followed by a normalized 14% earnings growth in FY14E. The
stock trades at 9.5x one-year forward earnings and is offering c7% yield. Our new
Dec-12 PT is HK$6.5 based on an unchanged target P/E of 13x, corresponding to its
5-yr historical average. Our PT is revised down 5% due to earnings revision. Risks to
22

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
our thesis include 1) Lower-than-expected HK sales will lead to worse-than

expected operating deleverage and result in downside risks to our 2012 earnings
forecasts and PT. 2) Slower-than-expected sales through will cause higher pressure
on inventory and hence margins. This would also result in downside risks to our
2012 earnings estimates and PT. 3) Slower-than-expected execution of China
management restructuring plan will also dilute the countrys margin assumptions and
result in downside risks to our forecasts.
Table 23: Changes to 2012 estimates Giordano
HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
5,614
3,283
909
-2
97
0
1,004
-225
779
-51
728
728
2012Enew
5,791
3,371
964
-2
91
0
1,054
-232
822
-54
768
768
% chg
y/y
3.1%
2.7%
6.1%
New vs
old
-4.9%
-5.6%
-7.1%
2012E BBG
6,256
JPM vs
BBG
-7.4%
1,014
-4.9%
-6.1%
-6.1%
-6.1%
1,126
-6.5%
5.5%
5.5%
2012Eold
6,088
3,572
1,038
-2
86
0
1,122
-247
875
-57
818
818
814
-5.7%
58.5%
16.2%
13.0%
-22.4%
58.2%
16.7%
13.3%
-22.0%
-0.3%
0.5%
0.3%
0.4%
58.7%
17.0%
13.4%
-22.0%
-0.4%
-0.4%
-0.2%
0.0%
4.9%
3.0%
5.5%
-6.1%
-6.1%
Table 24: 1H12 and 2H12 P&L summary Giordano

HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
2,649
1,581
452
-1
39
0
490
-119
371
-25
346
346
2H11
2,965
1,702
457
-1
58
0
514
-106
408
-26
382
382
1H12E
2,661
1,565
432
-1
46
0
476
-105
372
-27
345
345
2H12E
3,129
1,806
532
-1
46
0
577
-127
450
-27
423
423
59.7%
17.1%
13.1%
-24.3%
57.4%
15.4%
12.9%
-20.6%
58.8%
16.2%
13.0%
-22.0%
57.7%
17.0%
13.5%
-22.0%
% chg y/y
1H12E
0.5%
-1.0%
-4.5%
2H12E
5.5%
6.1%
16.5%
As % of full year
1H12E
2H12E
46.0%
54.0%
46.4%
53.6%
44.8%
55.2%
50.0%
50.0%
50.0%
50.0%
-2.8%
-11.9%
0.2%
12.3%
19.8%
10.3%
45.2%
45.2%
45.2%
54.8%
54.8%
54.8%
-0.4%
-0.4%
10.8%
10.8%
44.9%
44.9%
55.1%
55.1%
-0.9%
-0.8%
-0.1%
2.3%
0.3%
1.6%
0.6%
-1.4%
Source: Company data, J.P. Morgan estimates.
Golden Eagle
Recent trading: We believe Golden Eagle is likely to close 1H12 with high single
digits to 10% SSSG. While 1Q was a tad weak and April saw a recovery, May was
23
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
on the weak side as well and management says weekly performance has been volatile
during June. The company is not doing aggressive promotions across the board, only
doing promotions at some new stores where traffic needs to improve.
Changes to our 2012 estimates: We cut our FY12 estimates by 5% on the back of
slower than expected recovery in SSSG. We are now building 9% SSSG in 1H and
13.5% in 2H mainly on the back of the weak base of 4Q11. For FY12 we expect 23%
revenue growth with 11% driven by SSSG and the remaining by the new stores. We
continue to expect pressure on concessionaire rates and there are no major changes in
our view on that front. We are building 0.5% erosion on concessionaire rate down to
16.3% in FY12 from 16.8% in FY11. With some additional pressure on operating
expenses (due to new store openings) we are looking for 10% earnings growth.
1H12 results preview: It is also worth highlighting that 1H12 will be one of the
difficult 1Hs for Golden Eagle. Not only is demand generally weak impacting sales
performance across existing stores but also in 2012 Golden Eagle's new store
openings are front loaded. Out of the new 7 stores targeted for this year, 5 opened in
the 1H. All new stores preopening costs falls in 1H12 and sales contribution from
these stores that just opened will be insignificant. Therefore, we expect operating
margin to be down by 1.2% y/y in 1H12, leading to almost flat earnings. We expect
this to improve partly in 2H, with some sales contribution kicking in and cost base
stabilizing to a recurring level.
Maintain OW: As we caution for weak 1H results and some more downside risk to
consensus earnings estimates (which are 5% above ours), we maintain our OW rating
for Golden Eagle taking a longer-term view. The stock is trading at 16x 1-yr forward
P/E, pricing in the short-term weakness already in our view. We believe it is one of
the best-positioned department stores in China and we are looking for 27% earnings
CAGR post 2012 driven largely by new store additions and SSSG (around 14% post
2012). Our New Dec-12 PT is HK$22.5 (down 5% from the previous PT of HK$23)
is based on 1x PEG and 27% two-year earnings CAGR post 2012. Main risk on the
downside is execution risk at opening new stores. We assume 11% SSSG for all the
stores at a blended level in 2012E and 14% for 2013E and 2014E. If SSSG comes
below our estimate this will pose downside risk to our estimates and PT; we assume
c1% EBIT margin erosion due to new stores. If new stores perform below our
expectations given the slowdown in 2012E, this will also pose downside risks to our
2012 estimates and PT.
24

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 25: Changes to 2012 estimates Golden Eagle

RMBm
Gross sales proceeds

Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
14,340
3,217
2,453
1,533
73
-20
40
1,626
-414
1,212
0
1,212
1,193
2012Enew
17,633
3,912
2,945
1,727
71
0
0
1,798
-468
1,331
0
1,331
1,331
% chg
y/y
23.0%
21.6%
20.1%
12.6%
New vs
old
-2.6%
-2.6%
-2.6%
-4.6%
2012E BBG
JPM vs
BBG
4,060
-3.6%
1,825
-5.4%
-4.4%
-4.4%
-4.4%
1,890
-4.9%
9.8%
11.6%
2012Eold
18,105
4,017
3,024
1,810
71
0
0
1,881
-489
1,392
0
1,392
1,392
1,401
-5.0%
17.1%
10.7%
8.5%
-25.5%
16.7%
9.8%
7.5%
-26.0%
-0.4%
-0.9%
-0.9%
-0.5%
16.7%
10.0%
7.7%
-26.0%
0.0%
-0.2%
-0.1%
0.0%
10.6%
12.9%
9.8%
-4.4%
-4.4%
Source: Company data, J.P. Morgan estimates, Bloomberg.
Table 26: 1H12 and 2H12 P&L summary Golden Eagle

RMBm

Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
6,903
1,557
1,211
777
34
1
16
828
-212
616
0
616
1H11
7,437
1,660
1,242
756
39
-21
24
798
-202
596
0
596
1H12E
8,095
1,818
1,374
812
35
0
0
848
-220
627
0
627
2H12E
9,538
2,094
1,571
915
35
0
0
951
-247
703
0
703
17.6%
11.3%
8.9%
-25.6%
16.7%
10.2%
8.0%
-25.3%
17.0%
10.0%
7.7%
-26.0%
16.5%
9.6%
7.4%
-26.0%
% chg y/y
1H12E
17.3%
16.8%
13.4%
4.5%
2H12E
28.2%
26.2%
26.5%
21.0%
As % of full year
1H12E
2H12E
45.9%
54.1%
46.5%
53.5%
46.7%
53.3%
47.0%
53.0%
50.0%
50.0%
2.3%
3.8%
1.8%
19.2%
22.5%
18.0%
47.1%
47.1%
47.1%
52.9%
52.9%
52.9%
1.8%
18.0%
47.1%
52.9%
-0.6%
-1.2%
-1.2%
-0.4%
-0.2%
-0.6%
-0.6%
-0.7%
I.T Ltd
Current trading: I.T. management notes that current trading has been generally
weak and management has taken the view to push sales via promotions. In terms of
store openings, they will be opportunistic and would not set a hard target for store
openings.
Changes to FY13 estimates: We cut our FY13 estimates by 4%, half of it coming
from lower sales and half from margin cuts. We now expect IT to deliver 9%
earnings growth in FY13 with 16% top-line increase. We are modeling 5% SSSG for
HK and 7% in China and c10% addition to average sales area sq ft in FY13.
25
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Maintain OW: I.T. has a multi-brand and multi-channel merchandise offering

allowing the company to cover the full spectrum of mid- to high-end fashion market
targeting customers from teenage years to late 40s. We believe the structural upgrade
trends and shifting from sportswear to fast fashion names will allow IT to notably
expand its market share in China. We maintain our OW rating with a new Mar-13 PT
of HK$5.5 based on 0.7x PEG (discount to big cap space due to lower Mcap and
liquidity) and 18% two-year earnings CAGR post FY13. Our PT is revised down due
to FY13 earnings revision and cut in our long-term EPS CAGR expectation.
Downside risks to our rating and price target: We currently assume 2H FY12 will be
the trough of the current cycle. Worse-than-expected macro slowdown would cause
downside for FY13, especially for 1H; an abrupt slowdown in SSS growth; higherthan-expected operating expenses. Professionalization of the business is a potential
long-term risk, i.e., how the family-based management team will grow to include
more non-family professionals as the business expands, especially in China.
Table 27: Changes to FY13 estimates I.T Ltd
HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
FY12
5,742
3,540
575
-6
4
0
574
-101
473
-2
471
474
FY13Enew
6,684
4,087
640
-6
24
0
658
-138
520
-1
519
519
% chg
y/y
16.4%
15.5%
11.3%
New vs
old
-2.3%
-3.4%
-3.8%
FY13E BBG
6,574
JPM vs
BBG
1.7%
630
1.6%
-3.8%
-3.8%
-3.8%
623
5.6%
10.1%
9.4%
FY13Eold
6,838
4,233
665
-6
25
0
684
-144
541
-1
539
539
527
-1.6%
61.7%
10.0%
8.2%
-17.5%
61.1%
9.6%
7.8%
-21.0%
-0.5%
-0.4%
-0.4%
-3.5%
61.9%
9.7%
7.9%
-21.0%
-0.8%
-0.2%
-0.1%
0.0%
14.7%
37.3%
9.9%
-3.8%
-3.8%
LOccitane
LOccitane announced FY12 year net profit of 121m, up 22% y/y and 13.7% better
than our estimates; 5% driven by better than expected sales, 6% driven by better
control on operating expenses and the remaining 3% driven by FX gains. Following
the results we lift up our FY13 estimates by 15% and revise our PT to HK$18. The
stock had strong performance YTD and trades at 20.5x FY13E P/E vs international
brands average PE of 19x. While we appreciate the higher growth outlook for
LOccitane compared to international brands, we believe valuations are fair at these
levels (pointing to 1x PEG) and maintain Neutral. We would be buyers on declines.
FY12 sales by market: Sales from HK and China grew strongly at 29% and 55%
respectively, contributing c.16% to the total sales. USA and Japan sales grew 10%
and 13% respectively, contributing 11.5% and 23.6% to the total. As highlighted in
our previous note, sales from DMs and sell-in & B-to-B was the main cause of sales
surprise. Overall, FX contribution to sales was negligible. SSSG in HK, China, UK,
US and Japan was 34.3%, 19.9%, 14.8%, 10.3% and -3.3%, respectively. A net of
158 self-operated stores were added during FY12.
26
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Details on FY12 margins: Full year gross margin improved 20bps, driven by the
sell-in & B-to-B segment gross margin improvement of 2ppt and 0.7ppt decline in
sell-out margin. Overall operating margin declined 0.4ppt, largely due to investments
in the brand and channel mix while retail efficiency and prices product mix
contributed positively to operating margin. Management decided to increase dividend
payout ratio to 30% from 20% last year as cash flow remains comfortable and there
are no major M&A targets on the horizon. Cash conversion cycle increased to 109
days from 74 days last year largely due to increase in inventory days. Inventory rose
to 263 days (250 days excluding MPP) driven by FX rates, improvement in safety
stock which was too low last year and increase in inventory coverage.
Guidance for FY13: i) Management noted that while markets are challenging they
are working hard and delivering nice growth. ii) Putting some investment at gross
margin level. While benefitting from operating leverage they target to invest some of
this into marketing spending iii) Not totally immune from the slowdown in China but
still delivering healthy double digit growth. In China will be introducing 50-60 SKUs
this year and expect this to impact the growth positively iv) FY13 capex will step up
to 90-100mn given the renovation in Manosque factory. v) revising up the original
5-yr plan as two years into the plan running ahead of expectations.
Extracted from the note L'Occitane International SA: L'Occitane results better than
expected but priced in, published by Ebru Sener Kurumlu on 18 June 2012.
Table 28: FY13 estimates LOccitane
m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
FY12
913
755
152
0
0
4
157
-32
124
-3
121
121
FY13E-new
1,056
872
181
1
0
4
186
-41
145
-4
142
142
% chg y/y
15.6%
15.5%
18.9%
FY13E - BBG
1,065
JPM vs BBG
-0.8%
181
-0.2%
18.9%
26.5%
17.0%
183
1.9%
141
0.4%
82.7%
16.7%
13.3%
-20.7%
82.6%
17.1%
13.4%
-22.0%
-0.1%
0.5%
0.2%
-1.3%
17.0%
17.0%
Li Ning
Weak operational update. FY12 trade fair orders were down by high single digits
y/y, bringing the FY trade fair order decline to high single digit level on a y/y basis.
Management is taking a proactive approach as they want to control sell in, given
weak sell through and high discounting in the sector. Li Ning's focus will be on
functional products and core brand. Li Ning also announced that it signed an
agreement with CBA as its equipment supplier. While management did not disclose
the amount they noted: i) Impact on 2012 will be small as it kicks in 4Q, ii) despite
CBA agreement, they expect SG&A to remain flat in 2013 vs. 2012 as they are
cutting costs on staff front (partly related to the reduction of self-operated stores
27
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
which bear all the retail costs), cutting some of the media spending since CBA will
bring additional media awareness, cutting inefficient sponsorships and finally
focusing on core brand and putting less effort into other brands.
Terms change for Lotto agreement. On June 12 Li Ning also announced that they
have reduced the duration of Lotto license agreement to 10 years i.e., ending in end
2018 vs. 2028 earlier. This translates into lower aggregate minimum royalty to be
paid; hence, a saving of cRMB34mn per annum on finance costs and royalty
payments per annum based on our estimates. However, due to reduction in intangible
assets value, there will be a one-off non-cash expense of RMB59.5mn that will be
booked in 2012. This was the main reason for company warning about a rather
substantial decline in profit y/y and we would not read too much into this.
Changes to FY12 estimate: We had cut our earrings estimates by around 10% on
June 12 on the back of Li Ning's announcement of an operational update. We are
therefore not making changes in this Note.
Maintain UW: We maintain our UW rating. We believe the sportswear sector is still
struggling with inventory problems and heavy discounting. We have not yet seen any
major consolidation taking place in the sector and expect more shake-up as
franchisees in our view find it difficult to run profitable businesses given high
discount levels. As we assume the sectors margin will fall to a new normalized level
by 2014, our Dec-12 PT of HK$4.5 equals the present value of the long-term target
P/E of 10x 2014 earnings, which are based on normalized margins. Our normalized
target P/E represents c30% discount to the international brands long-term average of
15-16x on brand recognition. The company is working on streamlining operations for
different markets which could lead to lower-than-expected staff costs and thus some
margin upside. Better-than-expected sell-through of outlet business could help
accelerate destocking and thus improve top-line growth; this would cause upside
risks to our sales forecasts. Other risks include lower-than-expected A&P expenses
(we think at the expense of long-term sustainability) and higher-than-expected trade
fair order growth (we think at the expense of retail inventory level).
Table 29: 2012 estimates Li Ning
RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
8,929
4,115
631
-82
-2
0
547
-136
411
-25
386
386
2012E
8,041
3,653
507
-51
0
-60
397
-99
298
-28
269
314
% chg y/y
-9.9%
-11.2%
-19.7%
2012E - BBG
8,551
JPM vs BBG
-6.0%
532
-4.8%
-27.5%
-27.3%
-27.6%
469
-15.3%
312
0.6%
46.1%
7.1%
4.3%
-24.9%
45.4%
6.3%
3.3%
-25.0%
-0.6%
-0.8%
-1.0%
-0.1%
28
-30.2%
-18.6%
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Lifestyle
Current trading: Hong Kong stores continue to deliver relatively good growth
compared to China and in 2Q as well HK is running with low to mid teens SSSG.
Management notes that after April they had moved into high base (3Q11 and
4Q11was particularly strong) so they expect 2H to slow down slightly vs. the 1H in
Hong Kong. Sales at the Shanghai store has been weak throughout 1H12, showing
flat to slight declines. Suzhou store is generally doing fine and seeing double-digit
growth though as good as the management initially expected due to a generally weak
environment. The train line started to operate since end of April and we expect more
traffic on the back of this. Dalian store seems to be the weakest among the new stores
and struggling.
Changes to FY12 estimates: Incorporating better-than-expected HK sales
performance in 1H12, we lift our sales and earnings estimates by 4% and 3%,
respectively. We are modeling c10% SSSG for CWB store in FY12 which points to
c6-7% in 2H12, which should be achievable in our view, given 1H performance. For
Shanghai store, we have flat sales for FY12E, which conservatively assumes no
sequential improvement at the store. With these assumptions, we expect c9% sales
growth and 15% recurring profit growth for FY12 (note that FY11 headline earnings
includes one-off gains of cHK$300mn on the back of FV changes on investment
properties).
Upgrade to OW: Our Dec-12 PT is HK$19 based on SOTP method, where we value
HK operations at 15x P/E and Shanghai at 13x. There is no change to our PT as we
had only a 3% tweak in our FY12 earnings estimates. Lifestyle's share price has been
weak for the past 3 months mainly due to i) weak sales performance in Shanghai ii)
departure of the general manager iii) news flow around one of the major shareholder
Joseph Lau (please see link Chinese estates announcement dated 23 May). We
believe Shanghai store weakness is more than in the price and the latter two news
items will not have any material fundamental impact on Lifestyles operations.
Hence we believe selling s overdone and upgrade the stock to OW as a proxy to
Hong Kong retail sales growth (with no pressure on cost side given that the main
store is self-owned). Main risk to our PT would be further weakening of performance
at Shanghai store, HK store sales seeing a sharp slowdown in 2H12, Suzhou store
and Dalian store posting higher than expected losses in 2012 due to weakness in
demand.
29
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 30: Changes to 2012 estimates Lifestyle

HK$m

Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
12,052
5,132
3,000
2,039
-6
251
310
2,594
-535
2,059
-173
1,886
1,576
2012Enew
13,184
5,536
3,272
2,274
-108
284
0
2,450
-453
1,997
-182
1,816
1,816
24.9%
16.9%
15.7%
-20.6%
24.8%
17.2%
13.8%
-18.5%
% chg
y/y
9.4%
7.9%
9.1%
11.5%
New vs
old
4.2%
1.2%
3.4%
3.7%
2012E BBG
JPM vs
BBG
5,857
-5.5%
2,470
-7.9%
5.4%
9.0%
4.6%
2,633
-6.9%
-3.7%
15.2%
2012Eold
12,652
5,472
3,163
2,192
-57
190
0
2,325
-415
1,910
-153
1,757
1,757
1,959
-7.3%
-0.1%
0.3%
-1.9%
2.1%
25.0%
17.3%
13.9%
-17.9%
-0.2%
-0.1%
-0.1%
-0.6%
-5.6%
-15.4%
-3.0%
3.3%
3.3%
Parkson
Current trading: Parkson had announced weak 1Q12 results, pointing to a 12%
decline in operating profit, a 5% decline in net profit as sales were weak (SSSG at
2%) and operating expenses surged (up 25% y/y). Management noted that April
SSSG recovered to 7% and it expected 2Q SSSG to be around mid-single-digits.
Changes to our estimates: We had cut our FY12 earnings estimates by 7% and our
Dec-12 end PT to HK$7.5 on May 17 after 1Q results announcement. We are not
making further changes to estimates in this Note.
Maintain Neutral: While we maintain our Neutral rating for the longer term we
remain cautious about this name in the mid-term as it continues to underperform
peers and deliver weak earnings. Our Dec-12 PT of HK$7.5 is based on 1x PEG and
15% two-year earnings CAGR after 2012. A key risk on the downside is SSSG
further slowing down in Shanghai and Beijing stores, while key upside risks include
better-than-expected cost control and better-than-expected margins and performance
at the new stores.
30

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 31: 2012 estimates Parkson

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
16,426
4,938
3,699
1,509
9
0
0
1,519
-366
1,153
-30
1,123
1,123
2012E-new
18,212
5,462
4,113
1,495
83
0
0
1,579
-395
1,184
-34
1,150
1,150
% chg y/y
10.9%
10.6%
11.2%
-0.9%
2012E - BBG
JPM vs BBG
5,400
1.1%
1,543
-3.1%
4.0%
7.9%
2.7%
1,682
-6.1%
1,236
-6.9%
22.5%
9.2%
6.8%
-24.1%
22.6%
8.2%
6.3%
-25.0%
0.1%
-1.0%
-0.5%
-0.9%
2.4%
2.4%
Table 32: 1H12 and 2H12 P&L Summary Parkson

RMBm

Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
8,159
2,455
1,830
808
-7
0
0
802
-201
601
-16
585
585
1H11
8,268
2,484
1,869
701
16
0
0
717
-165
552
-13
538
538
1H12E
8,852
2,655
2,002
758
42
0
9
809
-203
606
-18
588
588
2H12E
9,359
2,807
2,111
737
42
0
-9
770
-192
578
-16
562
562
22.4%
9.9%
7.2%
-25.0%
22.6%
8.5%
6.5%
-23.1%
22.6%
8.6%
6.6%
-25.1%
22.6%
7.9%
6.0%
-24.9%
% chg y/y
1H12E
8.5%
8.2%
9.4%
-6.2%
2H12E
13.2%
13.0%
13.0%
5.2%
As % of full year
1H12E
2H12E
48.6%
51.4%
48.6%
51.4%
48.7%
51.3%
50.7%
49.3%
50.0%
50.0%
0.9%
1.1%
0.8%
7.4%
16.1%
4.8%
51.2%
51.4%
51.2%
48.8%
48.6%
48.8%
0.7%
0.7%
4.4%
4.4%
51.2%
51.2%
48.8%
48.8%
0.2%
-1.3%
-0.5%
0.0%
0.0%
-0.6%
-0.5%
-1.9%
Ports Design
Current trading: China's retail scene slowed down significantly in 4Q11 and
continues to slow down in 1Q12. Ports is still holding up in the first five months and
seeing low double digit sales growth. For 2012, management continues to target 10%
new store openings. Out of the 40 new stores planned to be opened 25-28 will be
Ports ladies, 10 menswear and the rest for licensed brands. Currently, menswear
accounts for 30% of total revenue and Ports expects it to grow faster than
womenswear in the next five years.
Changes to our 2012 estimates: We fine-tune our earnings estimates and cut by 3%
incorporating slightly lower sales and lower operating margin. We are modeling 10%
SSSG for FY10 and 9% store additions during FY12. We are looking for 10% y/y
31

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
increase in sales and 6% y/y increase in net profit. We have further lowered our longterm estimates and expect c11% two-year CAGR after 2012.
Maintain UW: Our new Dec-12 PT is HK$7.3 based on 0.7x PEG and 10.5% twoyear earnings CAGR post 2012. We have not changed our PT method but due to the
revision in 2012 earnings and earnings CAGR we lower our PT by 27%. We
maintain our UW rating for Ports Design. We have structural concerns on Ports
Design due to rising competition and unproven multi-brand strategy. We expect the
companys main growth pillar SSSG to slow down as international brands roll out
their points of sales more aggressively in lower-tier cities.
Table 33: Changes to 2012 estimates Ports Design
RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
1,985
1,629
526
12
0
51
589
-159
430
0
430
428
2012Enew
2,190
1,793
616
17
0
0
633
-177
456
0
456
456
% chg
y/y
10.3%
10.0%
17.2%
New vs
old
-1.3%
-0.4%
-4.0%
2012E BBG
2,250
JPM vs
BBG
-2.7%
638
-3.3%
-3.5%
-3.5%
-3.5%
636
-0.5%
6.0%
6.4%
2012Eold
2,219
1,799
642
14
0
0
656
-184
472
0
472
472
461
-1.0%
82.1%
26.5%
21.7%
-26.9%
81.9%
28.2%
20.8%
-28.0%
-0.2%
1.7%
-0.8%
-1.1%
81.1%
28.9%
21.3%
-28.0%
0.8%
-0.8%
-0.5%
0.0%
7.5%
11.8%
5.9%
-3.5%
-3.5%
Table 34: 1H12 and 2H12 P&L summary Ports Design

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
32
1H11
898
733
246
6
0
45
298
-84
214
1
213
173
1H11
1,087
897
280
6
0
6
291
-75
217
0
217
256
1H12E
993
809
263
8
0
0
272
-76
196
0
196
196
2H12E
1,197
983
353
8
0
0
362
-101
260
0
260
260
81.6%
27.4%
23.7%
-28.1%
82.5%
25.8%
19.9%
-25.7%
81.5%
26.5%
19.7%
-28.0%
82.2%
29.5%
21.8%
-28.0%
% chg y/y
1H12E
10.6%
10.4%
7.1%
2H12E
10.1%
9.7%
26.1%
As % of full year
1H12E
2H12E
45.3%
54.7%
45.1%
54.9%
42.7%
57.3%
50.0%
50.0%
-8.7%
-9.2%
-8.6%
24.1%
35.4%
20.2%
42.9%
42.9%
42.9%
57.1%
57.1%
57.1%
-8.3%
13.1%
20.1%
1.9%
42.9%
42.9%
57.1%
57.1%
-0.1%
-0.9%
-4.0%
0.1%
-0.3%
3.8%
1.8%
-2.3%
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Sa Sa International
Current trading: There is some slowdown in 1QFY13, following c20% SSSG in
2HFY12. Management still targets a low teens SSSG for FY13 and plans to have
c100 new store openings. Expect some pressure on rental costs given that renewal
rates are around 25% and would be focusing more on residential areas vs. traditional
tourist areas to mitigate the cost pressure.
Changes to our FY13 estimates: Following FY12 results which beat our estimates
by 6%, we are lifting our FY13 earnings estimates for Sa Sa by 4%. We are building
c16% revenue growth in HK in FY13 largely driven by low teens SSSG. We are
building slight erosion in operating margin on the back of rent costs and expect c15%
earnings growth in FY13.
Maintain Neutral: Our new Mar-13 PT is HK$5.3 based on 0.9x PEG and two-year
earnings CAGR of 21%. While we slightly lower our earnings CAGR estimate from
22% to 21%, we roll forward the time frame by six months and lift FY13 estimates
by 4%; hence, our PT is changed only marginally. Sa Sa trades at 17x Mar-13
earnings and currently we see c13% upside potential to our PT and would be buyers
of the stock on declines. Key upside risks include higher-than-expected gross
margins; key downside risks include lower-than-expected transaction volume and
higher-than-expected losses of China market.
Table 35: Changes to FY13 estimates Sa Sa International
HK$m
Sales
Gross profit
Operating profit
Share of associates and
JVs
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
FY12
6,405
2,897
828
6
FY13Enew
7,596
3,444
972
8
0
0
835
-145
690
0
690
690
0
0
979
-186
793
0
793
793
45.2%
12.9%
10.8%
-17.4%
45.3%
12.8%
10.4%
-19.0%
% chg
y/y
18.6%
18.9%
17.3%
FY13Eold
7,189
3,154
950
7
15.0%
15.0%
0
0
956
-191
765
0
765
765
0.1%
-0.1%
-0.3%
-1.6%
43.9%
13.2%
10.6%
-20.0%
17.3%
28.2%
15.0%
New vs
old
5.7%
9.2%
2.3%
FY13E BBG
7,541
JPM vs
BBG
0.7%
991
-1.9%
2.4%
-2.7%
3.7%
976
0.3%
807
-1.7%
3.7%
3.7%
1.5%
-0.4%
-0.2%
1.0%
Trinity
Current trading: Management notes that SSSG is running around single digits
during the 1H of 2012 and the company continues to target low teens for FY12
which means a strong recovery needs to kick in in 2H12. Taiwan SSSG is quite weak
but it is only 8% of the business. So far, there are no major discounts on their end or
from competitors as well.
Changes to our FY12 estimates: We keep China SSSG rate at 8% for FY12,
increase HK SSSG rate from 6% to 8% level. Without including Gieves and Hawkes
33
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
acquisition, we would have cut our overall sales estimate by 2% as we build lower
sales from Taiwan, lower new store openings (35 new net stores planned for FY12)
and lower productivity at the new stores. After including the Gieves and Hawkes
acquisition, our 2012 sales estimate is almost unchanged. We cut our earnings
estimates by 5% as now do not model any operating margin improvement due to
leverage and after incorporating the Gieves and Hawkes acquisition we cut it by 5%.
We expect Trinity just to maintain its operating margin in FY12 as we are not
modeling big promotions.
Maintain OW: Following the revision to FY12 earnings estimates, we lower our
Dec-12 PT to HK$8 due to the earnings revision in 2012 and changes in CAGR post
2012. Our PT is based on 1x PEG and a two-year earnings CAGR of c25%. After a
sharp correction YTD, Trinity now trades at 13x one-year forward P/E. With its
high-end menswear brands that have plenty of penetration potential in China, we
believe Trinity offers multiple years of growth opportunity and the current slowdown
is more than priced in. Maintain our OW rating. Main risks are further slowdown in
SSSG rates in China and HK and one more round of sharp increases in staff costs.
Table 36: Changes to 2012 estimates - Trinity
HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
2,607
2,104
614
1
62
0
677
-164
513
0
513
513
2012Enew
3,101
2,455
712
-4
64
0
772
-193
579
0
579
579
% chg
y/y
18.9%
16.7%
16.1%
80.7%
23.5%
19.7%
-24.2%
79.2%
23.0%
18.7%
-25.0%
34
New vs
old
0.6%
0.3%
-7.5%
2012E BBG
3,116
JPM vs
BBG
-0.5%
728
-2.2%
-6.9%
-10.5%
-5.7%
793
-2.6%
12.9%
12.9%
2012Eold
3,082
2,447
770
3
57
0
830
-216
614
0
614
614
603
-3.9%
-1.5%
-0.6%
-1.0%
-0.8%
79.4%
25.0%
19.9%
-26.0%
-0.2%
-2.0%
-1.2%
1.0%
14.1%
17.8%
12.9%
-5.7%
-5.7%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 37: 1H12 and 2H12 P&L summary - Trinity

HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
1,206
974
298
1
30
0
329
-89
240
0
240
240
1H11
1,401
1,130
315
0
33
0
348
-75
273
0
273
273
1H12E
1,392
1,122
342
1
31
0
373
-101
272
0
272
272
2H12E
1,709
1,333
371
-5
34
0
400
-92
307
0
307
307
80.8%
24.7%
19.9%
-27.0%
80.6%
22.5%
19.5%
-21.6%
80.6%
24.5%
19.5%
-27.0%
78.0%
21.7%
18.0%
-23.1%
% chg y/y
1H12E
15.4%
15.2%
14.5%
2H12E
21.9%
18.0%
17.6%
As % of full year
1H12E
2H12E
44.9%
55.1%
45.7%
54.3%
48.0%
52.0%
-12.5%
112.5%
47.7%
52.3%
13.3%
13.2%
13.3%
14.8%
23.3%
12.5%
48.2%
52.1%
47.0%
51.8%
47.9%
53.0%
13.3%
13.3%
12.5%
12.5%
47.0%
47.0%
53.0%
53.0%
-0.2%
-0.2%
-0.4%
0.0%
-2.6%
-0.8%
-1.5%
-1.6%
Source: Company data, J.P. Morgan estimates
Xtep
Current trading: SSSG in 2Q was around a low single digit increase, SSSG in 1Q
was lower around flat. Channel inventory is around five months. While it is better
than last year and management does not expect it to deteriorate but will not improve
a lot either until the end of the year. Average discounting is around 30% plus levels.
The company does not expect to make big changes to store numbers during the year.
Changes to FY12 estimates: We tweak our FY12 earnings estimate by 1% as we
incorporate:i) single-digit increase in orders, ii) remove Disney from our estimates as
operations ceased, iii) incorporate a higher tax rate.
Maintain UW: We believe 2012 will be another difficult year for all sportswear
brands across the board and continue to recommend staying away from the sector.
(refer to our note PRC Specialty Retail: Trade Sportswear for Fashion) We
maintain our UW in Xtep. We have further cut our PT to HK$2.25 (from previous
HK$2.6) based on the present value of the long-term target P/E of 10x 2014E
earnings, which are based on normalized margins. We have reduced the target P/E to
10x (pointing to c30% discount to the international brands long-term average of 1516x on brand recognition) from 13x as we become more cautious on local sportswear
brands long-term prospects than earlier. Risks to our PT include lower-thanexpected A&P expenses at the expense of long-term sustainability, and higher-thanexpected trade fair order growth at the expense of retail inventory level.
35
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 38: Changes to 2012 estimates - Xtep

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
5,540
2,258
1,219
-5
0
-3
1,211
-246
965
0
965
965
2012Enew
5,653
2,284
1,107
-20
0
0
1,087
-239
848
0
848
848
40.8%
22.0%
17.4%
-20.3%
40.4%
19.6%
15.0%
-22.0%
36
% chg
y/y
2.0%
1.2%
-9.2%
New vs
old
-5.0%
-1.5%
4.2%
2012E BBG
5,675
JPM vs
BBG
-0.4%
971
14.0%
1.5%
11.6%
-1.1%
1,143
-4.9%
-12.2%
-12.2%
2012Eold
5,953
2,318
1,062
10
0
0
1,071
-214
857
0
857
857
891
-4.9%
-0.4%
-2.4%
-2.4%
-1.7%
38.9%
17.8%
14.4%
-20.0%
1.5%
1.7%
0.6%
-2.0%
-10.3%
-2.8%
-12.2%
-1.1%
-1.1%
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Company section Staples

Ajisen
Operation updates
Same-store sales in China have been trending at negative 20-25% year to date, which
is below our expectation of -15% in 1H12 for China. Same-stores sales in Hong
Kong were doing better, trending between -4% and 5%. Due to the decline in sales
per stores, around 200+ stores are loss-making right now (total stores in China were
622 as of end 2011). During the first half, the company closed 16 non-performing
stores and had a net opening number of stores of 12.
New TV commercial program has been launched since March in Shanghai. Sales
improved immediately by 14% month-on-month, according to the company. The
roll-out of the new TV commercial in Hong Kong has started since May and will be
launched in Shenzhen later. In addition, the company is more active in doing media
interviews in an effort to rebuild the brand image.
Forecast changes
For the full year of 2012, the company is guiding for positive single digit revenue
growth on flat to single digit negative SSSG and net opening of 80 stores (to close 30
stores).
Given that the slower same-store sales trend in China, we are lowering our revenue
forecasts by 10%. We now assume revenue to increase 1% y/y in 2012 and SSS in
China to be -20% in 1H12 and flat in 2H12. Our full-year SSS assumption for China
is lowered to -10% from 0% previously. Due to operating deleverage, net profits is
lowered by 50%.
Beyond 2012, we expect Ajisen to deliver 34% earnings CAGR in 2012-2014 driven
by 20% top-line CAGR and 1.5ppt net margin improvement. We have
assummed140 new stores in 2013 and 2014 and SSSG of 10% and 5% for 2013 and
2014, respectively.
Table 39: Changes to our estimates
Year to Dec (US$ m)
Turnover
Gross Profit
Total operating expenses
Other income
EBIT
Profit before tax
Income Tax
Minority Interests
Net Profit
New
2012E
3096
2028
-1882
136
258
281
-76
-9
196
2013E
3775
2473
-2223
136
362
385
-96
-13
276
Old
2012E
3425
2314
-1904
136
522
546
-136
-18
391
2013E
4218
2850
-2290
136
672
695
-174
-23
499
Change
2012E
2012E
-9.6%
-10.5%
-12.4%
-13.2%
-1.2%
-2.9%
-50.6%
-48.4%
-44.3%
-49.8%
-49.8%
-46.2%
-44.6%
-44.6%
-44.6%
-44.6%
Neutral, PT HK$6.0.
We are keeping Ajisen as Neutral despite our 2012 earnings forecast is 43% below
consensus as we are taking a longer-term view and believe the company will resume
earnings growth of 34% in 2012-14. We believe it would take some time for the
company to rebuild the brand because the issue with Ajisen is more related to
37

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
consumersfeeling of being misled by the company and is less willing to pay a

premium for its products, in our view,we would be a buyer of the stock when SSS
starts to show positive growth.
Our Dec-12 PT is lowered to HK$6.0 (from HK$9.0), which is based on 0.9x PEG
and an EPS CAGR of 34% in 2012E-14E. Main upside risk to our call would be a
faster recovery and main downside risk to our call would be further earnings
downgrades by consensus. We would be a buyer of the stock once same-store sales
start showing positive growth.
Table 40: Changes to 2012 estimates Ajisen
HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
3,075
2,084
497
-4
0
23
516
-150
366
-16
350
350
2012Enew
3,096
2,028
258
0
0
23
281
-76
205
-9
196
196
% chg
y/y
0.7%
-2.7%
-48.0%
2012Eold
3,425
2,314
522
0
0
New vs
old
-9.6%
-12.4%
-50.6%
2012E BBG
3,473
JPM vs
BBG
-10.9%
395
-34.7%
-45.5%
-49.4%
-43.9%
-48.4%
-44.3%
-49.8%
473
-40.5%
-43.9%
-43.9%
546
-136
409
-18
391
391
333
-41.1%
67.8%
16.2%
11.4%
-29.1%
65.5%
8.3%
6.3%
-27.0%
-2.3%
-7.8%
-5.0%
2.1%
67.6%
15.3%
11.4%
-25.0%
-2.1%
-6.9%
-5.1%
-2.0%
-49.8%
-49.8%
Table 41: 1H12 and 2H12 P&L summary Ajisen

HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
38
1H11
1,665
1,140
375
-2
0
13
386
-118
268
-12
255
255
2H11
1,410
944
122
-2
0
10
130
-32
98
-4
95
95
1H12E
1,306
849
84
-2
0
13
95
-26
69
-12
57
57
2H12E
1,790
1,179
174
2
0
10
186
-50
136
3
139
139
68.5%
22.5%
15.3%
-30.6%
66.9%
8.7%
6.7%
-24.6%
65.0%
6.4%
4.4%
-27.0%
65.9%
9.7%
7.8%
-27.0%
% chg y/y
1H12E
2H12E
-21.5%
26.9%
-25.5%
24.9%
-77.6%
42.5%
As % of full year
1H12E
2H12E
42.2%
57.8%
41.9%
58.1%
32.5%
67.5%
-75.4%
-78.3%
-74.1%
42.8%
56.8%
38.3%
33.8%
33.8%
33.8%
66.2%
66.2%
66.2%
-77.7%
-77.7%
47.2%
47.2%
29.0%
29.0%
71.0%
71.0%
-3.5%
-16.1%
-11.0%
3.6%
-1.1%
1.1%
1.1%
-2.4%
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Caf de Coral
Operation updates
Caf de Coral (CDC) reported full-year results ending March 2012 showing revenue
increased 12% y/y to HK$5.9bn and net profits declined 8% to HK$474m. The
results were 4% below our expectation on lower profits from China operation. The
board recommends a final dividend of HK$0.45, representing a payout ratio of
74.6%.
Overall, revenue was 1% better than our estimate. Gross margin declined 1.4ppt from
last year on higher food costs but was 0.2ppt better than our expectation. EBITDA
margin for its China dropped to 9% from 15.7% in FY11 due to relocation costs to
the new central kitchen in Guangzhou and some write-off expenses on old
equipments, which accounted for half of the decline, according to the management.
SSSG
During the year, same store sales growth (SSSG) was 6% in Hong Kong driven by
6% ASP increase and flat volume. For Southern China, SSSG was 8%, driven by 8%
ASP increase and also flat volume. For Eastern China, SSSG was 13%, driven by
13% ASP and 5% volume.
For April and May of this year, management indicated that HK SSSG improved from
March. China has seen SSSG softened a little and April and May SSSG in China was
trending at mid- to high- single digit.
New stores plan
For FY13, CDC plans to open 50 stores, among that 20 in Hong Kong and 30 in
China. During FY12, CDC opened 32 new stores in Hong Kong and closed 20 stores
(new opening of 12). In China, CDC opened 22 new stores and closed7 stores in
FY12.
Neutral, Mar-13 PT HK$18.7
Our Mar-13 SOTP-based target price is HK$18.7. We stay Neutral as we believe the
expectation of higher China margins is priced-in. A key upside risk is stronger
volume growth in HK, while a key downside risk is another sudden increase in food
costs that cannot be passed on to consumers
39
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 42: FY12 estimates Caf de Coral

HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
FY12
5,956
814
559
9
0
0
568
-94
473
0
474
428
FY13E
6,635
929
659
8
0
0
667
-120
547
0
547
547
% chg y/y
11.4%
14.1%
17.9%
FY13E - BBG
6,615
JPM vs BBG
0.3%
611
7.9%
17.5%
27.5%
15.5%
660
1.1%
538
1.8%
13.7%
9.4%
8.0%
-16.6%
14.0%
9.9%
8.2%
-18.0%
0.3%
0.5%
0.3%
-1.4%
15.5%
28.0%
China Foods
Operation updates
According to the company, the wine industry in China experienced some slowdown
in 1Q12. One of the peers Changyu (200869 CH) had an 8% decline in 1Q12 wine
sales. China Foods continues to perform better than its peers, with positive revenue
growth, however, the growth rate has slowed to single digits, according to the
company. OP margin continues to improve on the back of product mix upgrades.
For 2H12, the company expects sales to accelerate driven by new product launches.
New imported wine from France and Chile is expected to be launched in August to
capture the demand for mid autumn festival. The signature product under the
cooperation with Michel Rolland is also scheduled to launch in August this year.
The beverage market is competitive, according to the company, but we had already
expected that and assume 15% revenue growth for 2012 compared to 33% in 2011.
Margin in 1H12 is slightly lower than 1H11, according to the company, because of
more sales from bottled water, which is a lower-margin product.
Edible oil division is in line with expectations and company expects EBIT margin of
around 1% this year, compared to 1.2% last year. Confectionary division is in line
with expectations and management believes that once revenue reaches HK$700m,
this division will be breakeven. We believe the target is achievable, given the
confectionary division grew 14% in 2011 and reached sales of HK$659m last year.
Overweight, PT HK$8.4
We rate China Foods Overweight as we are positive on the margin improvement on
the back of product mix upgrades of the wine division (51% of EBIT in 2011) and
breakeven in the confectionary division (was making HK$95m loses in 2011).
According to the company, high-end wine accounted for 19% of wine sales in 2011
and we expect high-end wine to account for 27% of wine sales in 2012, driven by
new imported prodcuts from Chile and France (launched this year). In addition, new
product under the cooperation with Michel Rollands, one of the most influential
winemakers in the world, is schedule to launch this year.
40

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Further earnings upside in 2013 could come from potential acquisitions - the
company is looking into areas such as Chinese white wine (Baiju) and seasoning and
spices products. We estimate that China Foods could generate cHK$600m in cash
flow from operations in 2012. Assuming no leverage and P/E of 15x on the acquired
target, we estimate that China Foods has the capacity to buy something making
HK$40m in profits (or 3.5% of 2013 estimated earnings). China Foods expects to
leverage on its distribution network to drive higher sales on the acquired business.
Our Dec-12 PT of HK$8.4 is based on 1.0x PEG with two-year (2012- 2014) EPS
CAGR of 26%. Key downside risk is slower improvement in China Foods wine and
kitchen foods margins.
Table 43: 2012 estimates China Foods
HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
28,011
6,662
1,180
-37
65
0
1,208
-341
867
-222
646
646
2012E
34,151
8,549
1,576
-40
75
0
1,610
-458
1,153
-259
894
894
% chg y/y
21.9%
28.3%
33.6%
2012E - BBG
33,877
JPM vs BBG
0.8%
1,505
4.7%
33.3%
34.2%
32.9%
1,579
2.0%
886
0.9%
23.8%
4.2%
2.3%
-28.2%
25.0%
4.6%
2.6%
-28.4%
1.2%
0.4%
0.3%
-0.2%
38.4%
38.4%
Table 44: 1H12 and 2H12 P&L summary China Foods

HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
1H11
13,482
3,187
611
-34
27
0
604
-187
417
-99
318
318
2H11
14,529
3,476
568
-3
39
0
604
-154
450
-123
327
327
1H12E
15,774
3,914
686
-34
30
0
683
-191
491
-117
375
375
2H12E
18,377
4,635
889
-6
45
0
928
-266
661
-143
519
519
Margins
Gross margin
Operating margin
Net margin
Tax rate
23.6%
4.5%
2.4%
-31.0%
23.9%
3.9%
2.3%
-25.4%
24.8%
4.4%
2.4%
-28.0%
25.2%
4.8%
2.8%
-28.7%
% chg y/y
1H12E
2H12E
17.0%
26.5%
22.8%
33.3%
12.3%
56.5%
As % of full year
1H12E
2H12E
46.2%
53.8%
45.8%
54.2%
43.6%
56.4%
13.0%
2.1%
17.9%
53.6%
73.3%
46.9%
42.4%
41.8%
42.6%
57.6%
58.2%
57.4%
17.7%
17.7%
58.5%
58.5%
41.9%
41.9%
58.1%
58.1%
1.2%
-0.2%
0.0%
3.0%
1.3%
0.9%
0.6%
-3.3%
41
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
China Mengniu
Operation updates
Due to the flavacin M1 incident in December last year, Mengniu's revenue in JanMay this year was only flat to low single digit increase, according to the company.
The operating environment remains challenging due to the needs for discounting and
extra spend on promotional activities.
On 15 June, Mengniu announced that Arla Foods, a leading dairy company in
Denmark, agreed to acquire a 5.9% stake in Mengniu from Hopu. Separately on 17
June, Mengniu announced it has signed a long-term Strategic Cooperation
Agreement with Arla Foods (please see details in our report dated June 15, 2012).
We believe that cooperation with Arla Foods is positive for Mengniu and could help
Mengniu to improve food safety control and product mix in the long run.
Forecast changes
We are lowering revenue forecasts by 6% for 2012 and 2013 because the current
sales run rate, which shows flat to single-digit growth in Jan-May period, was below
our expectations. We were earlier expecting Mengniu to see c9% sales increase in
1H12 and 13% for the full year. Given the slower-than-expected Jan-May run rate,
we now assume revenue to increase 4% in 1H12 and 8% for 2012.
In terms of product mix, we expect high-end/high-margin products, such as Deluxe
milk and milk powder, to account for 23% of revenue in 2012 (from 22% in 2011).
We assume raw milk costs will increase2.5% in 2012 but gross margin to be
relatively stable due to c1.5% blended ASP increase on the back of product mix
upgrades.
Given the food safety concerns, we expect A&P plus display spacing leasing fees to
be 10.6% of sales in 2012 compared to 9.4% in 2011. Net profits forecasts were
revised down by 8% and 7% for 2012 and 2013, respectively, mainly driven by lower
revenue.
Year to Dec (Rmb m)
Turnover
Gross profit
EBIT
Net profit
Key assumptions
Gross margin
EBIT margin
Net margin
New
2012E
40,363
10,202
1,847
1,573
2013E
47,413
12,148
2,419
2,003
Old
2012E
43,066
10,885
2,031
1,714
2013E
50,514
12,998
2,598
2,148
Change
2012E
2013E
-6%
-6%
-6%
-7%
-9%
-7%
-8%
-7%
25.3%
4.6%
3.9%
25.6%
5.1%
4.2%
25.3%
4.7%
4.0%
25.7%
5.1%
4.3%
0.0%
-0.1%
-0.1%
-0.1%
0.0%
0.0%
Overweight, PT HK$25.0
The key attraction of Mengniu, in our view, is its multi-year margin expansion
potential driven by product mix improvement. We will be a long-term buyer of the
stock for: 1) margin improvement on the back of product mix updates, and 2) rerating of the valuation multiple as the food safety control improves. In the short term,
sentiment of the stock might remain weak as the company is likely to see a 23%
decline in 1H12 net profits, based on our estimates. We see short-term share price
weakness as a good buying opportunity for the long term.
42

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Our new Dec-12 target price is lowered to HK$25 from HK$26 due to earnings
revisions. Our PT is based on 0.9x PEG with a two-year (2012E-14E) EPS CAGR of
25%. Key risks are larger-than- expected promotional spending in 1Q12 and shortage
of raw milk supply in China.
Table 46: Changes to 2012 estimates China Mengniu
RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
37,388
9,592
1,896
112
52
0
2,061
-276
1,785
-195
1,589
1,726
2012Enew
40,363
10,202
1,847
137
55
0
2,039
-273
1,766
-193
1,573
1,793
% chg
y/y
8.0%
6.4%
-2.6%
New vs
old
-6.3%
-6.3%
-9.1%
2012E BBG
41,719
JPM vs
BBG
-3.2%
2,055
-10.1%
-8.3%
-8.5%
-8.3%
2,181
-6.5%
-1.0%
3.9%
2012Eold
43,066
10,885
2,031
137
55
0
2,223
-298
1,925
-211
1,714
1,934
1,705
5.2%
25.7%
5.1%
4.3%
-13.4%
25.3%
4.6%
3.9%
-13.4%
-0.4%
-0.5%
-0.4%
0.0%
25.3%
4.7%
4.0%
-13.4%
0.0%
-0.1%
-0.1%
0.0%
-1.1%
-1.2%
-1.0%
-8.2%
-7.3%
Table 47: 1H12 and 2H12 P&L summary China Mengniu

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
1H11
18,579
4,825
995
37
16
0
1,049
-156
892
-102
790
2H11
18,809
4,767
901
75
36
0
1,012
-120
892
-93
799
1H12E
19,340
4,932
781
41
18
0
840
-126
714
-102
612
2H12E
21,023
5,270
1,065
96
37
0
1,199
-147
1,052
-91
961
Margins
Gross margin
Operating margin
Net margin
Tax rate
26.0%
5.4%
4.3%
-14.9%
25.3%
4.8%
4.3%
-11.8%
25.5%
4.0%
3.2%
-15.0%
25.1%
5.1%
4.6%
-12.2%
% chg y/y
1H12E
4.1%
2.2%
-21.5%
2H12E
11.8%
10.5%
18.2%
As % of full year
1H12E
2H12E
47.9%
52.1%
48.3%
51.7%
42.3%
57.7%
-19.9%
-19.4%
-20.0%
18.4%
22.5%
17.9%
41.2%
46.2%
40.4%
58.8%
53.8%
59.6%
-22.6%
20.2%
38.9%
61.1%
-0.5%
-1.3%
-1.1%
-0.1%
-0.3%
0.3%
0.3%
-0.4%

1Q Results: During 1Q12 retail business margin impacted by brand building. Retail
business reported a 27% sales and 5% recurring profit growth. Management noted
that while staff and rental cost ratios were maintained at 1Q11 levels, the brandbuilding exercise has continued to have an impact on margins. Beer revenue was up
18% y/y, almost half of this growth driven by ASP increases thanks to the higher
43
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
proportion of mid-to-high-end products, which now account for 32% of sales and has
grown c35% y/y. CRE decided to pull forward some of the ad spending to 1Q this
year (vs 2Q last year) to get ready for Olympics and have more effective brand
building. Therefore, beer margins were negatively impacted and the division posted a
small loss, which we would not read into too much given low season. Revenue
growth of 65% was stronger than expected thanks to a solid c20% price increase as
management boosted brand image and introduced Kirin products as well (milk tea
and coffee). One-off losses due to Kirin JV affected margins negatively. Food
business posted 14% sales growth; due to the impact of high input costs, earnings
were down 50%. As a result CRE reported HK$560MM in recurring net profit for
1Q12, down 15% y/y
FY12 estimates: During 2H11 CREs retail margins were exceptionally weak and
we expect due to a low base in 2HFY12 retail margins to start showing some
improvement on y/y basis. As a result, we expect CREs earnings to start posting
growth in 2Q and onwards leading to c26% earnings growth for FY12.
Maintain Neutral: Our Dec-12 PT of HK$24.5 is based on SOTP in which we value
the beer division at 25x 2012E (in line with Tsingtao) and retail division at 22x
2012E (average of the space). A key risk to our call on the upside is a sizeable M&A
and on the downside is further deterioration in retail margins. Retail business
margins have disappointed in FY11. We are assuming that they will slowly recover
and at least maintain margin for FY12. If they do not, it would pose a downside risk
to our 2012 earnings estimate and PT. We assumed barley costs to be flat in 2012. If
barley costs strengthen this would present another downside risk to our estimates
Table 48: 2012 estimates CRE
HK$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
110,164
27,357
5,339
77
10
0
5,426
-1,556
3,870
-1,038
2,832
1,889
2012E-new
135,786
34,082
6,610
67
0
0
6,677
-2,144
4,533
-1,240
3,293
2,393
% chg y/y
23.3%
24.6%
23.8%
2012E - BBG
132,160
JPM vs BBG
2.7%
5,560
18.9%
23.1%
37.8%
17.1%
5,535
20.6%
2,596
-7.8%
24.8%
4.8%
2.6%
-28.7%
25.1%
4.9%
2.4%
-32.1%
0.3%
0.0%
-0.1%
-3.4%
16.3%
26.7%
China Yurun
Operation updates
According to the company, the operating environment remains challenging for Yurun
in the first half due to Clenbuterol concerns. Margins improved in 2Q from 1Q
thanks to less discounting but is still not yet back to normal levels. For 2012, the
company is keeping the guidance of 5% volume growth for the upstream products
and flat volume growth for the downstream products. The pork market in China is
44
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
growing at a 10-15% CAGR, according to the company, suggesting Yurun will lose
market share in 2012. The average hog price is expected to decline 15% in 2012
based on Yurun's estimates.
We have assumed sales volume to increased 5.5% and ASP to decline 8.5% for
upstream products in 2012. For the downstream products, we expect flat volume and
flat ASP in 2012. GPM is likely to increase by 1.3ppt to 9.9%, based on our
estimates thanks to the increase in ASP and a drop in hogs price.
Underweight, PT HK$7.6
We rate Yurun Underweight as the operating environment remains difficult for
Yurun and earnings remain unpredictable. Yurun believes that the Clenbuterol
contamination is an industry-wide phenomenon. Taking the melamine incident in
2008 as a reference, Yurun expects the whole industry will take about one year to
recover. However, we are concerned that Yurun might be facing some companyspecific issues as Zhongpin (HOGS US), though facing the same margin pressure, is
expecting sales volume growth of 30% in 2012, better than Yurun's 5% target for
upstream.
Our Dec-12 PT is based on 0.8x 2012E book value, in line with Smithfield (SFD US).
We use PB as our methodology because we believe Yurun was loss-making in 2H11
and is still loss-making in 1Q12, based on our estimates. Key upside risk would be a
fast recovery in demand for Yuruns pork products.
Table 49: 2012 estimates China Yurun
RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
32,315
2,785
1,942
-36
0
0
1,905
-100
1,806
-7
1,799
1,071
2012E
30,825
3,043
1,932
-88
0
0
1,843
-124
1,719
-9
1,710
1,465
% chg y/y
-4.6%
9.3%
-0.5%
2012E - BBG
31,370
JPM vs BBG
-1.7%
1,831
5.5%
-3.3%
24.5%
-4.8%
1,722
7.0%
1,481
-1.1%
8.6%
6.0%
5.6%
-5.2%
9.9%
6.3%
5.5%
-6.7%
1.3%
0.3%
0.0%
-1.5%
-5.0%
36.8%
45

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 50: 1H12 and 2H12 P&L summary China Yurun

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
1H11
16,456
2,066
1,734
-12
0
0
1,721
-106
1,615
-6
1,609
1,213
2H11
15,859
719
208
-24
0
0
184
6
191
-1
190
-142
1H12E
15,066
904
633
-35
0
0
597
-36
561
-5
557
169
2H12E
15,759
2,139
1,299
-53
0
0
1,246
-88
1,158
-5
1,153
1,619
Margins
Gross margin
Operating margin
Net margin
Tax rate
12.6%
10.5%
9.8%
-6.2%
4.5%
1.3%
1.2%
3.5%
6.0%
4.2%
3.7%
-6.0%
13.6%
8.2%
7.3%
-7.1%
% chg y/y
1H12E
2H12E
-8.4%
-0.6%
-56.2%
197.6%
-63.5%
523.9%
As % of full year
1H12E
2H12E
48.9%
51.1%
29.7%
70.3%
32.7%
67.3%
-65.3%
-66.2%
-65.2%
575.5%
-1456.8%
506.4%
32.4%
28.9%
32.7%
67.6%
71.1%
67.3%
-65.4%
-86.0%
506.2%
NA
32.6%
9.5%
67.4%
90.5%
-6.6%
-6.3%
-6.1%
0.2%
9.0%
6.9%
6.1%
-10.6%
Dairy Farm
We expect revenue to increase12% to US$10bn and net profit to increase14% to
US$551m in 2012. North Asia is likely to be the fastest-growing market and
increase revenue by 16% and profits by 29%, based on our estimates, driven by
expansion in China. According to the company, 7-Eleven stores in China have turned
profitable (we expect 1.5% EBIT margin in 2012 compared to -2% in 2011) and the
management is committed to deliver positive stores growth in 2012 (we expect net
add of 35 7-Eleven stores compared to a decline of 5 stores in 2011. There is a risk
of lower margin in Malaysia market as management expects more challenges in this
market.
Neutral, Dec-12 PT S$9.0
Our PT is based on 1x PEG with a two-year (2012-14) EPS CAGR of 17.6%. At the
current share price, Dairy Farm is trading at 2012 PE of 26x, a premium to Jardine
Matheson and Jardine Strategic (12x 12E P/E). Key downside risk is higher costs in
HK. Key upside risk is higher currency benefits.
46
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 51: 2012 estimates Dairy Farm

US$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
9,134
2,683
535
-18
66
0
584
-99
485
0
484
484
2012E-new
10,215
3,000
598
-5
69
0
662
-113
550
1
551
551
% chg y/y
11.8%
11.8%
11.7%
2012E - BBG
10,065
JPM vs BBG
1.5%
597
0.1%
13.4%
13.4%
13.4%
664
-0.3%
552
-0.3%
29.4%
5.9%
5.3%
-17.0%
29.4%
5.9%
5.4%
-17.0%
0.0%
0.0%
0.1%
0.0%
13.7%
13.7%
Hengan
Operation updates
According to the company, diaper sales were below expectations year to date.
Hengan believes that tier 2 and below cities are the key growth areas for diaper
consumption, given the low penetration. However, demand for Hengans diapers in
the tier 2 and below cities has not yet picked up. We expect diaper sales to grow
10% in 1H12 and 13% for the full year.
Demand for Hengans tissue paper product s were impacted by the slower economy,
according to the company, as consumers are switching to lower-end tissue products,
such as paper towels and toilet paper from higher-end products such as pocket-size
tissue packs and tissue box. Hengan positions itself as a high-end tissue products
provider; hence, it was negatively impacted by the trend. In addition, competition
from the No. 2 and No. 3 tissue product companies has intensified as they put out
more promotions during the period. We expect tissue paper sales to grow 15% in 1H
and 31% for the full year.
Snack food division was also negatively impacted by the food safety concern in the
entire F&B sector in China. We expect snack foods to grow 15% in 1H and 25% for
the full year. Overall, Hengan comments that in 1H12 top-line growth was
challenging but margins have improved nicely on the back of lower raw material
prices. We assume the top line to grow 17% y/y and gross margin to expand 4.9ppt,
driven by 6.6ppt for tissue paper, 1.5ppt for sanitary napkins, and 1.8ppt for diapers.
Going into 2H12, Hengan plans to spend more on A&P, especially for the tissue
paper products. For the full year of 2012, Hengan targets to have double-digit top
line growth and margin expansion in 2012 from 2011.
Wood pulp prices, which accounted for c56% of tissue paper cost, had bottomed in
4Q11/1Q12. Hengan keeps 4.5 months of inventory on average and we estimate that
wood pulp costs for Hengan in 1H12 is c18% lower y/y. GPM for tissues could
expand by 6-7ppt in 1H12 based on our estimates. However, current wood pulp price
has risen c21% from the bottom. GPM expansion in 2H12 is likely to be less than in
47

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
1H12, in our view. For the petrochemical-related raw material (for sanitary napkin
and diaper), Hengan is keeping only two months of inventory; therefore, it could
benefit from the recent price fall.
2,000
1500
1,500
Jul-12
Jan-12
2,500
US$/ton
2000
Jan-12
Figure 16: HDPE Polymers Far East spot price
US$/ton
Jul-11
Figure 15: LDPE Polymers Far East spot price
Jul-11
Source: Bloomberg (FOEXBHKP Index).
Jan-11
Source: Bloomberg (FOEXUSNB Index).
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-07
Jan-09
Jul-12
400
Jan-12
500
500
Jul-11
600
600
Jan-11
700
Jul-10
700
Jan-10
800
800
Jul-09
900
900
Jul-08
1,000
1,000
Jan-08
1,100
Jul-07
US$/ton
Jan-07
US$/ton
Jan-08
Figure 14: Short fiber pulp price trend
Jul-07
Figure 13: Long fiber pulp price trend
1000
1,000
500
500
Source: Bloomberg (MERSETL1 Index).
Jul-12
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Source: Bloomberg (MERSETH1 Index).
Underweight, PT HK$53
Hengan is currently trading at 2012 P/E of 25x, which reflects the high expectation
of margin expansion on the back of lower raw material costs, in our view. We are
Underweight the stock and note that 1H12 sales are likely to be disappointing. We
expect Hegnan to deliver 17% top-line growth and 38% earnings growth in 1H12.
We rate Hengan Underweight as we expect tissue paper segment to account for 52%
of the sales by 2014 (from 47% in 2011) driven by capacity expansion. With more
than half of the revenue coming from commodity products, we expect Hengans
earnings volatility to increase going forward. In addition, we believe due to the
product positioning, we see Hengan has little advantage in the diaper segment and
have doubts on Hengans ability to delivery diaper growth.
Our Dec-12 target price of HK$53.0 is based on 1x PEG with a two-year (2012E14E) EPS CAGR of 18%. Key upside risks to our call would be a sudden drop in
pulp prices and a faster-than-expected roll-out of new diaper products.
48

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 52: 2012 estimates Hengan

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
17,051
6,800
3,294
-38
0
0
3,255
-570
2,686
-37
2,649
2,649
2012E
21,573
9,330
4,609
-3
0
0
4,605
-921
3,684
-47
3,637
3,637
% chg y/y
26.5%
37.2%
39.9%
2012E - BBG
21,275
JPM vs BBG
1.4%
4,429
4.1%
41.5%
61.6%
37.2%
4,440
3.7%
3,569
1.9%
39.9%
19.3%
15.5%
-17.5%
43.2%
21.4%
16.9%
-20.0%
3.4%
2.0%
1.3%
-2.5%
37.3%
37.3%
Table 53: 1H12 and 2H12 P&L summary Hengan

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
8,189
3,160
1,349
65
0
0
1,414
-206
1,207
-26
1,182
1,182
2H11
8,862
3,640
1,945
-103
0
0
1,841
-363
1,478
-11
1,467
1,467
1H12E
9,590
4,171
2,062
-2
0
0
2,060
-412
1,648
-11
1,637
1,637
2H12E
11,983
5,159
2,547
-2
0
0
2,545
-509
2,036
-36
2,000
2,000
38.6%
16.5%
14.4%
-14.6%
41.1%
21.9%
16.6%
-19.7%
43.5%
21.5%
17.1%
-20.0%
43.0%
21.3%
16.7%
-20.0%
% chg y/y
1H12E
2H12E
17.1%
35.2%
32.0%
41.7%
52.8%
31.0%
As % of full year
1H12E
2H12E
44.5%
55.5%
44.7%
55.3%
44.7%
55.3%
45.7%
99.6%
36.5%
38.2%
40.0%
37.8%
44.7%
44.7%
44.7%
55.3%
55.3%
55.3%
38.5%
38.5%
36.4%
36.4%
45.0%
45.0%
55.0%
55.0%
4.9%
5.0%
2.6%
-5.4%
2.0%
-0.7%
0.1%
-0.3%
Tibet 5100
Operation updates
Retail sales shown rapid growth and accounted for c25% of revenue in 1H12
compared to 14% in 2011, according to the company. Key retail channels include: 1)
supermarket/hypermarkets. 2) 5-star hotels, 3) chain restaurants, 4) club/bar, 5) golf
course/ theater, and 6) airports.
As the company continues to diversify the customer base, reliance to CRE will
further reduce to less than 50% of total in 2012 from 62% in 2011, according to the
company. Due to seasonality, shipments to CRE in 1H and 2H usually accounts for
15-20% and 80-85%, respectively. For the full year, the company is expecting topline growth of 25-30% y/y.
49
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Gross margin is expected to expand, according to the company, driven by more sales
to non CRE customers. GPM for CRE sales was 76% and GPM for non CRE sales
was 83% in 2011, based on our estimates. Distribution cost as a percentage of sales
would increase because transportation costs for non CRE sales are higher. The
company budgets 5% of sales for A&P spending in 2012, compared to 2% in 2011.
Receivable days could come down from 123 days at the end of 2011 to less than 100
days at end of June 2012, based on our estimates. This is because Tibet 5100 gives
credit terms to CRE only and sales to CRE in 1H is 18% of the full year. It is likely
that receivable days could go up again by end of 2012.
Overall, we expect revenue to increase 28.6% y/y to Rmb815m and net profits to
increase 19.4% y/y to Rmb446m in 2012. Excluding the government grants, we
expect net profits to increase 27% y/y to RMb340m in 2012.
Forecast changes
We are lowering our revenue forecasts by 29% for 2012 and 2013 to be in line with
the company's guidance (25-30% top-line growth). We had previously expected
sales volume for non CRE customers to double assuming three more institutional
clients and each to order the same amount as the existing clients. The latest guidance
suggests that the new clients signed up this year are ordering less volume compared
to the existing clients each. Our core net profit estimates are lowered by 20% and
16% for 2012 and 2013, respectively, mainly due to the downward revision of sales
but partially offset by lower transportation costs due to savings in transportation
costs for orders from the Lhasa government.
Year to Dec (Rmb m)
Sales
COGS
Gross profit
GPM
EBIT
EBIT margin
Net profit
NP margin
Core NP
Cor NP margin
Old
2012E
1,139
231
908
79.7%
633
55.6%
545
47.9%
426
37.4%
2013E
1,449
296
1,153
79.6%
802
55.4%
691
47.7%
544
37.6%
New
2012E
814
165
649
79.7%
511
62.8%
445
54.7%
340
41.8%
2013E
1,032
207
825
80.0%
666
64.6%
591
57.2%
458
44.4%
Change
2012E
2013E
-28.5%
-28.8%
-28.5%
-30.2%
-28.5%
-28.5%
0.0%
0.4%
-19.3%
-16.9%
-18.3%
-14.6%
-20.1%
-15.9%
Valuation
Given Tibet 5100s production and cash flow characteristics, a DCF approach is
appropriate for this company, in our view. We use an 15.5% cost of equity (risk-free
rate of 5%, equity risk premium of 7% and beta of 1.5) and 2.0% terminal growth
rate. We use a two-stage DCF model30% core earnings CAGR over 2012-14E
and 3% core earnings CAGR over 2015-20E.
Our Dec-12 price target is lowered to HK$2.2 from HK$2.6 due to the earnings
revision. At our target price, Tibet 5100 would be trading at 10x 2012E reported
earnings and 14x 2012E core earnings.
50
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 55: DCF valuation breakdown

Year to Dec (Rmb m)
Pre-tax profit
Add: Depreciation and Amortization
Less: Tax Paid
Less: Capex
Less: Working Capital Changes
Free cash flow to equity holders
Discount factor
PV of operating free cash flow
Terminal
NPV of free cash flow (Rmb m)
Net cash (2012E)
Equity value (Rmb m)
Equity value (HK$ m)
# of outstanding shares
Value per share (HK$)
2012E
454.9
24.0
(60.9)
(50.0)
478.6
846.5
1.0
846.5
889.6
3,352
1,569
4,921
5,709
2,569
2.2
2013E
519.1
33.5
(81.9)
(100.0)
(92.9)
277.8
1.2
240.6
2014E
687.5
53.2
(78.8)
(200.0)
(110.6)
351.3
1.3
263.3
2015E
2016E
2017E
2018E
2019E
2020E
368.8
1.5
239.4
384.5
1.8
216.1
398.4
2.1
193.8
410.6
2.4
173.0
421.4
2.7
153.7
430.7
3.2
136.0
New vs
old
-28.5%
-28.5%
-20.2%
2012E BBG
906
JPM vs
BBG
-10.1%
582
-13.2%
-19.6%
-21.1%
-19.3%
589
-11.9%
453
-25.9%
0.0%
6.4%
6.2%
0.3%
Table 56: Changes to 2012 estimates Tibet 5100

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
633
499
441
14
0
0
455
-82
373
0
373
268
2012Enew
814
649
505
14
0
0
519
-79
440
0
440
336
% chg
y/y
28.6%
30.2%
14.5%
18.0%
25.6%
2012Eold
1,139
908
633
12
0
0
645
-100
545
0
545
426
78.8%
69.6%
58.9%
-18.0%
79.7%
62.0%
54.1%
-15.2%
0.9%
-7.6%
-4.9%
2.8%
79.7%
55.6%
47.9%
-15.5%
14.1%
-3.7%
18.0%
-19.3%
-21.1%
51

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 57: 1H12 and 2H12 P&L summary Tibet 5100

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
209
164
179
-2
0
0
177
-29
148
0
148
83
2H11
424
334
262
16
0
0
278
-53
225
0
225
184
1H12E
260
211
202
7
0
0
210
-34
175
0
175
109
2H12E
554
438
302
7
0
0
310
-45
265
0
265
227
78.6%
85.6%
70.8%
-16.3%
78.9%
61.8%
53.1%
-19.1%
81.2%
77.8%
67.4%
-16.3%
79.0%
54.6%
47.8%
-14.4%
% chg y/y
1H12E
2H12E
24.4%
30.7%
28.6%
30.9%
13.1%
15.5%
As % of full year
1H12E
2H12E
32.0%
68.0%
32.6%
67.4%
40.1%
59.9%
18.4%
18.4%
18.4%
11.4%
-15.7%
17.8%
40.4%
43.3%
39.8%
59.6%
56.7%
60.2%
18.4%
31.6%
17.8%
22.8%
39.8%
32.6%
60.2%
67.4%
2.7%
-7.8%
-3.4%
0.0%
0.1%
-7.2%
-5.3%
4.6%
Tingyi
1Q Details: In instant noodles category Tingyi posted 10% revenue and 24% EBIT
growth respectively in 1Q12. While bowl noodles sales slowed down, mid to low end
pack noodles sales accelerated. Thanks to decline in input costs, noodles division
posted 29.8% gross margin up from 26.1% in 1Q11. During 1Q12 in beverages
segment RTD sales were particularly slow, down 40% y/y. While part of this was
due to seasonality (2011 RTD sales front loaded in 1Q), part of it was due to shift to
other beverages from RTD. In particular, the newly developed milk tea category has
been very successful in China. Given that Tingyi did not have this product in 1Q,
they lost share to Uni-President during the quarter. Thanks to decline in input costs
gross margin edged slightly higher on y/y basis but product mix shift (RTD has
higher margins than other beverage categories) and operating deleveraging led to a
sharp 65% decline in EBIT.
2Q expectations: We expect noodles sales growth to improve sequentially in 2Q12
as it is entering a low base. On the beverages front we expect Tingyi to turn into
small positive growth helped by the low base and the introduction of milk tea in
April. Management notes that milk tea sales have been performing well since the
introduction, and taking some market share from competitors. In 2Q12 we expect
Tingyi to post c15% revenue growth for existing products. We are looking for 47%
growth at headline sales and 10% growth at headline earnings with the first time
consolidation of Pepsi business.
Maintain Neutral: While Tingyis 1Q12 earnings were weak down 16% y/y at
recurring level with seasonality effect easing and with the introduction of milk tea we
expect Tingyis earnings to go back to growth in coming quarters, posting 15%
recurring profit growth for FY12. We maintain our Neutral rating but remain
negative on Tingyi in the short term given heightened competition in noodles and
slowdown in tea sales both putting pressure on the extent of margin improvement.
Our Dec-12 PT of HK$16.5 is based on SOTP. We value existing Tingyi business at
HK$16 based on 1x PEG and 25% two-year earnings CAGR post 2012 and Pepsi
business at HK$ 0.3 based on DCF. Key upside risks to our PT are a deep
52
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
unexpected cut in distribution costs in remainder of 2012, and a sharp decline in

input costs across the board, while downside risk is a sudden slowdown in sales
growth and longer than expected turn-around time for acquired Pepsi business.
Table 58: 2012 estimates Tingyi
US$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
7,867
2,088
618
29
0
16
663
-163
500
-80
420
381
2012E-new
11,001
3,091
805
20
0
0
825
-173
652
-120
532
437
% chg y/y
39.8%
48.0%
30.3%
2012E - BBG
9,810
JPM vs BBG
12.1%
821
-1.9%
24.5%
5.9%
30.5%
862
-4.2%
491
-11.1%
26.5%
7.9%
5.3%
-24.6%
28.1%
7.3%
4.8%
-21.0%
1.6%
-0.5%
-0.5%
3.7%
26.8%
14.8%
Tsingtao
1Q12 Results: Tsingtao reported a 7% y/y increase in the top line in 1Q12, driven by
a 9% increase in sales volume and decline in blended ASP. Tsingtao brand volumes
were almost flat, up 1% y/y. At the same time, second-tier brands were up 23% y/y.
Strong increase in second-tier brands led to a decline in blended ASPs. Gross margin
declined sharply in 1Q12 to 31.1% from 35.8% in 1Q11. In terms of quarterly
performance this was the sharpest decline in gross margin in a single quarter since
gross margins started to fall 12 months ago. The decline in gross margin was driven
partly by high input costs and partly by the product mix change, which shifted
towards second-tier brands. In 1Q12 operating expenses fell 10% y/y, helping the
company report almost flat operating profit in 1Q12 and together with higher net
financial income led to 15% growth in net profit.
2Q Expectation: We expect Tsingtao to post c12% revenue growth in 2Q given that
big seasonality in sales will be over and recent industry data also showing c9%
increase in beer output across China in April and May y/y. While we expect 1% y/y
increase in gross margin, we also model c1% y/y increase in A&P expenses as well,
leading to c12% earnings growth as well.
Maintain UW: We believe the cut in operating expenses is not sustainable
throughout the remainder of the year and we expect 15% earnings growth for the
FY12 on the back of 14% increase in revenue. We expect that while the pressure
from gross margin will ease in coming quarters, operating expenses will go back up
again, still leading to c15% earnings growth for FY12. We maintain UW as the stock
trades at demanding 2012 P/E of 24x, with 2-yr EPS CAGR of 17.5% after 2012. We
assume barley costs to be flat to mildly up in 2012. If barley costs weaken this could
present upside risks to our 2012 estimates and PT. If management spends more A&P
on second tier brands this could present downside risks to our 2012 estimates and PT.
53
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 59: 2012 estimates Tsingtao

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
23,158
7,717
2,118
50
4
282
2,455
-657
1,798
-60
1,738
1,738
2012E
26,508
9,021
2,553
43
10
191
2,797
-713
2,084
-83
2,000
2,000
% chg y/y
14.5%
16.9%
20.5%
2012E - BBG
26,106
JPM vs BBG
1.5%
2,721
-6.2%
13.9%
8.5%
15.9%
2,848
-1.8%
2,043
-2.1%
33.3%
9.1%
7.5%
-26.8%
34.0%
9.6%
7.5%
-25.5%
0.7%
0.5%
0.0%
1.3%
15.1%
15.1%
Uni-President China
Operation updates
Based on Tingyis 1Q12 revenue growth and market share data, we estimate that
UPC revenue for instant noodles grew 35% and beverages grew 27% in 1Q12.
According to AC Nielsen data, UPC market share in RTD tea market increased to
28.6% as of March 2012, from 22.5% a year a go. During the same period, Tingyi
market share declined from 54.2% to 45.8% and revenue for RTD tea. We have
applied the same growth rate that UPC achieved in 1Q12 to the full year revenue
assumptions.
Tingyi launched its milk tea products in April 2012 and, according to Tingyi, UPCs
milk tea sales drop 16-17% month-on-month in the first month of the new Tingyi
new milk tea products launch. In light of intensified completion from Tingyi, UPC is
guiding A&P to be 12% sales this year compared to 10% last year.
Given the raw material price trend, we expect GPM for beverages to improve by
4.2ppt to 33.5% and GPM for noodles to increase by 4.9ppt to 34.7% in 2012.
Underweight, PT HK$5.0.
We rate UPC Underweight as we believe the consensuss A&P assumptions are too
low given the intensified competition from Tingyi. UPCs earnings are highly
leveraged to A&P costs - every 5 bps increase in A&P expenses cuts our FY12E EPS
estimate by 14%.
Our new Dec-12 target price of HK$5.0 is based on a 0.9x PEG with a two-year
(2012E-14E) EPS CAGR of 28%. Key upside risks are lower than expected PET
prices and A&P spending.
54
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Table 60: 2012 estimates Uni-President China

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
16,932
4,943
261
95
40
0
396
-84
312
0
312
312
2012E
21,931
6,986
684
64
60
0
807
-178
630
0
630
630
% chg y/y
29.5%
41.3%
161.7%
2012E - BBG
22,112
JPM vs BBG
-0.8%
834
-18.0%
103.7%
110.3%
101.9%
938
-14.0%
742
-15.2%
29.2%
1.5%
1.8%
-21.3%
31.9%
3.1%
2.9%
-22.0%
2.7%
1.6%
1.0%
-0.7%
101.9%
101.9%
Table 61: 1H12 and 2H12 P&L summary Uni-President China

RMBm
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
8,799
2,481
156
30
42
0
227
-51
177
0
177
177
2H11
8,133
2,462
105
65
-2
0
169
-34
135
0
135
135
1H12E
11,386
3,517
496
32
36
0
564
-124
440
0
440
440
2H12E
10,545
3,469
188
32
24
0
244
-54
190
0
190
190
28.2%
1.8%
2.0%
-22.4%
30.3%
1.3%
1.7%
-19.9%
30.9%
4.4%
3.9%
-22.0%
32.9%
1.8%
1.8%
-22.0%
% chg y/y
1H12E
29.4%
41.8%
218.0%
2H12E
29.7%
40.9%
78.3%
As % of full year
1H12E
2H12E
51.9%
48.1%
50.3%
49.7%
72.5%
27.5%
147.9%
143.8%
149.1%
44.2%
59.6%
40.3%
69.8%
69.8%
69.8%
30.2%
30.2%
30.2%
149.1%
149.1%
40.3%
40.3%
69.8%
69.8%
30.2%
30.2%
2.7%
2.6%
1.9%
0.4%
2.6%
0.5%
0.1%
-2.1%
Want Want
Operation updates
According to the company, revenue has been on-track to the full year guidance of
20% growth for Dry Foods division (rice cracker and snacks) and 25% for Beverage
division. The roll-out of new appraisal system for third-party distributors has started;
as a result, total number of third-party distributors is expected to decline further from
8,000 at the end of 2011. But efficiency for each distributor should improve as Want
Want plans to install the information system that it uses for KA accounts onto the
wholesales customers.
On the cost side, we note that the milk powder prices have been trending below our
expectation. Year-to-date, the average imported milk powder price is about 20%
lower from 1H11. We had previously factored in only 3% decline in milk powder
55
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
costs. Milk powder is the key raw material for Want Wants Hot Kid milk drink and
accounted for 16.9% of the COGs in 2011.
Overall, we expect revenue to increase 22% and GPM to expand 3.7ppt to 38.5%
(rice cracker up 2.4ppt, dairy and beverage up 4.3ppt and snack foods up3.4ppt). The
increase in GPM will be partially offset by higher A&P (up by 1ppt). Net net, we
expect earnings to increase by 36% IN 2012.
Figure 17: Milk powder price trend
USD/MT
5,000
4,500
4,000
3,500
3,000
2,500
2,000
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Source: Fonterra
Forecast changes
We are keeping our revenue forecasts largely unchanged but lifting earnings
forecasts by 6% and 7% for 2012 and 2013 respectively due to lower milk powder
prices. We have now factored in milk powder to decline 20% y/y in 2012. Our
sensitivity suggests that for every 5ppt changes in milk powder price, Want Wants
earnings would vary by 2%.
Year to Dec (US$ m)
Turnover
- Rice carcker
- Dairy & beverage
- Snack foods
Gross profit
EBIT
Net profit
EPS (US$)
New
2012E
3,592
976
1,737
866
1,381
730
569
0.0431
2013E
4,273
1,172
2,086
1,002
1,690
910
696
0.0526
Old
2012E
3,592
976
1,737
866
1,339
687
537
0.0406
2013E
4,284
1,183
2,086
1,002
1,612
852
651
0.0493
Change
2012E
2013E
0.0%
-0.2%
0.0%
-0.9%
0.0%
0.0%
0.0%
0.0%
3.2%
4.8%
6.2%
6.9%
6.0%
6.8%
6.0%
6.8%
Neutral PT HK$7.6
Our new Dec-12 target price of HK$7.6 (previously HK$7.0) is based on 1x PEG
and a two-year (2012E-14E) EPS CAGR of 22.5%. The key upside risk would be a
greater-than-expected decline in raw material costs and key downside risk would be
slower-than-expected sales if the new distribution initiatives resulted in turnover in
distributors. We would be holding the share until the result, which could surprise the
market on the upside due to lower milk powder costs.
56

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Table 63: Changes to 2012 estimates Want Want

US$m
Sales
Gross profit
Operating profit
Share of associates and
JVs
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
2011
2,947
1,025
522
16
2012Enew
3,592
1,381
730
19
0
0
538
-119
420
0
419
372
0
0
749
-180
569
0
569
538
34.8%
17.7%
14.2%
-22.0%
38.5%
20.3%
15.9%
-24.0%
% chg
y/y
21.9%
34.8%
39.7%
2012Eold
3,592
1,339
687
19
New vs
old
0.0%
3.2%
6.2%
2012E BBG
3,645
JPM vs
BBG
-1.5%
696
4.9%
6.0%
6.0%
6.0%
717
4.5%
35.7%
44.7%
707
-170
537
0
537
490
546
-1.4%
3.7%
2.6%
1.6%
-2.0%
37.3%
19.1%
14.9%
-24.0%
1.2%
1.2%
0.9%
0.0%
0
39.2%
51.5%
35.7%
6.0%
9.9%
Table 64: 1H12 and 2H12 P&L summary Want Want

US$m
Sales
Gross profit
Operating profit
Other inc./(exp.)
PBT
Tax
PAT
Minority
Net profit
Margins
Gross margin
Operating margin
Net margin
Tax rate
1H11
1,279
422
204
5
0
0
209
-42
167
0
167
2H11
1,667
603
319
10
0
0
329
-77
253
0
252
1H12E
1,565
571
284
7
0
0
290
-67
223
0
223
2H12E
2,027
810
446
13
0
0
459
-113
346
0
346
33.0%
15.9%
13.1%
-20.1%
36.2%
19.1%
15.1%
-23.3%
36.5%
18.1%
14.3%
-23.0%
40.0%
22.0%
17.1%
-24.6%
% chg y/y
1H12E
2H12E
22.3%
21.6%
35.3%
34.4%
39.3%
40.0%
As % of full year
1H12E
2H12E
43.6%
56.4%
41.3%
58.7%
38.9%
61.1%
38.8%
58.8%
33.8%
39.5%
47.6%
37.0%
38.7%
37.1%
39.2%
61.3%
62.9%
60.8%
33.8%
37.0%
39.3%
60.7%
3.5%
2.2%
1.2%
-2.9%
3.8%
2.9%
1.9%
-1.4%
57

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Retail Valuation Table

Company
Price
(LC)
Mkt Cap
(USD mn)
11
P/E
12E
13E
EPS CAGR
12E-14E
PEG (x)
12E-14E
11
P/B
12E
13E
11.0
1833 HK
3308 HK
3368 HK
825 HK
848 HK
331 HK
7.6
15.7
6.9
4.2
1.4
0.7
1,957
3,940
2,486
906
976
392
14.5
21.0
14.1
11.3
9.6
8.0
13.1
13.2
18.8
13.7
9.9
9.1
7.5
12.0
11.3
15.1
12.0
8.6
7.0
5.8
10.0
19.3%
28.3%
15.0%
~
26.1%
20.7%
21.9%
0.7
0.7
0.9
~
0.3
0.4
0.6
1.9
5.5
3.0
1.2
1.1
1.0
2.3
1.7
4.8
2.7
1.1
0.9
1.1
2.1
1.5
4.1
2.4
1.0
0.9
1.0
1.8
2.7
1.2
3.2
3.5
4.2
6.3
3.5
Fashionwear/footwear Retail
Belle International
Ports Design
Daphne International^
Trinity Limited
China Lilang
Average
1880 HK
589 HK
210 HK
891 HK
1234 HK
13.1
8.1
7.8
4.9
5.3
14,266
587
1,661
1,076
819
21.3
8.7
13.7
16.5
8.4
13.7
19.3
8.2
12.2
14.6
8.1
12.5
15.7
7.3
9.9
11.6
6.9
10.3
22.2%
10.7%
21.7%
25.2%
18.0%
19.6%
0.9
0.8
0.6
0.6
0.4
0.6
4.7
2.0
3.2
2.6
2.4
3.0
4.0
1.8
2.7
2.5
2.0
2.6
3.5
1.6
2.3
2.3
1.8
2.3
Jewellery & Watch Retail

Xinyu Hengdeli^
Chow Tai Fook*
Average
3389 HK
1929 HK
2.4
9.6
1,382
12,377
10.8
15.1
13.0
10.1
13.2
11.6
8.3
10.7
9.5
20.0%
21.9%
21.0%
0.5
0.6
0.6
1.8
3.3
2.6
1.6
2.8
2.2
Sportswear Brands
Anta
China Dongxiang^
Li Ning
Xtep
361 Degrees^
Peak Sports^
Average
2020 HK
3818 HK
2331 HK
1368 HK
1361 HK
1968 HK
4.7
0.7
4.3
2.7
1.7
1.3
1,505
500
591
758
461
352
5.5
31.5
9.7
5.0
3.2
2.9
9.6
6.6
8.1
13.9
5.7
3.3
4.4
7.0
7.6
7.4
9.2
7.7
3.2
4.0
6.5
-17.8%
11.3%
34.7%
-24.6%
~
5.8%
1.9%
-0.4
0.7
0.4
-0.2
~
0.8
0.3
1.5
0.5
1.0
1.2
0.6
0.6
0.9
493 HK
002024
CH
1.0
2,219
7.7
9.2
7.2
23.1%
0.4
8.4
9,236
12.2
9.9
11.6
10.4
9.9
8.6
18.2%
20.7%
Supermarkets, Hypermarkets, Convenience Stores

Beijing Jingkelong^
814 HK
5.7
Lianhua^
980 HK
7.4
Wumart Stores^
1025 HK
15.7
Average
305
1,068
2,590
9.2
10.8
27.9
16.0
8.1
10.7
21.7
13.5
6.8
9.6
18.0
11.5
12.3
10.8
9.1
CHINA
Department Stores
Intime Stores^
Golden Eagle
Parkson Retail
NWDS*^
Maoye International Hldgs^
PCD Stores^
Average
Electrical Appliance
Gome Electrical Appliances^
Suning^
Average
China Average
58
Ticker
Div yield
12E
EV/EBITDA
12E
13E
11
ROE
12E
13E
8.4
9.3
6.6
2.4
5.7
3.3
5.9
13.8
29.4
23.0
11.0
13.7
13.2
17.4
14.0
27.2
20.7
11.9
11.8
15.1
16.8
14.5
29.4
21.4
13.5
13.5
17.5
18.3
12.6
5.1
6.6
9.3
4.8
7.7
10.3
4.6
5.3
7.4
3.9
6.3
23.3
24.7
26.1
18.6
30.9
24.7
22.4
23.4
24.9
17.3
27.2
23.1
23.7
23.4
25.7
20.7
27.4
24.2
7.5
12.2
9.8
6.5
10.4
8.4
5.4
8.5
6.9
17.7
31.5
24.6
16.5
22.9
19.7
17.4
23.3
20.3
8.1
7.0
4.3
6.1
14.3
7.8
7.9
2.6
~
4.8
2.7
2.4
0.0
2.5
3.1
~
5.7
2.9
2.3
0.0
2.8
3.6
~
4.7
3.7
2.3
0.0
2.9
28.7
1.4
10.7
26.6
20.7
20.7
18.1
21.8
4.9
7.2
20.5
18.2
12.5
14.2
17.9
5.0
10.2
13.9
17.6
12.0
12.8
2.6
3.8
3.7
4.4
3.5
12.0
8.9
10.7
1.8
2.2
1.3
1.9
1.5
2.6
8.9
6.3
7.2
5.8
5.8
4.6
23.7
17.9
18.9
13.9
18.1
14.4
1.0
1.7
4.2
2.3
4.3
3.3
1.6
3.0
4.9
3.2
2.1
3.4
5.7
3.6
2.5
3.9
7.5
0.6
17.7
8.6
5.7
0.4
10.4
5.5
5.0
0.4
8.7
4.7
13.5
20.2
19.4
17.7
13.6
18.1
22.1
18.0
14.6
18.0
23.5
18.7
1.6
4.8
4.7
5.2
6.9
5.9
5.0
19.3
17.4
17.8
13E
11
3.2
2.7
3.6
4.0
3.5
4.7
3.6
3.7
3.3
4.2
4.8
4.4
5.8
4.4
14.6
13.7
7.7
3.4
6.4
4.1
8.3
10.2
11.9
7.6
2.8
7.0
4.0
7.3
1.4
5.8
2.2
4.6
7.7
4.3
2.1
6.1
2.6
4.8
6.2
4.3
2.5
6.9
3.2
6.0
7.3
5.2
14.5
5.9
7.6
10.6
5.6
8.9
1.4
2.3
1.8
3.2
5.8
4.5
3.2
1.5
2.3
3.9
1.9
2.9
1.4
0.4
1.0
1.1
0.5
0.5
0.8
1.3
0.4
0.9
1.0
0.4
0.5
0.8
11.1
2.1
3.1
9.3
15.0
10.7
8.6
9.2
6.3
2.9
8.2
14.3
7.3
8.0
0.9
0.8
0.8
2.6
0.6
0.5
2.6
1.8
2.2
1.5
1.8
1.3
13.7%
13.4%
21.1%
16.1%
0.6
0.8
1.0
0.8
1.2
2.0
5.2
2.8
1.1
1.9
4.9
2.6
15.5%
0.5
2.1
1.9

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company
Ticker
Price
(LC)
Mkt Cap
(USD mn)
11
P/E
12E
13E
EPS CAGR
12E-14E
PEG (x)
12E-14E
11
P/B
12E
13E
11.0
Div yield
12E
13E
11
EV/EBITDA
12E
13E
11
ROE
12E
13E
HONG KONG
Apparel
Esprit Holdings
Giordano
I.T*
330 HK
709 HK
999 HK
9.9
5.5
3.4
1,646
1,085
530
20.9
11.3
8.6
14.6
10.8
7.9
7.8
8.6
6.6
83.5%
19.7%
18.7%
0.2
0.5
0.4
0.8
3.0
1.8
0.8
2.8
1.6
0.7
2.5
1.4
2.9
7.0
4.6
4.1
6.5
5.1
7.7
8.2
6.0
7.5
7.3
5.1
5.8
6.9
4.6
3.7
5.4
3.8
3.7
28.3
22.9
5.3
26.9
21.4
9.6
31.0
22.3
Jewelry Retail
Chow Sang Sang^
Luk Fook*^
116 HK
590 HK
15.0
16.1
1,309
1,220
9.3
6.8
8.1
7.1
6.8
6.1
18.5%
19.2%
0.4
0.4
1.6
1.7
1.4
1.5
1.2
1.3
4.0
5.7
4.4
5.5
5.1
6.3
7.4
5.5
6.7
5.6
5.7
4.7
18.2
30.5
17.6
22.6
18.1
21.7
113 HK
1212 HK
4.2
16.9
200
3,631
~
18.0
~
15.7
~
13.9
~
13.1%
~
1.2
~
3.4
~
3.0
~
2.7
~
2.4
~
2.6
~
2.9
~
12.1
~
10.9
~
9.7
NA
24.2
NA
20.3
NA
20.3
Supermarkets, Hypermarkets, Convenience Stores

Convenience Retail Asia^
831 HK
4.4
Dairy Farm
DFI SP
10.6
422
14,339
19.6
29.6
18.5
27.0
17.1
23.1
15.5%
18.1%
1.2
1.5
3.5
15.6
~
11.8
~
9.4
3.3
1.8
3.4
2.2
3.8
2.6
9.5
19.4
~
17.5
~
15.3
18.6
57.3
18.1
49.9
20.1
45.1
433
1,763
14.0
19.8
15.8
11.4
17.2
13.8
9.3
14.3
11.3
23.7%
21.0%
25.1%
0.5
0.8
0.7
11.7
8.4
5.1
9.3
5.6
4.2
8.0
4.8
3.6
5.8
3.6
4.1
7.2
4.1
4.5
8.8
4.9
5.6
9.7
13.8
9.7
7.8
11.9
8.6
6.4
10.1
7.2
94.4
46.2
34.4
88.3
39.1
31.0
89.8
36.4
31.4
13.4
11.7
9.8
18.7%
0.6
3.0
2.5
2.2
4.6
4.6
5.3
7.9
6.8
5.7
24.1
21.5
22.0
Department Stores
Dickson Concepts*^
Lifestyle
Cosmetics & Healthcare Goods

Bonjour^
Sa Sa International*
HK Average
Total Average
653 HK
178 HK
1.1
4.9
Source: Company, J.P. Morgan estimates. Bloomberg. Prices as of Jun 29, 2012. *FY12 figure given under 11E as the year ends in Jan-Jun. ^Not Covered. Bloomberg consensus estimates used for the companies.
59

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Staples Valuation Table

Company
China Huiyuan Juice
Tingyi
Uni-president China
Average
Snack manufacturers
China Lifestyle^
Want Want
Average
Personal Care
Hengan International
Vinda^
Fook Woo Group^
Magic Holdings^
Bawang^
Average
Breweries
Beijing Yanjing Brewery^
Tsingtao Brewery
Average
Liquor
Kweichow Moutai^
Luzhou Laojiao^
Shanxi Fen Wine^
Wuliangye Yibin^
Average
Wineries
China Foods
Dynasty Fine Wines^
China Tontine Wines^
Yantai Changyu Pioneer Wine^
Average
Dairies
Bright Dairy^
China Mengniu Dairy
China Modern Dairy^
Yashili International^
Synutra^
Inner Mongolia Yili Industrial^
Average
60
Ticker
Mkt Cap
(USD mn)
11
P/E (x)
12E
13E
EPS CAGR
12E-14E
PEG (x)
12E-14E
11
P/B (x)
12E 13E
11.0
Div yield
12E
13E
EV/EBITDA (x)
11 12E
13E
11
ROE
12E
13E
1886 HK
322 HK
220 HK
1115 HK
526
14,289
3,341
490
22.8
37.5
68.1
10.4
34.7
13.1
32.7
33.7
9.3
22.2
~
24.9
25.4
6.9
19.1
~
29.6%
28.4%
29.6%
29.2%
~
1.1
1.2
0.3
0.9
0.6
6.8
3.1
1.7
3.1
0.5
5.9
2.9
1.4
2.7
~
5.2
2.7
1.1
3.0
1.1
1.5
0.4
0.0
0.8
1.9
1.9
0.9
0.0
1.2
~
2.0
1.2
0.0
1.1
11.8
16.5
28.7
4.0
15.2
9.5
12.9
16.1
3.5
10.5
~
11.9
10.4
2.7
8.3
2.7
21.4
4.6
34.9
15.9
4.2
23.5
9.0
21.4
14.5
NA
22.3
11.1
23.3
18.9
1262 HK
151 HK
367
16,201
8.3
38.6
23.4
7.7
28.4
18.1
6.6
23.3
14.9
15.5%
21.3%
18.4%
0.5
1.3
0.9
1.6
12.2
6.9
1.4
10.5
5.9
1.2
8.9
5.1
2.4
1.6
2.0
2.7
2.2
2.4
3.1
2.7
2.9
6.0
26.7
16.3
7.5
19.1
13.3
6.4
15.3
10.9
21.2
34.9
28.1
17.4
39.6
28.5
17.3
41.4
29.4
1044 HK
3331 HK
923 HK
1633 HK
1338 HK
11,876
1,477
426
351
225
34.7
26.5
6.5
13.7
-2.6
15.8
25.3
15.9
5.4
9.9
-5.1
10.3
21.3
13.0
4.6
7.3
-44.7
0.3
17.8%
22.9%
~
~
~
20.4%
1.4
0.7
~
~
~
1.1
7.5
3.4
0.8
2.1
1.4
3.0
6.8
2.8
0.7
1.8
1.9
2.8
6.1
2.4
0.7
3.6
1.8
2.9
1.8
1.0
3.1
1.5
0.0
1.5
2.6
1.6
3.6
1.8
0.6
2.0
3.1
2.0
4.2
2.4
0.0
2.3
24.7
19.1
2.5
6.6
-0.9
10.4
17.7
11.0
2.1
4.6
-1.7
6.7
14.4
8.7
1.8
3.6
-22.5
1.2
23.2
13.9
12.9
15.0
(42.7)
4.5
28.0
19.4
13.3
18.4
(33.1)
9.2
30.1
20.2
13.8
24.4
2.4
18.2
000729 CH
291 HK
168 HK
2,898
7,102
7,902
21.6
29.1
28.1
26.3
18.1
23.0
24.4
21.8
15.1
18.9
20.6
18.2
18.9%
23.0%
17.8%
19.9%
1.0
1.0
1.4
1.1
2.0
1.5
4.4
2.6
~
1.4
3.8
2.6
~
1.4
3.2
2.3
1.4
2.0
0.5
1.3
~
2.4
0.6
1.5
~
2.8
0.7
1.7
12.9
7.9
16.2
12.3
~
6.3
13.5
9.9
~
5.2
11.6
8.4
9.7
8.4
16.8
11.6
11.1
8.8
16.7
12.2
11.8
9.6
17.0
12.8
600519 CH
000568 CH
600809 CH
000858 CH
39,067
9,282
5,135
19,568
28.3
20.3
41.8
20.2
27.7
19.2
14.5
27.6
14.3
18.9
13.5
11.1
19.2
11.3
13.8
35.8%
32.3%
47.2%
23.8%
34.8%
0.5
0.4
0.6
0.6
0.5
9.9
8.2
13.1
5.4
9.2
7.1
6.3
9.1
4.1
6.6
5.2
4.9
6.5
3.1
4.9
1.7
3.3
0.7
1.5
1.8
1.4
4.4
0.9
2.0
2.2
2.2
5.6
1.3
2.4
2.9
18.7
13.6
22.0
11.6
16.5
15.4
11.5
15.3
8.5
12.7
12.5
9.4
10.9
6.7
9.9
40.4
45.8
35.3
29.9
37.9
39.5
47.3
36.2
29.6
38.1
40.2
48.1
37.4
29.1
38.7
506 HK
828 HK
389 HK
200869 CH
2,742
204
192
6,363
32.9
373.5
6.5
15.4
107.1
23.8
31.8
5.5
13.3
18.6
18.5
19.8
5.5
10.7
13.6
26.3%
45.8%
~
26.8%
33.0%
0.9
0.7
~
0.5
0.7
3.2
0.8
0.7
5.9
2.6
2.9
0.8
~
4.8
2.8
2.7
0.8
~
3.8
2.4
1.1
1.2
4.8
2.7
2.4
1.5
1.3
~
3.1
2.0
1.9
2.1
~
3.6
2.6
14.6
15.3
~
14.7
14.9
11.1
10.6
~
11.6
11.1
8.8
7.6
~
9.3
8.6
10.3
0.2
11.0
43.1
16.1
12.8
2.4
9.2
37.9
15.6
15.1
3.8
9.9
36.4
16.3
600597 CH
2319 HK
1117 HK
1230 HK
SYUT US
600887 CH
1,539
4,638
1,120
540
300
5,177
40.5
17.0
16.9
11.2
15.4
18.2
19.9
32.7
16.3
10.1
9.8
5.2
18.3
15.4
25.9
13.8
6.9
9.5
4.1
13.8
12.3
31.1%
17.1%
~
-8.3%
22.9%
25.2%
17.6%
1.1
1.0
~
-1.2
0.2
0.7
0.4
4.0
2.6
1.3
0.9
~
5.5
2.9
3.6
2.3
1.2
0.9
~
4.0
2.4
3.2
2.1
1.0
0.8
~
3.3
2.1
1.6
1.2
0.0
5.8
~
1.2
2.0
~
1.2
0.0
5.4
~
1.2
1.9
~
1.5
1.6
5.7
~
1.2
2.5
20.0
8.8
15.6
1.9
8.6
15.6
11.8
21.2
7.6
9.7
1.4
4.5
10.2
9.1
18.7
5.7
6.8
1.3
4.2
8.4
7.5
9.9
15.0
9.5
8.1
22.0
35.3
16.6
10.9
13.0
13.6
9.1
17.0
21.5
14.2
13.2
14.9
16.4
8.2
NA
21.6
14.8

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company
Food retailers
Beijing Jingkelong^
Sun Art^
Lianhua^
Wumart Stores^
Average
China Restaurants
Country Style Cooking^
Caf de Coral*
Ajisen China Holdings Ltd.
Fairwood*^
Average
Meat Processors
China Yurun
Henan Shuanghui^
Zhongpin^
People's Food^
Average
Tobacco and Tobacco Flavour
Huabao International*
AMVIG Holdings^
China Flavors & Fragrances^
Average
Agri-industrial companies
China Agri-Industries
China Green^*
Chaoda Agricultural^
Global Bio-chem Technology^
Xiwang Sugar^
Average
Ticker
Mkt Cap
(USD mn)
11
P/E (x)
12E
13E
EPS CAGR
12E-14E
PEG (x)
12E-14E
11
P/B (x)
12E 13E
11.0
Div yield
12E
13E
EV/EBITDA (x)
11 12E
13E
11
ROE
12E
13E
814 HK
6808 HK
980 HK
1025 HK
305
10,442
1,068
2,590
9.2
34.8
10.8
27.9
20.7
8.1
27.8
10.7
21.7
17.1
6.8
22.6
9.6
18.0
14.2
13.7%
21.0%
13.4%
21.1%
17.3%
0.6
1.3
0.8
1.0
0.9
1.2
4.4
2.0
5.2
3.2
1.1
4.1
1.9
4.9
3.0
1.0
3.7
1.7
4.2
2.6
4.3
1.2
3.3
1.6
2.6
4.9
1.3
3.2
2.1
2.9
5.7
1.6
3.6
2.5
3.4
7.5
15.0
0.6
17.7
10.2
5.7
11.2
0.4
10.4
6.9
5.0
9.0
0.4
8.7
5.8
13.5
16.4
20.2
19.4
17.4
13.6
14.9
18.1
22.1
17.2
14.6
16.6
18.0
23.5
18.2
CCSC US
341 HK
538 HK
52 HK
181
1,520
738
231
-158.4
27.5
16.5
~
-38.1
21.9
21.5
29.4
~
24.3
15.5
18.0
20.9
~
18.1
22.9%
18.5%
33.9%
~
0.3
1.0
1.2
0.9
~
1.0
5.9
3.6
2.0
~
3.8
1.4
3.5
1.9
~
2.3
1.3
3.3
1.8
~
2.1
0.0
3.0
3.4
~
2.1
0.0
3.5
1.9
~
1.8
0.0
4.2
2.7
~
2.3
10.2
13.4
6.4
~
10.0
6.8
11.2
9.4
~
9.1
4.6
9.3
7.2
~
7.0
(0.9)
15.0
12.3
NA
8.8
10.2
16.5
6.6
NA
11.1
13.6
18.9
9.0
NA
13.8
1068 HK
000895 CH
HOGS US
PFH SP
1,586
5,901
343
445
11.5
66.5
5.6
21.9
26.4
9.2
20.3
6.2
~
11.9
7.1
16.2
4.9
~
9.4
26.9%
25.1%
31.6%
~
27.9%
0.3
0.8
0.2
~
0.4
0.8
10.2
0.7
0.5
3.1
0.7
7.1
0.6
~
2.8
0.7
5.6
0.5
~
2.3
3.3
0.9
0.0
0.0
1.0
3.2
1.2
~
~
2.2
4.5
2.3
~
~
3.4
5.7
38.7
6.4
4.4
13.8
5.5
10.4
6.6
~
7.5
4.0
8.2
5.2
~
5.8
11.8
15.4
14.7
2.5
11.1
9.5
30.9
13.0
NA
17.8
12.2
30.3
NA
NA
21.2
336 HK
2300 HK
3318 HK
1,540
406
68
6.8
5.8
8.3
6.9
6.5
5.9
~
6.2
5.9
5.4
~
5.6
9.2%
10.8%
~
10.0%
0.7
0.5
~
0.6
1.9
0.7
0.5
1.0
1.6
0.7
~
1.1
1.3
0.6
~
1.0
5.8
7.0
0.0
4.2
4.6
6.3
~
5.4
5.1
7.0
~
6.0
5.0
3.0
3.6
3.9
4.6
2.9
~
3.8
4.0
2.5
~
3.3
30.8
13.4
6.6
16.9
26.4
11.3
NA
18.8
24.2
11.8
NA
18.0
606 HK
904 HK
682 HK
809 HK
2088 HK
2,202
197
467
467
95
7.8
2.8
~
2.8
3.3
4.2
6.3
2.6
~
2.6
2.4
3.5
5.0
2.0
~
2.3
2.5
3.0
22.2%
~
~
14.9%
~
18.5%
0.3
~
~
0.2
~
0.2
0.8
0.4
~
0.4
0.3
0.5
0.8
0.3
~
0.3
0.2
0.4
0.7
0.3
~
0.3
0.2
0.4
2.6
9.9
~
3.2
4.7
5.1
3.1
10.6
~
2.8
8.4
6.2
4.0
10.6
~
3.4
8.4
6.6
8.1
1.1
~
4.3
5.0
4.7
6.6
1.0
~
4.1
~
3.9
5.5
0.9
~
3.9
~
3.4
11.5
11.7
NA
13.9
8.7
11.4
12.7
11.7
NA
11.1
6.2
10.4
14.2
10.9
NA
10.6
7.4
10.8
Source: Company, J.P. Morgan estimates. Bloomberg. Prices as of June 29, 2013. *FY12 figure given under 11E as the year ends in Jan-Jun. ^Not covered, Bloomberg consensus estimates used for the companies
61

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Appendix 1: Forward PE charts: Retailers

Figure 19: Belle
Mean
P/E
Trough
Mean
Source: Bloomberg, J.P. Morgan estimates.
Source: Source: Bloomberg, J.P. Morgan estimates.
Figure 20: China Dongxiang
Figure 21: China Lilang
May-12
20.0
15.0
17.3
7.4
P/E
Trough
Figure 22: Chow Tai Fook
Figure 23: Giordano
P/E
Mean
Apr-12
May-12
Trough
Jun-12
P/E
Mean
May-12
Mar-12
Jul-11
May-11
Mar-11
Sep-11
Trough
Jan-12
Mar-12
Jan-11
Feb-12
Jan-10
Jan-12
Jan-09
Dec-11
Jan-08
11.9
10.0
5.8
Jan-07
12.0
Trough
9.6
Jan-06
12.4
Jan-05
14.0
14.7
17.2
Jan-04
16.5
Jan-03
18.0
Jan-02
20.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan-01
22.0
Jan-11
Mean
16.0
Nov-10
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Nov-09
Sep-09
0.0
Jan-12
7.4
Nov-11
5.0
Jun-12
Feb-12
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Feb-08
5.8
Mean
14.7
10.0
5.8
P/E
62
Trough
25.0
Oct-07
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Nov-11
17.1
Nov-08
Mar-12
Nov-11
Jul-11
Mar-11
Nov-10
Jul-10
Mar-10
Nov-09
Jul-09
Mar-09
Jul-08
Nov-08
Mar-08
Jul-07
Nov-07
0.0
P/E
9.0
10.0
May-08
6.8
5.1
5.0
23.3
20.0
Nov-07
10.0
0.0
30.0
15.3
May-07
15.0
May-11
40.0
Nov-10
50.0
20.0
May-10
60.0
25.0
Nov-09
30.0
May-09
Figure 18: Anta

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Figure 24: Golden Eagle
30.0
25.0
20.0
24.2
15.0
10.8
5.0
P/E
Figure 26: L'Occitane
Figure 27: Lifestyle
Trough
P/E
Figure 28: Li Ning
Figure 29: Parkson
Mean
Trough
Jun-11
Nov-11
Aug-10
Jan-11
Mar-10
Apr-12
Apr-11
Apr-10
Trough
29.0
Mean
May-12
May-11
Nov-10
May-10
Nov-09
May-08
Nov-07
May-07
Nov-06
P/E
Nov-11
12.8
12.8
May-06
Jun-11
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
P/E
Jun-12
11.4
9.2
Nov-05
24.1
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Oct-09
Mean
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Apr-09
Apr-07
Apr-04
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
Mean
14.3
8.8
May-09
P/E
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
14.4
Trough
19.1
Apr-06
21.3
Apr-05
21.9
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jul-08
Mean
29.0
27.0
25.0
23.0
21.0
19.0
17.0
15.0
13.0
Dec-08
May-09
Feb-08
Jan-06
Jun-06
Aug-05
Mar-05
Trough
Apr-08
Mean
0.0
Nov-08
P/E
7.3
1.8
Apr-12
10.0
Apr-07
Sep-07
9.1
Nov-06
16.8
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Figure 25: I.T
Trough
63

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
P/E
Source: Source: Bloomberg, J.P. Morgan estimates.
Figure 32: Trinity
Figure 33: Xtep
P/E
64
Mean
Trough
P/E
Mean
Trough
Dec-11
Dec-10
Dec-09
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Jun-10
Mar-10
Dec-09
Nov-11
Sep-11
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Nov-09
0.0
7.0
3.1
Sep-09
11.8
5.0
Jun-09
10.0
Trough
9.0
Mar-09
12.8
Dec-08
15.0
Sep-08
21.2
20.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Jun-08
25.0
Dec-08
Mean
30.0
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Oct-11
Oct-10
Oct-09
Trough
16.3
Dec-10
Mean
15.9
4.5
Sep-10
P/E
Oct-08
7.8
Oct-07
Oct-06
Oct-05
Oct-04
7.5
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
Dec-02
20.2
Oct-03
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Figure 31: Sa Sa International
Dec-01
Figure 30: Ports Design

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Appendix 2: Forward PE charts: Staples

Figure 35: Caf de Coral
P/E
Mean
20.5
16.9
Trough
P/E
Figure 36: China Foods
Figure 37: Dairy Farm
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Trough
30.0
25.0
20.0
Mean
10.0
8.4
5.0
Trough
P/E
Mean
Figure 38: Mengniu
Figure 39: China Resource Enterprise
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
0.0
Jan-01
Dec-11
Dec-10
Dec-09
15.9
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
18.0
5.5
24.9
17.7
15.0
P/E
Trough
60
50
55.8
40
30
20
23.1
P/E
Mean
20.2
P/E
Mean
Jan-12
Jan-11
Jan-10
Jan-09
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
8.5
Jan-02
Jan-01
Jun-11
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
10
Jan-08
15.0
Jun-04
75.0
65.0
55.0
45.0
35.0
25.0
15.0
5.0
-5.0
Jan-07
Mean
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan-06
Jan-05
Jan-04
6.5
Jan-03
23.9
8.8
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan-02
34.1
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Jan-01
Figure 34: Ajisen
Trough
65

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Figure 41: Hengan
22.9
17.9
Trough
P/E
Figure 42: Huabao
Figure 43: Tingyi
P/E
P/E
Mean
Figure 44: Tsingtao
Figure 45: Uni-president China
Jan-12
Jan-11
Jan-10
Jan-09
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-05
Jan-04
Jan-03
Jan-02
4.6
Trough
60.0
50.0
40.0
30.0
P/E
Mean
Trough
Apr-12
Dec-11
Aug-11
Apr-11
Dec-10
Aug-10
28.0
Apr-10
Aug-09
Apr-09
Dec-08
Aug-08
Apr-08
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Dec-07
10.0
0.0
Mean
26.6
7.7
20.0
22.6
Dec-09
27.0
Forward P/E
66
Jan-08
21.7
Mean
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Trough
27.7
Jan-01
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
6.3
Jan-04
Jan-03
Jan-02
Jan-01
17.5
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan-07
Mean
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
Jan-06
Jan-05
Jan-04
Jan-03
6.9
Jan-02
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mean
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan-06
P/E
Mar-09
Mar-08
7.7
Sep-08
Sep-07
Mar-07
Sep-06
Mar-06
Sep-05
20.5
7.7
Mar-12
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan-01
Figure 40: China Yurun

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Figure 46: Want Want

33.0
31.0
29.0
27.0
25.0
23.0
21.0
19.0
17.0
15.0
24.5
22.8
P/E
Mean
Mar-12
Nov-11
Jul-11
Mar-11
Nov-10
Jul-10
Mar-10
Nov-09
Jul-09
Mar-09
Nov-08
Jul-08
Mar-08
16.0
Trough
67
2030
1830
1630
1430
1230
1030
830
630
430
230
30
68
Source: Bloomberg (PURDP116 INDEX)
4000
3500
3000
2500
2000
5000
4000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
4500
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
May-12
Jan-12
Sep-11
May-11
Jan-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
May-08
Jan-08
Figure 47: Palm Oil- International (M$/ton)
7,000
1Q/04
3Q/04
1Q/05
3Q/05
1Q/06
3Q/06
1Q/07
3Q/07
1Q/08
3Q/08
1Q/09
3Q/09
1Q/10
3Q/10
1Q/11
3Q/11
1Q/12
40
35
30
25
20
15
10
5
0
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
1500
1000
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Ebru Sener Kurumlu

(852) 2800-8521
02 July 2012
Appendix 3: Raw material price charts

Figure 48:Palm Oil- Local (Rmb/ton)
11000
10000
9000
8000
7000
6000
Source: Bloomberg (PAL2MALY Index)

Source: Bloomberg (CNOM24HU Index)
Figure 49:Sugar- International (US$/lb)

Figure 50: Sugar- Local (Rmb/ton)
Source: Bloomberg (SB1 Comdty)

Source: Bloomberg (JCIASGNN Index)
Figure 51: PET- International (UScents/lb)

Figure 52: PET- Local (Rmb/ton)
14,500
13,000
11,500
10,000
8,500
Source: Tingyi
Source: Bloomberg (WPA1 Comdty)
May-12
Jan-12
Sep-11
May-11
Jan-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
May-08
900
800
700
2.2
2
1100
325
1000
275
600
125
500
75
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
2900
2800
2700
2600
2500
2400
2300
2200
2100
2000
Source: Bloomberg (W 1 Comdty)

Source: Bloomberg (CNWHWBEI Index)
Figure 55: Milk International (US$/cwt)

Figure 56: Milk Local (RMB/kg)
Source: Bloomberg (DA1 COMB Comdty)

Source: http://www.sn110.com/
Figure 57: Pulp- International (US$/ton)

Figure 58: Barley- International (C$/ton)
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Apr-12
Feb-12
Dec-11
Oct-11
Aug-11
Jun-11
Apr-11
Feb-11
Dec-10
Oct-10
Aug-10
Jun-10
Apr-10
Feb-10
Dec-09
Figure 53: Wheat- International (US$/bu)
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
23
21
19
17
15
13
11
9
7
5
Jan-08
10
9
8
7
6
5
4
3
2
1
0
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Ebru Sener Kurumlu

(852) 2800-8521
02 July 2012
Figure 54: Wheat- Local (Rmb/ton)
3.4
3.2
3
2.8
2.6
2.4
225
175
Source: Bloomberg (WA1 COMDTY)
69
230
210
190
170
150
130
110
90
70
50
70
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
0.00
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
5.00
Source: www.sn110.com
Figure 61: Orange Juice Concentrate International (US$/lb)
Source: Bloomberg (JO1 Comdty)

Source: Bloomberg (RRHO COMB Comdty)
May-09
Jan-09
May-10
Jan-10
May-11
Jan-11
May-12
Jan-12
Sep-11
10.00
Sep-10
15.00
Sep-09
20.00
26
24
22
20
18
16
14
12
10
8
Sep-08
25.00
May-08
Figure 59: Hog- Local (Rmb/kg)
Jan-08
Ebru Sener Kurumlu

(852) 2800-8521
02 July 2012
Figure 60: Rice International (US$/cwt)

02 July 2012
Companies
Ebru Sener Kurumlu

(852) 2800-8521
71

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Ajisen China Holdings Ltd

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
3mth Avg daily volume
3M - Average daily Value
(HK$ mn)
Average 3m Daily Turnover
($ mn)
HSI
Exchange Rate
Fiscal Year End
Ajisen China Holdings Ltd (Reuters: 0538.HK, Bloomberg: 538 HK)

HK$ in mn, year-end Dec
FY10A
FY11A
FY12E
Revenue (HK$ mn)
2,681
3,075
3,096
Net Profit (HK$ mn)
447
350
196
EPS (HK$)
0.41
0.32
0.18
DPS (HK$)
0.23
0.18
0.10
Revenue growth (%)
32.6%
17.5%
0.7%
Net profit growth (%)
42.3%
-21.8%
-43.9%
EPS growth (%)
40.8%
-22.1%
-43.9%
ROA
14.3%
9.6%
5.2%
P/BV (x)
2.1
2.0
1.9
P/E (x)
12.9
16.5
29.4
EV/EBITDA (x)
5.3
6.3
9.7
Dividend Yield
4.3%
3.4%
1.9%
1,074
5,723
738
5.33
29 Jun 12
4,368,608.00
33.11
4.27
19,441
7.76
Dec
FY13E
3,775
276
0.25
0.14
21.0%
40.6%
40.6%
7.2%
1.8
20.9
7.7
2.7%
FY14E
4,491
352
0.32
0.18
18.3%
27.5%
27.5%
8.6%
1.8
16.4
6.3
3.4%
Source: Company data, Bloomberg, J.P. Morgan estimates.
JPM Q-Profile
Ajisen (China) Holdings Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Quant_Strategy@jpmorgan.com
Local Share Price
Current:
5.87
18.00
12 Mth Forward EPS
Current:
0.38
0.70
16.00
0.60
14.00
0.50
12.00
10.00
0.40
8.00
0.30
6.00
4.00
0.20
2.00
0.10
14%
12Mth fwd EY
Current:
Hong Kong BY
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Implied Value Of Growth*
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
6%
Dec/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Earnings Yield (& local bond Yield)
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
-1.93%
1.20
Proxy
1.00
12%
0.80
10%
0.60
0.40
0.20
8%
0.00
6%
-0.20
4%
-0.40
-0.60
2%
Current:
15.5x
70.0x
45.0x
60.0x
40.0x
50.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Price/Book Value
50.0x
35.0x
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
PE (1Yr Forward)
-1.00
Jul/98
-0.80
0%
Current:
PBV hist
2.2x
PBV Forward
40.0x
30.0x
30.0x
25.0x
20.0x
20.0x
ROE (Trailing)
Current:
12.27
120.00
Dividend Yield (Trailing)
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
-20.0x
Feb/99
0.0x
Jul/98
-10.0x
Dec/97
0.0x
5.0x
May/97
10.0x
Dec/97
10.0x
15.0x
Current:
1.29
2.5
100.00
2.0
80.00
1.5
60.00
1.0
40.00
0.5
20.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Jun/01
Aug/02
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
Summary
Ajisen (China) Holdings Ltd.
HONG KONG
Consumer Discretionary
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
Implied Value of Growth
759.40
5.83599 SEDOL
B1TNRD8
Hotels Restaurants & Leisure
Latest
Min
Max
15.51x
8.47
46.27
2.16x
1.32
59.57
1.29
0.00
2.04
12.27
10.20
98.38
-1.9%
-0.77
0.76
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs
72
Median
21.51
3.84
0.88
18.99
0.37
Average
22.68
6.09
0.87
41.13
0.31
2 S.D.+
39.17
26.47
1.88
110.45
0.97
2 S.D. 6.20
-14.30
-0.15
-28.19
-0.36
% to Min
-45%
-39%
-100%
-17%
-3902%
As Of:
Local Price:
EPS:
% to Max
198%
2664%
58%
702%
4024%
% to Med
39%
78%
-32%
55%
1999%
* Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)
22-Jun-12
5.87
0.38
% to Avg
46%
182%
-33%
235%
1685%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
P&L sensitivity metrics for FY12
Ajisen is engaged in restaurant chain

operations in China and Hong Kong,
specialized in Japanese-style ramen. The
average per capita spending in Ajisens stores
is Rmb38.3 in China and HK$58.9 in Hong
Kong. Average table turnover rates were 5
times per day in China and 6 times per day in
Hong Kong. As of 31 Dec 10, the company
operated 471restaurants in the PRC and 35
restaurants in HK.
Sales per average area
2011 Revenue Breakdown
Price target and valuation analysis
EBIT
impact (%)
EPS
impact (%)
-4.1%
-4.3%
-4.1%
-4.3%
-5.7%
-7.6%
Impact of each 5% decrease

Average saleable area
Gross margin assumption
Our new Dec-12 PT of HK$6.0 (lowered from HK$9.0) is based on

PEG ratio of 0.9x PEG with 2-year (2012-2014E) EPS CAGR of 34%.
We base our PT on 0.9x PEG which is a discount to 1.0x for the
average of China consumer staples (excluding Huabao and Yurun) to
reflect the near term risks in business recovery. We are using PEG in
order to capture earnings growth prospects. ..
Noodles
sales
4%
Restaura
nts
96%
Target PEG
0.9
2012-14E EPS CAGR
33.9%
Implied Dec-12 target PE (x)
Source: Company.
30.5
EPS Dec-12 (HK$)
0.181
Target price (HK$)
6.0
Key upside risks to our call would be a faster-than-expected same store

sales recovery, and key downside risks to our call would be further
earnings downgrades by consensus.
EPS J.P. Morgan vs consensus

HK$
FY12E
J.P. Morgan
0.181
Consensus
0.314
FY13E
0.255
0.392
FY14E
0.325
0.486
Source: Bloomberg, JPMorgan
Peer comparison valuations

Company
Ajisen China
Caf de Coral*
Country Style Cooking^
Gourmet Master^
Sector average
Ticker
538 HK
341 HK
CCSC US
2723 TT
Rating
N
N
NR
NR
Price
(HK$)
5.3
20.7
7.0
206.0
PT
(HK$)
6.0
NA
NA
NA
Mkt Cap
(US$m)
738
1,520
181
974
2011
16.5
27.5
(158.4)
~
(38.1)
P/E (x)
2012E
29.4
21.5
21.9
20.8
23.4
2013E
20.9
18.0
15.5
15.8
17.6
EV/EBITDA
2012E
9.4
11.2
6.8
~
9.1
ROE
2012E
6.6
16.5
10.2
22.3
13.9
P/B (x)
2012E
1.9
3.5
1.4
4.2
2.7
Yld (%)
2012E
1.9%
3.5%
0.0%
2.2%
1.9%
Source: Bloomberg, J.P. Morgan estimates. Share prices are as of close of 29 Jun 2012. Bloomberg consensus estimates for NR stocks.
73
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Ajisen China Holdings Ltd: Summary of Financials

Income Statement
HK$ in millions, year end Dec
FY10
FY11
Revenues
2,681 3,075
% change Y/Y
32.6% 17.5%
Gross Profit
1,854 2,084
% change Y/Y
33.9% 12.4%
Gross margin
67.8% 64.9%
EBITDA
728
654
% change Y/Y
37.8% -10.2%
EBITDA Margin
26.6% 20.4%
EBIT
601
497
% change Y/Y
44.7%
NM
EBIT Margin
22.0% 15.5%
Net Interest
21
19
Share of JVs
Earnings before tax
622
516
% change Y/Y
43.3% -17.1%
Tax
-154
-150
as % of EBT
24.7% 29.1%
Minority Interest
-21
-16
Net income (reported)
447
350
% change Y/Y
42.3% -21.8%
EPS (reported)
0.41
0.32
% change Y/Y
40.8% (22.1%)
Balance sheet
FY10
FY11
Cash and cash equivalents
1,971 1,887
Accounts receivable
145
150
Inventories
82
98
Others
5
4
Current assets
2,203 2,140
Intangible assets
37
45
Net fixed assets
773 1,075
Other assets
Total Assets
3,474 3,832
Liabilities
Short-term loans
142
293
Trade & other payables
155
Others
97
112
Total current liabilities
602
813
Long-term debt
0
0
Others
25
22
Total Liabilities
627
835
Shareholders' equity
2,781 2,922
BVPS
2.58
2.70
Source: Company reports and J.P. Morgan estimates.
74
FY12E
3,096
0.7%
2,028
-2.7%
62.7%
448
-31.5%
13.9%
258
NM
8.0%
23
281
-45.5%
-76
27.0%
-9
196
-43.9%
0.18
(43.9%)
FY13E
3,775
21.0%
2,473
21.9%
63.2%
585
30.5%
15.0%
362
40.2%
9.3%
23
385
36.9%
-96
25.0%
-13
276
40.6%
0.25
40.6%
FY14E
4,491
18.3%
2,942
19.0%
63.6%
723
23.7%
15.6%
467
29.2%
10.1%
23
491
27.5%
-123
25.0%
-16
352
27.5%
0.32
27.5%
FY12E FY13E
1,367 1,218
167
204
106
130
4
4
1,645 1,556
45
45
1,435 1,762
3,697 3,936
FY14E
1,142
242
154
4
1,543
45
2,056
4,217
1
197
112
581
0
22
604
3,009
2.78
1
1
226
112
112
684
793
0
0
22
22
707
815
3,132 3,289
2.89 3.04
Cash flow statement

PBT
Depr. & amortization
Change in working capital
Tax
Other
Cash flow from operations
FY10
622
127
50
-154
0
624
FY11 FY12E FY13E FY14E

516
281
385
491
157
190
223
256
24
36
43
45
-150
-76
-96
-123
0
0
0
0
524
408
531
646
Capex
Acquisition of subsidiaries/intangibles
Other
Cash flow from investing
-486
-627
-500
-503
-550
-526
-550
-526
-550
-526
Equity raised/(repaid)
Debt raised/(repaid)
Dividends paid
Other
Cash flow from financing
0
142
-248
0
-106
0
152
-194
0
-42
0
-291
-109
0
-400
0
1
-153
0
-152
0
1
-195
0
-194
-108
1,971
0.23
-22
1,947
0.18
-519
1,367
0.10
-147
1,218
0.14
-74
1,142
0.18
Net change in cash

Ending Cash
DPS
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Recurring net profit margin
Sales growth
Net profit growth
Recurring net profit growth
EPS growth
Net debt to equity
Sales/assets
Assets/equity
ROE
ROCE
FY10
67.8% 64.9% 62.7% 63.2% 63.6%
26.6% 20.4% 13.9% 15.0% 15.6%
16.4% 10.9%
6.1% 7.1% 7.6%
32.6% 17.5%
0.7% 21.0% 18.3%
42.3% -21.8% -43.9% 40.6% 27.5%
40.8% (22.1%) (43.9%) 40.6% 27.5%
-65.8% -54.5% -45.4% -38.9% -34.7%
0.87
0.88
0.86
1.02
1.14
1.20
1.31
1.23
1.26
1.28
17.3% 12.3%
6.6% 9.0% 11.0%
22.6% 16.2%
8.3% 11.8% 14.5%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Anta Sports Products Ltd. (Reuters: 2020.HK, Bloomberg: 2020 HK)

Rmb in mn, year-end Dec
FY10A
FY11A
FY12E
Revenue (Rmb mn)
7,408
8,905
8,168
Net Profit (Rmb mn)
1,551
1,730
1,443
EPS (Rmb)
0.62
0.69
0.58
Recurring EPS (Rmb)
0.62
0.69
0.58
DPS (Rmb)
0.39
0.42
0.35
Revenue growth (%)
26.1%
20.2%
-8.3%
24.0%
11.5%
-16.6%
EPS growth (%)
23.8%
11.5%
-16.6%
ROE
28.8%
28.7%
21.8%
ROA
23.6%
22.7%
17.3%
P/BV (x)
1.7
1.5
1.4
P/E (x)
6.2
5.5
6.6
EV/EBITDA (x)
3.0
2.5
2.8
Dividend Yield
10.1%
11.1%
9.2%
2,494
9,564
1,504
4.68
29 Jun 12
30.5%
4,759,374.00
31.53
4.06
5,329
7.76
Dec
FY13E
8,660
1,263
0.51
0.51
0.31
6.0%
-12.5%
-12.5%
17.9%
14.4%
1.3
7.6
3.0
8.1%
FY14E
9,443
976
0.39
0.39
0.24
9.0%
-22.7%
-22.7%
13.1%
10.5%
1.3
9.8
3.8
6.2%

Anta Sports Products Ltd. (CHINA / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
5.69
12 Mth Forward EPS
20.00
1.00
18.00
0.90
16.00
0.80
14.00
0.70
12.00
0.60
10.00
0.60
0.50
8.00
0.40
6.00
0.30
4.00
0.20
2.00
18%
12Mth fwd EY
Current:
China BY
13%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.00
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
Dec/97
0.10
0.00
-50.99%
1.20
1.00
0.80
Proxy
16%
14%
0.60
0.40
12%
10%
0.20
0.00
-0.20
8%
6%
PE (1Yr Forward)
Current:
7.8x
50.0x
35.0x
40.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Sep/99
Feb/99
Apr/00
Current:
PBV hist
1.8x
PBV Forward
30.0x
25.0x
20.0x
20.0x
Dec/11
May/11
Mar/10
Oct/10
Dec/11
8.27
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Current:
Jun/01
Nov/00
Apr/00
Sep/99
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Jul/98
Feb/99
Feb/99
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
0.0
Oct/03
1.0
0.00
Mar/03
2.0
10.00
Jan/02
3.0
20.00
Aug/02
4.0
30.00
Jun/01
5.0
40.00
Apr/00
6.0
50.00
Nov/00
7.0
60.00
Sep/99
70.00
Feb/99
8.0
Jul/98
9.0
Dec/97
Dec/97
Jul/98
28.72
80.00
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Current:
90.00
May/97
ROE (Trailing)
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
-20.0x
Feb/99
0.0x
Jul/98
-10.0x
Dec/97
0.0x
5.0x
May/97
10.0x
May/97
10.0x
15.0x
May/97
Jul/98
Price/Book Value
40.0x
30.0x
Dec/97
-1.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
2%
May/97
-0.40
-0.60
-0.80
4%
0%
Current:
Summary
CHINA
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
1796.85
5.18505 SEDOL
B1YVKN8
Textiles, Apparel & Luxury Goo
Latest
Min
Max
7.77x
5.87
35.26
1.83x
1.42
39.49
8.27
0.00
8.27
28.72
20.92
84.49
-51.0%
-0.82
0.70
Median
15.59
4.48
2.90
28.84
0.25
Average
16.32
6.72
3.43
37.10
0.15
2 S.D.+
30.78
24.85
7.97
78.27
0.92
2 S.D. 1.86
-11.42
-1.11
-4.07
-0.63
% to Min
-24%
-22%
-100%
-27%
-61%
As Of:
Local Price:
EPS:
% to Max
% to Med
354%
101%
2063%
145%
0%
-65%
194%
0%
237%
148%
22-Jun-12
5.69
0.60
% to Avg
110%
268%
-59%
29%
129%
75

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
P&L sensitivity metrics
Anta is primarily engaged in designing,

developing, manufacturing and marketing
sportswear, including sports footwear and
apparel for professionals and the general
public under the ANTA brand. Through a
large network of 9,297 stores, the group
enjoys a leading presence in the second and
third tier cities across PRC.
Sales volume growth assumption

EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-5.3%
-5.2%
-5.3%
-5.2%
-4.2%
-4.0%
-0.7%
-0.7%
ASP increase assumption

Operating expense assumption (% chg y/y)
Impact of each 1% increase
2011 Revenue breakdown
We have further cut our Dec-12 PT to HK$4 (from previous HK$5.5)

based on the present value of the long term target PE of 10x 2014
earnings, which are based on normalized margins. We have reduced
the target PE to 10x (pointing to c30% discount to the international
brands long term average of 15-16x on brand recognition) from 13x
as we become more cautious on local sportswear brands long term
prospects than earlier.
Access
ory
3%
Appare
l
45%
Footwe
ar
52%
Risks to our PT include lower than expected A&P expenses at the

expense of long term sustainability, and higher than expected trade
fair order growth at the expense of retail inventory level.
Source: Company reports
EPS: J.P. Morgan vs consensus

J. P. Morgan
Consensus
FY12E
0.58
0.60
FY13E
0.51
0.61
FY14E
0.39
0.64
Source: J.P. Morgan estimates, Bloomberg
Peer group valuation comparison table

Company
China retailers
Sportswear Brands
Li Ning
China Dongxiang^
Xtep
Other Chinese retailers
Belle International
Parkson Retail
Golden Eagle
Ports Design
Sector average
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
9.7
31.5
5.0
13.9
8.1
5.7
9.2
7.4
7.7
1.0
0.4
1.1
0.9
0.4
1.0
21.3
14.1
21.0
21.0
17.7
19.3
13.7
18.8
18.8
14.1
15.7
12.0
15.1
15.1
11.7
4.0
2.7
4.8
4.8
2.7
3.5
2.4
4.1
4.1
2.4
2331 HK
3818 HK
1368 HK
UW
NR
UW
4.3
0.7
2.7
4.50
2.20
591
500
758
1880 HK
3368 HK
3308 HK
3308 HK
OW
N
OW
OW
13.1
6.9
15.7
15.7
15.50
7.50
22.50
22.50
14,266
2,486
3,940
3,940
Source: Company reports, Bloomberg, J.P. Morgan estimates. Based on COB prices as on 29 June 2011.
76
P/B
2012E
2013E

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Anta Sports Products Ltd.: Summary of Financials

Income Statement
Rmb in millions, year end Dec
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
Operating Profit
% change Y/Y
Operating margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
Recurring Net Income
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Long term investments
Net fixed assets
Other assets
Total Assets
FY10
7,408
26.1%
3,171
28.2%
42.8%
1,776
24.3%
24.0%
1,737
24.5%
23.4%
106
1,843
27.5%
-297
16.1%
5
44
1,551
24.0%
1,551
24.0%
0.62
23.8%
0.62
23.9%
FY11
8,905
20.2%
3,762
18.7%
42.3%
2,026
14.0%
22.8%
2,011
15.8%
22.6%
149
2,160
17.2%
-436
20.2%
6
74
1,730
11.5%
1,730
11.5%
0.69
11.5%
0.69
11.6%
FY12E
8,168
(8.3%)
3,416
-9.2%
41.8%
1,690
-16.6%
20.7%
1,678
-16.6%
20.5%
125
1,804
-16.5%
-361
20.0%
0
70
1,443
-16.6%
1,443
-16.6%
0.58
(16.6%)
0.58
(16.6%)
FY13E
8,660
6.0%
3,444
0.8%
39.8%
1,463
-13.4%
16.9%
1,442
-14.1%
16.7%
137
1,579
-12.5%
-316
20.0%
0
70
1,263
-12.5%
1,263
-12.5%
0.51
(12.5%)
0.51
(12.5%)
FY14E
9,443
9.0%
3,667
6.5%
38.8%
1,110
-24.1%
11.8%
1,079
-25.2%
11.4%
141
1,220
-22.7%
-244
20.0%
0
70
976
-22.7%
976
-22.7%
0.39
(22.7%)
0.39
(22.7%)
Cash flow statement

PBT
Tax
Other

2,160 1,804 1,579 1,220
90
81
91
101
-454
27
-213
-82
-387
-361
-316
-244
38
0
0
0
1,448 1,552 1,141
995
Capex
Sale of assets
Other
-89
1
-15
599
496
-127
2
-54
-559
-738
-100
0
0
-100
-100
0
0
-100
-100
0
0
-100
Dividends paid
Other
6
1
0
0
-940 -1,055
-5
-5
-939 -1,059
0
-969
0
-969
0
-826
0
-826
0
-684
0
-684
Net change in cash

FX gain/(loss)
Ending cash
DPS
Ratio Analysis
FY11 FY12E FY13E FY14E Rmb in millions, year end Dec
4,429 4,911 5,126 5,338 Gross margin
1,709 1,539 1,751 1,909 EBITDA margin
618
586
714
791 Operating margin
15
15
15
15 Net margin
6,770 7,051 7,606 8,053 Recurring net profit margin
541
539
538
537 Sales growth
132
131
131
130 Net profit growth
701
721
732
732 Recurring net profit growth
52
52
52
52 EPS growth
8,195 8,495 9,058 9,504
Net debt to equity
Liabilities
Sales/assets
Short-term loans
0
0
0
0
0 Assets/equity
1,071 1,471 1,297 1,424 1,577 ROE
Others
93 133
133
133
133 ROCE
1,163 1,604 1,430 1,557 1,710
Long-term debt
0
0
0
0
0
Others
160 171
171
171
171
Total Liabilities
1,324 1,776 1,602 1,728 1,881
Minorities
53
47
46
46
46
5,678 6,372 6,846 7,283 7,576
BVPS
2.28 2.56
2.75
2.92
3.04
FY10
4,291
990
454
10
5,745
531
79
653
46
7,054
FY10
1,843
84
-295
-224
25
1,433
990
-36
3,391
0.39
-350
-23
3,019
0.42
483
3,501
0.35
215
3,716
0.31
212
3,928
0.24
FY10
42.8%
24.0%
23.4%
20.9%
20.9%
26.1%
24.0%
24.0%
23.8%
FY11
42.3%
22.8%
22.6%
19.4%
19.4%
20.2%
11.5%
11.5%
11.5%
FY12E
41.8%
20.7%
20.5%
17.7%
17.7%
(8.3%)
-16.6%
-16.6%
(16.6%)
FY13E
39.8%
16.9%
16.7%
14.6%
14.6%
6.0%
-12.5%
-12.5%
(12.5%)
FY14E
38.8%
11.8%
11.4%
10.3%
10.3%
9.0%
-22.7%
-22.7%
(22.7%)
-75.6% -69.5% -71.7% -70.4% -70.5%

1.13
1.17
0.98
0.99
1.02
1.13
1.13
1.24
1.24
1.25
28.8% 28.7% 21.8% 17.9% 13.1%
31.5% 32.1% 24.3% 19.4% 13.6%
77

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Belle International Holdings Ltd. (Reuters: 1880.HK, Bloomberg: 1880 HK)

FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
23,706
28,945
35,166
41,485
Net Profit (Rmb mn)
3,425
4,255
4,689
5,774
EPS (Rmb)
0.41
0.50
0.56
0.68
Recurring EPS (Rmb)
0.41
0.50
0.56
0.68
Revenue growth (%)
20.0%
22.1%
21.5%
18.0%
35.2%
24.2%
10.2%
23.1%
Recurring profit growth (%)
35.2%
24.2%
10.2%
23.1%
ROE
21.1%
23.3%
22.4%
23.7%
P/E (x)
26.5
21.3
19.3
15.7
P/BV (x)
5.3
4.7
4.0
3.5
EV/EBITDA (x)
19.4
15.2
12.8
10.2
Dividend Yield
2.9%
1.4%
2.1%
2.6%
8,434
90,667
14,262
13.12
29 Jun 12
53.3%
15,776,990.00
211.83
27.30
5,329
7.76
Dec
FY14E
47,370
7,000
0.83
0.83
14.2%
21.2%
21.2%
24.8%
13.0
3.0
8.3
3.1%
Belle International Holdings Ltd. (HONG KONG / Consumer Discretionary)

As Of: 22-Jun-2012
Local Share Price
Current:
12.40
12 Mth Forward EPS
18.00
0.80
16.00
0.70
14.00
Current:
0.63
0.60
12.00
0.50
10.00
8.00
0.40
6.00
0.30
4.00
0.20
2.00
12%
12Mth fwd EY
Current:
Hong Kong BY
6%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
Dec/97
0.10
0.00
1.32%
1.20
Proxy
1.00
10%
0.80
0.60
8%
0.40
6%
0.20
0.00
4%
-0.20
-0.40
2%
PE (1Yr Forward)
Current:
16.0x
50.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Price/Book Value
Current:
30.0x
45.0x
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.80
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.60
May/97
0%
PBV hist
4.4x
PBV Forward
25.0x
40.0x
20.0x
35.0x
30.0x
15.0x
25.0x
20.0x
10.0x
15.0x
5.0x
10.0x
ROE (Trailing)
Current:
23.29
60.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
-5.0x
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0x
May/97
0.0x
5.0x
Current:
1.47
2.5
50.00
2.0
40.00
1.5
30.00
1.0
20.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
May/97
0.5
10.00
Summary
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
13521.99
30.36614 SEDOL
B1WJ4X2
Specialty Retail
Latest
Min
16.02x
9.08
4.41x
1.75
1.47
0.00
23.29
15.86
1.3%
-0.65
Max
45.49
24.94
2.34
56.43
0.77
Median
22.23
5.19
0.96
22.60
0.41
78
Average
22.71
5.37
1.03
28.87
0.32
2 S.D.+
37.43
11.26
1.98
57.74
0.94
2 S.D. 7.98
-0.53
0.07
0.00
-0.29
% to Min
-43%
-60%
-100%
-32%
-5040%
As Of:
Local Price:
EPS:
% to Max
% to Med
184%
39%
465%
17%
60%
-35%
142%
-3%
5707%
3007%
22-Jun-12
12.40
0.63
% to Avg
42%
22%
-30%
24%
2340%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Belle International Holdings Limited is

engaged in the manufacturing, distribution and
retail sales of shoes and footwear products.
Footwear and sportswear are the two segments
it operates in with China & HK being the main
markets. The company-owned footwear
brands include Belle, Staccato, Teenmix, Tata,
Fato and JipiJapa. The sportswear brands
distributed by it include first-tier sportswear
brands Nike and Adidas, and second-tier
sportswear brands Reebok, PUMA, Kappa,
Mizuno, Converse and LiNing. By the end of
Dec-11 the Company had 10,270 footwear and
4,680 sportswear stores in mainland China.
Revenue per store
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-2.7%
-3.0%
-5.0%
-5.5%
-1.6%
-1.7%

Gross margin
Change in operating expenses (y/y)
Source: J.P. Morgan estimates
Our new Dec-12 PT is HK$15.5 (down from the previous PT of HK$16

due to earnings revisions) is based on 1x PEG and c22% 2-yr earnings
CAGR post 2012.
FY11 revenue breakdown
Sportsw
ear
36%
Footwea
r
64%
Key risk is slower than expected SSSG or sharp erosion in margins.

Management is planning to add mass market brands to its portfolio and if
they pursue this strategy aggressively in 2012 this can pose downside
risk to our 2012 and 2013 estimates and thus PT. Belle has not been
doing aggressive discounting over the few months, if they change this
strategy and start aggressive discounting this can pose downside risk to
our near term estimates, especially 2012

J. P. Morgan
Consensus
0.56
0.68
0.83
0.57
0.68
0.80
FY12E
FY13E
FY14E
Source: J.P. Morgan estimates, Bloomberg.
Peer group valuations

Company
Fashionwear/footwear Retail
Ports Design
Parkson Retail
Golden Eagle
Anta
China Dongxiang^
Li Ning
Sector average
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
P/B
2012E
2013E
589 HK
UW
8.1
7.00
587
8.7
8.2
7.3
1.8
1.6
3368 HK
3308 HK
2020 HK
3818 HK
2331 HK
N
OW
UW
NR
UW
6.9
15.7
4.7
0.7
4.3
7.50
22.50
4.00
2,486
3,940
1,505
500
591
14.1
21.0
5.5
31.5
9.7
15.1
13.7
18.8
6.6
8.1
13.9
11.6
12.0
15.1
7.6
7.4
9.2
9.8
2.7
4.8
1.4
0.4
1.0
2.0
2.4
4.1
1.3
0.4
0.9
1.8
4.50
Source: J.P. Morgan estimates, Bloomberg, Company Data. Prices as of 29 Jun 2012 close. Bloomberg consensus estimates for NR stock.
79

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Belle International Holdings Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
23,706
20.0%
13,208
25.3%
55.7%
4,596
33.2%
19.4%
3,903
38.5%
16.5%
163
0
4,125
44.3%
-701
17.0%
0
60
3,425
35.2%
3,425
35.2%
0.41
35.2%
0.41
35.2%
FY11
28,945
22.1%
16,556
25.3%
57.2%
5,914
28.7%
20.4%
5,151
32.0%
17.8%
205
0
5,471
32.6%
-1,232
22.5%
-16
114
4,255
24.2%
4,255
24.2%
0.50
24.2%
0.50
24.2%
FY12E
35,166
21.5%
19,849
19.9%
56.4%
6,849
15.8%
19.5%
5,922
15.0%
16.8%
198
0
6,170
12.8%
-1,481
24.0%
0
50
4,689
10.2%
4,689
10.2%
0.56
10.2%
0.56
10.2%
FY13E
41,485
18.0%
23,540
18.6%
56.7%
8,327
21.6%
20.1%
7,380
24.6%
17.8%
264
0
7,699
24.8%
-1,925
25.0%
0
55
5,774
23.1%
5,774
23.1%
0.68
23.1%
0.68
23.1%
FY14E
47,370
14.2%
27,146
15.3%
57.3%
9,888
18.8%
20.9%
8,922
20.9%
18.8%
351
0
9,334
21.2%
-2,333
25.0%
0
61
7,000
21.2%
7,000
21.2%
0.83
21.2%
0.83
21.2%
Cash flow statement

PBT
Tax
Other
FY10
4,125
693
-1,648
-401
-120
2,649
Capex
Sale of assets
Other
-1,239 -1,664 -1,750

14
0
0
0
0
0
992 -258
0
-232 -1,922 -1,750
Dividends paid
Other
0
0
0
0
0
691 1,277
0
0
0
-1,603 -1,940 -1,613 -2,093 -2,800
-1,003
281
198
264
351
-1,915 -382 -1,414 -1,828 -2,449
Net change in cash

FX gain/(loss)
Ending cash
DPS
502
714
-20
0
2,173 2,887
0.31 0.15
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E Rmb in millions, year end Dec
2,173 2,887 4,831 7,497 10,818 Gross margin
2,120 2,746 2,890 3,410 3,893 EBITDA margin
4,859 6,517 6,295 7,375 8,311 Operating margin
4,971 5,617 5,791 6,137 6,460 Net margin
14,122 17,767 19,806 24,419 29,482 Recurring net profit margin
2,713 2,790 3,690 3,690 3,690 Sales growth
1,297 1,792 1,638 1,484 1,330 Net profit growth
2,354 2,852 2,928 2,885 2,823 Recurring net profit growth
346
481
481
481
481 EPS growth
20,832 25,681 28,543 32,958 37,806
Net debt to equity
Liabilities
Sales/assets
Short-term loans
681 1,895 1,895 1,895 1,895 Assets/equity
1,106 1,248 1,595 1,868 2,105 ROE
Others
1,674 2,686 2,125 2,585 2,995 ROCE
3,460 5,830 5,615 6,348 6,996
Long-term debt
0
0
0
0
0
Others
257
258
258
258
258
Total Liabilities
3,717 6,087 5,873 6,606 7,254
Minorities
0
0
0
0
0
17,115 19,424 22,500 26,182 30,382
BVPS
2.03
2.30
2.67
3.10
3.60
80
FY10
55.7%
19.4%
16.5%
14.5%
14.5%
20.0%
35.2%
35.2%
35.2%

5,471 6,170 7,699 9,334
763
927
947
966
-2,257
-310 -1,212 -1,095
-1232 -1481 -1925 -2333
273
-198
-264
-351
3,018 5,108 5,245 6,520
FY11
57.2%
20.4%
17.8%
14.7%
14.7%
22.1%
24.2%
24.2%
24.2%
1,944
0
4,831
0.22
FY12E
56.4%
19.5%
16.8%
13.3%
13.3%
21.5%
10.2%
10.2%
10.2%
-750
0
0
0
-750
-750
0
0
0
-750
2,667 3,321
0
0
7,497 10,818
0.27
0.33
FY13E
56.7%
20.1%
17.8%
13.9%
13.9%
18.0%
23.1%
23.1%
23.1%
FY14E
57.3%
20.9%
18.8%
14.8%
14.8%
14.2%
21.2%
21.2%
21.2%
-8.7% -5.1% -13.0% -21.4% -29.4%

1.20 1.24
1.30
1.35
1.34
1.21 1.21
1.27
1.26
1.24
21.1% 23.3% 22.4% 23.7% 24.8%
23.6% 26.3% 25.9% 28.1% 29.6%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Cafe de Coral Holdings Ltd

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Cafe de Coral Holdings Ltd (Reuters: 0341.HK, Bloomberg: 341 HK)

HK$ in mn, year-end Mar
FY11A
FY12A
FY13E
Revenue (HK$ mn)
5,333
5,956
6,635
Net Profit (HK$ mn)
514
474
547
EPS (HK$)
0.90
0.83
0.96
Recurring EPS (HK$)
0.77
0.75
0.96
DPS (HK$)
0.86
0.62
0.72
Revenue growth (%)
9.2%
11.7%
11.4%
0.2%
-7.9%
15.5%
EPS growth (%)
-0.9%
-8.1%
15.5%
ROE
17.4%
15.0%
16.5%
ROA
14.1%
12.1%
13.1%
P/E (x)
22.8
24.8
21.5
P/BV (x)
3.8
3.6
3.5
EV/EBITDA (x)
13.2
13.9
11.8
Dividend Yield
4.2%
3.0%
3.5%
571
11,793
1,520
20.65
29 Jun 12
57.7%
289,515.00
6.06
0.78
19,441
7.76
Mar
FY14E
7,537
655
1.15
1.15
0.86
13.6%
19.7%
19.7%
18.9%
14.9%
18.0
3.3
9.6
4.2%
FY15E
8,416
769
1.35
1.35
1.01
11.7%
17.3%
17.3%
21.1%
16.5%
15.3
3.1
8.0
4.9%

JPM Q-Profile
Cafe de Coral Holdings Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
20.30
25.00
12 Mth Forward EPS
Current:
0.96
1.40
1.20
20.00
1.00
15.00
0.80
10.00
0.60
0.40
5.00
25%
12Mth fwd EY
Current:
Hong Kong BY
5%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
Dec/97
0.20
0.00
25.40%
0.80
Proxy
0.60
20%
0.40
0.20
15%
0.00
10%
-0.20
-0.40
5%
Current:
21.2x
25.0x
Price/Book Value
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.80
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
PE (1Yr Forward)
Aug/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
-0.60
0%
Current:
6.0x
PBV hist
3.5x
PBV Forward
5.0x
20.0x
4.0x
15.0x
3.0x
10.0x
2.0x
5.0x
ROE (Trailing)
Current:
15.66
25.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
1.0x
May/97
0.0x
Current:
3.02
12.0
10.0
20.00
8.0
15.00
6.0
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
2.0
0.00
May/97
4.0
5.00
Summary
Cafe de Coral Holdings Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
1470.63
0.9596366 SEDOL
6160953
Hotels Restaurants & Leisure
Latest
Min
Max
21.19x
5.20
22.34
3.50x
1.16
4.38
3.02
2.35
9.59
15.66
14.74
22.66
25.4%
-0.60
0.48
Median
13.68
2.83
3.99
19.10
0.15
Average
12.74
2.69
4.32
19.03
0.07
2 S.D.+
22.45
4.52
7.04
22.68
0.57
2 S.D. 3.02
0.86
1.60
15.38
-0.43
% to Min
-75%
-67%
-22%
-6%
-337%
As Of:
Local Price:
EPS:
% to Max % to Med
5%
-35%
25%
-19%
217%
32%
45%
22%
89%
-40%
22-Jun-12
20.30
0.96
% to Avg
-40%
-23%
43%
22%
-72%
81

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Caf de Coral is a leading quick-service

restaurants (QSR) operator in Hong Kong. As
of March 2011, the Group manages 568
operating units, including 305 in Hong Kong,
104 in China and the remaining 159 in North
America. CDC owns popular outlet brands
including Cafe de Coral, Spaghetti House,
Oliver's Super Sandwiches, and Manchu Wok.
Hong Kong ASP
EBIT
impact (%)
EPS
impact (%)
5.4%
5.2%
-2.5%
-2.4%
-1.9%
-1.8%
-1.2%
-1.1%
Impact of each 1 percentage points increase

Food cost
Labor cost
Rent cost
FY12 Revenue Breakdown

Our Mar-13 SOTP-based target price of HK$18.7 is based on PEG of 0.9x for
CDCs China business and PE of 15x for CDC's Hong Kong business. We have
assumed a net profit CAGR of 72% in FY13-15E for CDCs China business.
North
America
4%
China
16%
Hong
Kong
80%
China valuation methodology
PEG
Multiple (x)
China value (HK$ per share)
0.9
5.3
Hong Kong valuation methodology
PE
Multiple (x)
Hong Kong value (HK$ per share)
15.0
13.4
SOTP (HK$ per share)
18.7
Source: Company.

HK$
FY12E
J.P. Morgan
0.961
Consensus
0.973
FY13E
1.150
1.072
FY14E
1.350
1.248
Key upside risk would be a stronger volume growth in HK. We have assumed
2% volume growth for HK in FY13. For every 1ppt upside on volume growth,
CDCs earnings would increase by 3%.
Key downside risk is another sudden increase in food costs that cannot be
passed on to consumers. We estimate that for every 1ppt increase in food cost,
CDCs earnings would decrease by 2.4%.

Company
Cafe De Coral
Ajisen China Hol
Gourmet Master
Tao Heung
Fairwood Hldgs
Country-Spon Adr
Tang Palace Hldg
Sector average
Ticker
341 HK
538 HK
2723 TT
573 HK
52 HK
CCSC US
1181 HK
Rating
N
N
NR
NR
NR
NR
NR
Price
(HK$)
20.7
5.3
206.0
3.9
14.4
7.0
1.6
PT
(HK$)
18.70
6.00
NA
NA
NA
NA
NA
Mkt Cap
(US$m)
1,520
738
974
514
231
181
83
2011
27.5
16.5
~
15.6
~
(158.4)
9.5
(17.9)
P/E (x)
2012E
21.5
29.4
20.8
13.9
~
21.9
6.5
19.0
2013E
18.0
20.9
15.8
12.6
~
15.5
5.2
14.7
EV/EBITDA
2012E
11.2
9.4
~
6.3
~
6.8
3.3
7.4
ROE
2012E
16.5
6.6
22.3
19.6
~
10.2
17.7
15.5
P/B (x)
2012E
3.5
1.9
4.2
~
~
1.4
1.3
2.5
Source: Bloomberg, J.P. Morgan estimates. Share prices are as of close of 29 Jun 2012; ^Stock not under J.P. Morgan coverage. Bloomberg consensus estimates for NR stocks.
82
Yld (%)
2012E
3.5%
1.9%
2.2%
~
~
0.0%
5.4%
2.6%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Cafe de Coral Holdings Ltd: Summary of Financials

Income Statement
HK$ in millions, year end Mar
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY11
5,333
9.2%
804
-3.4%
15.1%
815
4.1%
15.3%
606
NM
11.4%
7
3
619
0.3%
-105
17.0%
2
72
514
0.2%
437
-8.1%
0.90
(0.9%)
0.77
(9.1%)
FY12
5,956
11.7%
814
1.2%
13.7%
788
-3.4%
13.2%
559
NM
9.4%
9
-0
568
-8.4%
-94
16.6%
1
54
474
-7.9%
428
-2.2%
0.83
(8.1%)
0.75
(2.4%)
FY13E
6,635
11.4%
929
14.1%
14.0%
938
19.1%
14.1%
659
17.9%
9.9%
8
-0
667
17.5%
-120
18.0%
1
10
547
15.5%
547
28.0%
0.96
15.5%
0.96
28.0%
FY14E
7,537
13.6%
1,103
18.8%
14.6%
1,136
21.1%
15.1%
801
21.7%
10.6%
7
-0
808
21.2%
-154
19.0%
1
13
655
19.7%
655
19.7%
1.15
19.7%
1.15
19.7%
FY15E
8,416
11.7%
1,259
14.2%
15.0%
1,325
16.6%
15.8%
953
19.0%
11.3%
7
-0
960
18.8%
-192
20.0%
0
15
769
17.3%
769
17.3%
1.35
17.3%
1.35
17.3%
Cash flow statement

PBT
Tax
Other

568
667
808
960
229
279
335
372
279
-0
-10
-16
-105
-94
-120
-154
0
0
0
0
971
852 1,013 1,162
Capex
Sale of assets
Other
-310
32
-278
-650
-46
-696
-605
-17
-622
-350
-18
-368
-368
-18
-386
Dividends paid
Other
52
0
-334
-2
-284
9
-422
0
-413
10
-381
0
-372
13
-449
0
-436
12
-532
0
-520
Net change in cash

FX gain/(loss)
Ending cash
DPS
25
0
993
0.86
-139
0
854
0.62
-142
0
712
0.72
209
0
921
0.86
257
0
1,178
1.01
FY11
15.1%
15.3%
11.4%
9.6%
8.2%
9.2%
0.2%
-8.1%
(0.9%)
FY12
13.7%
13.2%
9.4%
8.0%
7.2%
11.7%
-7.9%
-2.2%
(8.1%)
FY13E
14.0%
14.1%
9.9%
8.3%
8.3%
11.4%
15.5%
28.0%
15.5%
FY14E
14.6%
15.1%
10.6%
8.7%
8.7%
13.6%
19.7%
19.7%
19.7%
FY15E
15.0%
15.8%
11.3%
9.1%
9.1%
11.7%
17.3%
17.3%
17.3%
Ratio Analysis
FY12 FY13E FY14E FY15E HK$ in millions, year end Mar
854
712
921 1,178 Gross margin
74
78
87
95 EBITDA margin
172
182
203
185
166
136
110 Net margin
0
0
0 Sales growth
- Net profit growth
1,906 2,232 2,247 2,242 Recurring net profit growth
2,168 2,039 2,264 2,542 EPS growth
4,074 4,270 4,511 4,784
Net debt to equity
Liabilities
Sales/assets
Short-term loans
0
0
0
0
0 Assets/equity
172
171
187
208
228 ROE
Others
466
568
601
643
690 ROCE
639
739
788
851
917
Long-term debt
0
0
0
0
0
Others
75
84
94
107
119
Total Liabilities
714
823
882
957 1,036
Minorities
2
1
1
1
0
3,066 3,249 3,387 3,553 3,747
BVPS
5.44 5.69
5.93
6.22
6.56
FY11
993
54
171
167
1,386
1,560
2,222
3,781
FY11
619
209
-124
-112
-6
587
-32.4% -26.3% -21.0% -25.9% -31.4%

1.46
1.52
1.59
1.72
1.81
1.27
1.25
1.26
1.27
1.28
17.4% 15.0% 16.5% 18.9% 21.1%
20.5% 17.7% 19.9% 23.1% 26.1%
83

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
China Foods Ltd

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
3M - Avg daily Value (HK$
mn)
3M - Avg daily Value (USD)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
China Foods Ltd (Reuters: 0506.HK, Bloomberg: 506 HK)

FY10A
FY11A
FY12E
Revenue (HK$ mn)
19,956
28,011
34,151
Net Profit (HK$ mn)
427.6
646.6
893.5
EPS (HK$)
0.15
0.23
0.32
Core EPS (HK$)
0.15
0.23
0.32
DPS (HK$)
0.06
0.08
0.11
Revenue growth (%)
18.6%
40.4%
21.9%
EPS growth (%)
-24.8%
51.2%
38.2%
ROCE
12.6%
14.8%
17.9%
ROE
7.5%
10.3%
12.9%
ROA
3.1%
3.9%
4.6%
P/E (x)
49.7
32.9
23.8
P/BV (x)
3.6
3.2
2.9
EV/EBITDA (x)
17.2
13.2
10.0
Dividend Yield
0.7%
1.1%
1.5%
2,795
21,268
2,741
7.61
29 Jun 12
25.8%
3.30
25.18
3.14
5,329
7.76
Dec
FY13E
41,652
1,147.7
0.41
0.41
0.15
22.0%
28.5%
20.8%
15.1%
5.4%
18.5
2.7
7.8
1.9%
FY14E
50,199
1,425.8
0.51
0.51
0.18
20.5%
24.2%
23.4%
16.9%
6.0%
14.9
2.4
6.2
2.4%

China Foods Ltd. (HONG KONG / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
6.98
12 Mth Forward EPS
9.00
0.45
8.00
0.40
7.00
0.35
6.00
0.30
5.00
0.25
4.00
0.36
0.20
3.00
0.15
2.00
0.10
1.00
20%
12Mth fwd EY
Current:
Hong Kong BY
5%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
18.81%
1.00
Proxy
18%
0.80
16%
0.60
14%
0.40
12%
10%
0.20
8%
PE (1Yr Forward)
Current:
19.5x
4.5x
45.0x
4.0x
40.0x
3.5x
35.0x
3.0x
30.0x
2.5x
25.0x
2.0x
20.0x
1.5x
15.0x
1.0x
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Price/Book Value
50.0x
10.0x
Jul/98
-0.60
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
-0.40
Jul/98
2%
Dec/97
-0.20
May/97
4%
May/97
0.00
6%
Current:
PBV hist
2.9x
PBV Forward
ROE (Trailing)
Current:
10.23
7.0
14.00
6.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
16.00
12.00
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.5x
May/97
0.0x
0.0x
Dec/97
0.5x
5.0x
May/97
0%
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.05
May/97
0.00
Current:
Current:
1.16
5.0
10.00
4.0
8.00
3.0
6.00
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
0.0
Dec/97
1.0
0.00
May/97
2.00
May/97
2.0
4.00
Summary
China Foods Ltd.
HONG KONG
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
2490.78
2.627005 SEDOL
6105738
Food Products
Latest
Min
19.47x
5.81
2.92x
0.62
1.16
0.00
10.23
2.03
18.8%
-0.42
Max
44.73
4.04
5.84
14.67
0.81
84
Median
13.76
1.44
2.16
9.04
0.22
Average
14.92
1.76
2.54
8.63
0.19
2 S.D.+
27.79
3.58
5.65
13.94
0.70
2 S.D. 2.06
-0.07
-0.56
3.32
-0.33
% to Min
-70%
-79%
-100%
-80%
-323%
As Of:
Local Price:
EPS:
% to Max
130%
38%
402%
43%
330%
% to Med
-29%
-51%
86%
-12%
18%
22-Jun-12
6.98
0.36
% to Avg
-23%
-40%
119%
-16%
-1%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company description
P&L sensitivity metrics for FY12E
China Foods is a leading manufacturer and

distributor of wines in China, under the brand,
Greatwall (), and one of the three key
bottlers and distributors of Coca-Cola
beverages in China. In addition, it distributes
one of the top four edible oil brands,
Fortune (), in China.
Operating margin of wine segment
EBITDA
impact (%)
EPS
impact (%)
-5.6
-3.7%
-7.3
-3.7
-10.6
-13.1
Impact of each 1 percentage points decrease

Operating margin of beverage segment
Operating margin of kitchen foods segment
Source: J.P.Morgan estimates.
2011 revenue breakdown
Our Dec-12 target price of HK$8.4 is based on 1x PEG with 2-year

(2012-2014) EPS CAGR of 26%. We base our PT on 1.0x PEG, in-line
with other China consumer staples companies.
Kitchen
foods
45.8%
Wines
13.0%
Beverages
39.4%
Target PEG
Confectionary
1.8%
2012-14E EPS CAGR
26.3%
26.3
2012E EPS (HK$)
0.320
Target price (HK$)
8.4
Source: Company.

HK$
FY12E
J.P. Morgan
0.320
Consensus
0.318
FY13E
0.411
0.411
FY14E
0.510
0.503
Key downside risk to our call would be a slower recovery in wine

margins. We have assumed wine EBIT margin to recovery back to
18%/19% in 2012/2013. Our sensitivity analysis suggests that for every
1% variance in the EBIT margin for the wine division, China Foods
2012 earnings would change by 3.7%.
Source: Bloomberg, J.P. Morgan estimates

Company
China Foods
Tingyi
Want Want
CRE
China Mengniu Dairy
Uni-president China
Tsingtao Brewery
Sector average
Ticker
506 HK
322 HK
151 HK
291 HK
2319 HK
220 HK
168 HK
Ratin
g
OW
N
N
N
OW
UW
UW
Price
PT
Mkt cap
(HK$)
(HK$)
(US$MM)
7.6
19.8
9.5
23.0
20.4
7.2
44.1
8.4
16.5
7.6
24.5
25.0
5.0
33.0
2,742
14,289
16,201
7,102
4,638
3,341
7,902
P/E (x)
2011
32.9
37.5
38.6
29.1
17.0
68.1
28.1
35.9
2012E
23.8
32.7
28.4
23.0
16.3
33.7
24.4
26.1
2013E
18.5
24.9
23.3
18.9
13.8
25.4
20.6
20.8
EV/EBITDA
ROE
P/B (x)
Yld (%)
2012E
11.1
12.9
19.1
6.3
7.6
16.1
13.5
12.4
2012E
12.8
23.5
39.6
8.8
13.0
9.0
16.7
17.6
2012E
2.9
5.9
10.5
1.4
2.3
2.9
3.8
4.3
2012E
1.5%
1.9%
2.2%
2.4%
1.2%
0.9%
0.6%
1.5%
Source: Bloomberg, J.P. Morgan estimates. Share prices are as of close of 29 June 2012.
85

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
China Foods Ltd: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
19,956
18.6%
5,081
8.1%
25.5%
1,195
-3.2%
6.0%
862
(8.6%)
4.3%
-27
64
881
-7.2%
-260
29.5%
-193
1,143
427.6
-24.7%
428
-24.7%
0.15
(24.8%)
0.15
(24.8%)
FY10
1,741
1,616
3,490
1,512
8,359
1,680
3,548
1,388
14,975
FY11
28,011
40.4%
6,662
31.1%
23.8%
1,580
32.3%
5.6%
1,181
36.9%
4.2%
-13
65
1,209
37.2%
-341
28.2%
-222
1,377
646.6
51.2%
647
51.2%
0.23
51.2%
0.23
51.2%
FY12E
34,151
21.9%
8,549
28.3%
25.0%
2,081
31.7%
6.1%
1,576
33.5%
4.6%
-10
75
1,610
33.2%
-458
28.4%
-259
1,669
893.5
38.2%
894
38.2%
0.32
38.2%
0.32
38.2%
FY13E
41,652
22.0%
10,601
24.0%
25.5%
2,620
25.9%
6.3%
1,993
26.5%
4.8%
-7
89
2,042
26.8%
-582
28.5%
-312
2,080
1,147.7
28.4%
1,148
28.4%
0.41
28.5%
0.41
28.4%
FY14E
50,199
20.5%
12,566
18.5%
25.0%
3,212
22.6%
6.4%
2,451
23.0%
4.9%
1
103
2,514
23.1%
-718
28.6%
-370
2,534
1,425.8
24.2%
1,426
24.2%
0.51
24.2%
0.51
24.2%

1,790 1,992 2,433 2,838
1,945 2,252 2,610 3,082
5,702 6,604 7,652 9,038
1,789 1,758 1,692 1,613
11,225 12,606 14,386 16,571
1,728 2,107 2,569 3,096
3,889 4,012 4,046 3,978
1,487 1,517 1,547 1,578
18,330 20,242 22,549 25,224
Liabilities
Short-term loans
1,021 1,517 1,593 1,672 1,756
2,663 3,939 4,707 5,626 6,645
Others
3,150 3,939 4,135 4,348 4,584
6,834 9,396 10,435 11,646 12,985
Long-term debt
495
300
315
331
347
Others
96
120
147
179
216
Total Liabilities
7,426 9,816 10,896 12,156 13,548
Minorities
1,603 1,844 2,104 2,415 2,785
5,947 6,670 7,242 7,977 8,891
BVPS
2.13 2.39
2.59
2.85
3.18
86
Cash flow statement

PBT
Tax
Other
FY10 FY11 FY12E FY13E FY14E

881 1,209 1,610 2,042 2,514
332 400
505
626
760
-587 -552 -453 -492 -838
-208 -260 -341 -458 -582
-64
-65
-75
-89 -103
354 731 1,247 1,630 1,751
Capex
Sale of assets
Other
-798
-17
-815
-598
-216
-814
-628
-166
-794
-660
-195
-855
-693
-227
-920
Dividends paid
Other
713
-205
-300
209
325
-193
0
132
26
-277
0
-250
32
-367
0
-334
37
-462
0
-426
-202
49
51
0
1,741 1,790
0.06 0.08
202
0
1,992
0.11
441
0
2,433
0.15
405
0
2,838
0.18
FY12E
25.0%
6.1%
4.6%
2.6%
2.6%
21.9%
38.2%
24.5%
38.2%
FY13E
25.5%
6.3%
4.8%
2.8%
2.8%
22.0%
28.4%
20.0%
28.5%
FY14E
25.0%
6.4%
4.9%
2.8%
2.8%
20.5%
24.2%
17.0%
24.2%
Net change in cash

FX gain/(loss)
Ending cash
DPS
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Sales growth
Net profit growth
EPS growth
Net debt to equity
Sales/assets
Assets/equity
ROE
ROCE
FY10
25.5%
6.0%
4.3%
2.1%
2.1%
18.6%
-24.7%
-20.3%
(24.8%)
FY11
23.8%
5.6%
4.2%
2.3%
2.3%
40.4%
51.2%
47.6%
51.2%
-3.8% 0.4% -1.2% -5.4% -8.3%

1.45 1.68
1.77 1.95
2.10
2.52 2.75
2.80 2.83
2.84
7.5% 10.3% 12.9% 15.1% 16.9%
12.6% 14.8% 17.9% 20.8% 23.4%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
China Lilang Ltd.

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
1,201
5,204
819
5.29
29 Jun 12
31.8%
1,818,053.00
12.03
1.55
19,441
7.76
Dec
China Lilang Ltd. (Reuters: 1234.HK, Bloomberg: 1234 HK)

FY10A
FY11A
FY12E
Revenue (Rmb mn)
2,053
2,708
3,148
Net Profit (Rmb mn)
419
623
643
EPS (Rmb)
0.35
0.52
0.54
Recurring EPS (Rmb)
0.35
0.52
0.54
DPS (Rmb)
0.17
0.33
0.27
Revenue growth (%)
31.6%
31.9%
16.3%
38.2%
48.8%
3.2%
EPS growth (%)
13.0%
48.8%
3.2%
ROE
23.9%
30.9%
27.2%
ROA
18.9%
24.9%
21.6%
P/E (x)
12.4
8.4
8.1
P/BV (x)
2.8
2.4
2.0
EV/EBITDA (x)
8.9
5.6
4.0
Dividend Yield
3.9%
7.7%
6.2%
FY13E
3,831
756
0.63
0.63
0.32
21.7%
17.6%
17.6%
27.4%
21.7%
6.9
1.8
3.5
7.3%
FY14E
4,624
896
0.75
0.75
0.37
20.7%
18.5%
18.5%
27.9%
22.0%
5.8
1.5
2.3
8.6%
87

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
China Lilang Ltd. (CHINA / Consumer Discretionary)

As Of: 22-Jun-2012
Local Share Price
Current:
5.45
12 Mth Forward EPS
14.00
0.80
12.00
0.70
10.00
0.60
0.40
6.00
0.30
4.00
0.20
2.00
16%
12Mth fwd EY
Current:
China BY
14%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.00
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.10
-64.86%
1.00
Proxy
14%
0.80
12%
0.60
10%
0.40
0.20
8%
0.00
6%
-0.20
4%
-0.40
2%
PE (1Yr Forward)
Current:
7.1x
30.0x
Price/Book Value
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
-0.80
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.60
May/97
0%
0.63
0.50
8.00
0.00
Current:
Current:
9.0x
PBV hist
2.5x
PBV Forward
8.0x
25.0x
7.0x
20.0x
6.0x
5.0x
15.0x
4.0x
10.0x
3.0x
2.0x
5.0x
Dec/11
May/11
Mar/10
Oct/10
Dec/11
5.23
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Current:
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Feb/99
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
0.0
Jun/01
1.0
0.00
Nov/00
2.0
20.00
Apr/00
3.0
40.00
Sep/99
4.0
60.00
Feb/99
80.00
Jul/98
5.0
Dec/97
6.0
May/97
Dec/97
May/97
100.00
Jul/98
30.87
120.00
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Current:
0.0x
May/97
ROE (Trailing)
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
1.0x
0.0x
Summary
China Lilang Ltd.
CHINA
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
830.99
1.945539 SEDOL
B4JMX94
Latest
Min
Max
7.12x
7.12
25.91
2.46x
2.46
8.16
5.23
0.00
5.23
30.87
23.91
99.34
-64.9%
-0.65
0.53
Median
17.06
5.41
2.10
32.44
0.33
88
Average
15.90
5.11
2.41
49.51
0.18
2 S.D.+
26.17
8.31
5.11
106.10
0.81
2 S.D. 5.63
1.91
-0.28
-7.09
-0.46
% to Min
0%
0%
-100%
-23%
0%
As Of:
Local Price:
EPS:
% to Max
% to Med
264%
140%
231%
120%
0%
-60%
222%
5%
182%
151%
22-Jun-12
5.45
0.63
% to Avg
123%
107%
-54%
60%
127%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
China Lilang is a leading mainstream menswear

brand company in the PRC. It was ranked No.1 by
retail sales in the mainstream brands market for
2007 and 2008, according to Frost & Sullivan. The
company is mainly engaged in the design, sourcing,
manufacturing and wholesaling a wide range of
menswear products under two self-owned brands,
LILANZ and L2, mainly targeting the mid-end
business formal and casual, fashion-casual markets.
As of Dec-11, Lilang had a total of 3,032 LILANZbranded stores operated by its distributors and subdistributors across the country.
Trade fair growth assumption

Apparel/
suits
4%
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-0.8%
-0.8%
-1.1%
-1.1%
-4.0%
-4.0%
-4.0%
-4.0%
--Impact of 1% decrease
Replenishment order as % of sales
Operating expenses as % of sales
--Impact of 1% increase
Our new Dec-12 PT is HK$8.3 based on 2-yr earnings CAGR of

18% and 0.7x PEG (discount to 1x PEG used for our big cap
coverage to reflect the risks associated with the overall franchising
model). The revision in our PT is a result of earnings revision for
2012 and 2-yr CAGR.
Accessor
ies
6%
Pants
18%
Key downside risks to our price target are a lower-than-expected

ASP increase and an abrupt increase in A&P expenses. Higher-than
expected wholesale discounts, subsidies and A&P expenses could
pose downside risks to our margins assumptions and result in
downside risks to our 2012 earnings estimates and PT. Worse-than
expected performance of the sub-brand L2 should generate
downside risks to our earnings and PT
Tops
72%
Source: Company reports.
EPS: J.P. Morgan vs. consensus

FY12E
FY13E
FY14E
J. P. Morgan
Consensus
0.54
0.63
0.75
0.58
0.67
0.77

Company
Lifestyle
Sa Sa*
Giordano
Chow Sang Sang^
Luk Fook*^
Belle
Trinity
China Lilang
Golden Eagle
Sector average
Ticker
1212 HK
178 HK
709 HK
116 HK
590 HK
1880 HK
891 HK
1234 HK
3308 HK
Rating
OW
N
OW
NR
NR
OW
OW
OW
OW
Price
16.9
4.9
5.5
15.0
16.1
13.1
4.9
5.3
15.7
PT
19.00
5.30
6.50
15.50
8.00
8.30
22.50
Mkt Cap
(USD mn)
3,631
1,763
1,085
1,309
1,220
14,266
1,076
819
3,940
2011
18.0
19.8
11.3
9.3
6.8
21.3
16.5
8.4
21.0
14.7
P/E
2012E
15.7
17.2
10.8
8.1
7.1
19.3
14.6
8.1
18.8
13.3
2013E
13.9
14.3
8.6
6.8
6.1
15.7
11.6
6.9
15.1
11.0
P/B
2012E
3.0
5.6
2.8
1.4
1.5
4.0
2.5
2.0
4.8
3.1
2013E
2.7
4.8
2.5
1.2
1.3
3.5
2.3
1.8
4.1
2.7
Source: Bloomberg, J.P. Morgan estimates. Prices as of 29 Jun 2012 close. ^Bloomberg consensus estimates used for the NR (not rated) companies
89

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
China Lilang Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
Operating Profit
% change Y/Y
Operating margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
LT Investments
Other assets
Total Assets
FY10
2,053
31.6%
778
41.2%
37.9%
487
41.3%
23.7%
480
42.0%
23.4%
11
488
46.8%
-69
14.2%
419
38.2%
419
38.2%
0.35
13.0%
0.35
13.0%
FY11
2,708
31.9%
1,055
35.7%
39.0%
711
46.0%
26.3%
704
46.7%
26.0%
44
753
54.2%
-130
17.2%
623
48.8%
623
48.8%
0.52
48.8%
0.52
48.7%
FY12E
3,148
16.3%
1,275
20.8%
40.5%
837
17.7%
26.6%
827
17.5%
26.3%
31
858
13.9%
-214
25.0%
643
3.2%
643
3.2%
0.54
3.2%
0.54
3.2%
FY13E
3,831
21.7%
1,571
23.2%
41.0%
1,020
21.8%
26.6%
1,005
21.6%
26.2%
46
1,051
22.5%
-294
28.0%
756
17.6%
756
17.6%
0.63
17.6%
0.63
17.6%
FY14E
4,624
20.7%
1,896
20.7%
41.0%
1,220
19.7%
26.4%
1,203
19.8%
26.0%
41
1,245
18.5%
-349
28.0%
896
18.5%
896
18.5%
0.75
18.5%
0.75
18.5%
Cash flow statement

PBT
Tax
Other
90

753
858 1,051 1,245
19
22
27
30
-399
315
-518
267
-92
-214
-294
-349
-47
-31
-46
-41
234
950
220 1,152
Capex
Other
-49
-262
-311
-120
582
462
-120
31
-89
-100
46
-54
-50
41
-9
Dividends paid
Other
1
-1
-192
-0
-192
1
0
-300
-0
-300
0
0
-271
0
-271
0
0
-337
0
-337
0
0
-397
0
-397
Net change in cash

Ending Cash
DPS
15
847
0.17
396
1,241
0.33
589
1,830
0.27
-171
1,660
0.32
746
2,406
0.37
FY10
37.9%
23.7%
23.4%
20.4%
20.4%
31.6%
38.2%
38.2%
13.0%
FY11
39.0%
26.3%
26.0%
23.0%
23.0%
31.9%
48.8%
48.8%
48.8%
FY12E
40.5%
26.6%
26.3%
20.4%
20.4%
16.3%
3.2%
3.2%
3.2%
FY13E
41.0%
26.6%
26.2%
19.8%
19.8%
21.7%
17.6%
17.6%
17.6%
FY14E
41.0%
26.4%
26.0%
19.4%
19.4%
20.7%
18.5%
18.5%
18.5%
Ratio Analysis
1,241 1,830 1,660 2,406 Gross margin
715
769 1,058 1,172 EBITDA margin
225
255
308
4
4
4
4 Net margin
166
166
166
166 Sales growth
204
302
374
29
29
29
10
10
8
8 EPS growth
2,595 3,366 3,607 4,551
Net debt to equity
Liabilities
Sales/assets
Short-term loans
0
0
0
0
0 Assets/equity
509
339
738
562 1,007 ROE
Others
27
29
29
29
29 ROCE
536
368
767
591 1,036
Long-term debt
0
0
0
0
0
Others
12
49
49
49
49
Total Liabilities
548
418
816
640 1,085
1,860 2,177 2,549 2,969 3,468
BVPS
1.55 1.81
2.12
2.47
2.89
FY10
847
501
182
614
2,144
46
180
30
8
2,408
FY10
488
16
71
-49
-8
518
-45.6% -57.0% -71.8% -55.9% -69.4%

0.93
1.08
1.06
1.10
1.13
1.29
1.19
1.32
1.21
1.31
23.9% 30.9% 27.2% 27.4% 27.9%
26.9% 34.3% 34.5% 35.9% 37.0%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
China Mengniu Dairy Co. Ltd. (Reuters: 2319.HK, Bloomberg: 2319 HK)
FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
30,265
37,388
40,363
47,413
Net Profit (Rmb mn)
1,237.3
1,589.3
1,572.8
2,003.2
EPS (Rmb)
0.71
0.90
0.90
1.14
DPS (Rmb)
0.16
0.20
0.20
0.25
Revenue growth (%)
17.7%
23.5%
8.0%
17.5%
EPS growth (%)
4.3%
27.3%
-1.0%
27.4%
ROE
13.5%
15.0%
13.0%
14.9%
P/E (Non-Financial)
23.5
18.4
18.6
14.6
ROA
7.9%
8.5%
7.5%
8.6%
P/BV (x)
3.0
2.6
2.3
2.1
EV/EBITDA (x)
10.7
8.4
7.3
5.2
Dividend Yield
1.0%
1.2%
1.2%
1.5%
1,768
29,474
4,636
20.35
29 Jun 12
80.0%
6,631,444.00
147.20
18.97
5,329
7.76
Dec
FY14E
55,530
2,456.9
1.40
0.31
17.1%
22.7%
16.2%
11.9
9.5%
1.8
3.7
1.8%
China Mengniu Dairy Co. Ltd. (HONG KONG / Consumer Staples)

As Of: 22-Jun-2012
Local Share Price
Current:
21.50
12 Mth Forward EPS
40.00
1.60
35.00
1.40
30.00
1.20
25.00
1.00
20.00
0.60
10.00
0.40
5.00
16%
12Mth fwd EY
Current:
Hong Kong BY
6%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
2.50%
1.00
Proxy
14%
0.80
12%
0.60
10%
0.40
0.20
8%
0.00
6%
-0.20
4%
-0.40
2%
Current:
16.2x
45.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Price/Book Value
Current:
12.0x
40.0x
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.80
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
-0.60
PE (1Yr Forward)
PBV hist
2.7x
PBV Forward
10.0x
35.0x
30.0x
8.0x
25.0x
6.0x
20.0x
15.0x
4.0x
10.0x
Current:
14.97
30.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
ROE (Trailing)
0.0x
May/97
2.0x
5.0x
0.0x
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.20
0%
1.09
0.80
15.00
0.00
Current:
Current:
1.14
2.5
20.00
2.0
10.00
1.5
0.00
1.0
-10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
-30.00
May/97
0.5
-20.00
Summary
HONG KONG
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
4942.87
19.39241 SEDOL
B01B1L9
Food Products
Latest
Min
16.21x
7.35
2.72x
1.68
1.14
0.00
14.97
-19.88
2.5%
-0.57
Max
38.48
11.39
2.03
27.30
0.73
Median
20.69
3.98
0.71
19.54
0.40
Average
22.13
4.78
0.73
14.83
0.39
2 S.D.+
34.33
9.22
1.58
41.90
0.80
2 S.D. 9.93
0.34
-0.12
-12.23
-0.03
% to Min
-55%
-38%
-100%
-233%
-2373%
As Of:
Local Price:
EPS:
% to Max
% to Med
137%
28%
320%
47%
79%
-37%
82%
30%
2817%
1508%
22-Jun-12
21.50
1.09
% to Avg
36%
76%
-36%
-1%
1444%
91

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Mengniu is a leading dairy producer in

China. Its major products include liquid
milk product and ice cream. In 2008, it
ranked No.1 in the sectors of liquid milk,
yogurt and ice cream in China dairy
industry.
ASP assumption
Impact of a 0.5% increase
EBIT
impact (%)
EPS
impact (%)
11%
10%
-9%
-8%
-12%
-11%
Raw milk cost assumption

Impact of a 1% increase
Selling expense as % of sales assumption
Impact of a 0.5% increase

Ice
cream
9%
Our Dec-12 target price of HK$25.0 (lowered from HK$26.0) is based

on 0.9x PEG, a discount to 1x for other China consumer staples to
reflect higher system risk for the diary industry, with 2-year (20122014) EPS CAGR of 25%. We are using PEG in order to capture
earnings growth prospects.
Others
1%
Target PEG
Liquid
milk
90%
0.9
2012-14E EPS CAGR
25.0%
Source: Company.
22.5
2012E EPS (CNY)
0.895
Target price (HK$)
25.0
Key risks to our target price are larger-than-expected promotional

spending in 1Q12 or shortage of raw milk supply in China.

FY12E
J.P. Morgan
0.895
Consensus
0.968
FY13E
1.140
1.228
FY14E
1.399
1.494

Company
China Mengniu Dairy
Want Want
China Resources
Enterprise
Tsingtao Brewery
Uni-president China
Sector average
Ticker
2319 HK
151 HK
Rating
OW
N
Price
(HK$)
20.4
9.5
PT
(HK$)
25.0
7.6
Mkt Cap
(US$m)
4,638
16,201
291 HK
168 HK
220 HK
N
UW
UW
23.0
44.1
7.2
24.5
33.0
5.0
7,102
7,902
3,341
Source: Bloomberg, J.P. Morgan estimates. Share prices are as of close of 29 Jun 2012.
92
2011
17.0
38.6
P/E (x)
2012E
16.3
28.4
2013E
13.8
23.3
EV/EBITDA
2012E
7.6
19.1
ROE
2012E
13.0
39.6
P/B (x)
2012E
2.3
10.5
Yld (%)
2012E
1.2%
2.2%
29.1
28.1
68.1
36.2
23.0
24.4
33.7
25.2
18.9
20.6
25.4
20.4
6.3
13.5
16.1
12.5
8.8
16.7
9.0
17.4
1.4
3.8
2.9
4.2
2.4%
0.6%
0.9%
1.4%
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
China Mengniu Dairy Co. Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income
% change Y/Y
Option expense
Net Income ex option expense
No. of shares o/s
EPS (reported)
EPS ex option expense
Balance sheet
Trade & other receivable
Inventories
Others
Total current assets
Net fixed assets
Others
Total Assets
FY10 FY11 FY12E FY13E

30,265 37,388 40,363 47,413
17.7% 23.5%
8.0% 17.5%
7,786 9,592 10,202 12,148
2,168 2,760 3,169 4,268
11.5% 27.3% 14.8% 34.7%
7.2%
7.4%
7.9%
9.0%
1,455 1,896 1,847 2,419
11.7% 30.3%
NM 31.0%
4.8%
5.1%
4.6%
5.1%
43
112
137
139
1,538 2,061 2,039 2,615
14.2% 34.0% -1.1% 28.3%
-182
-276
-273
-364
11.8% 13.4% 13.4% 13.9%
1,237.3 1,589.3 1,572.8 2,003.2
10.9% 28.4% -1.0% 27.4%
1,528 1,726 1,793 2,123
1,741 1,757 1,757 1,757
0.71
0.90
0.90
1.14
0.878 0.983 1.021 1.209
FY14E
55,530
17.1%
14,338
5,440
27.5%
9.8%
2,998
24.0%
5.4%
172
3,231
23.5%
-467
14.5%
2,456.9
22.7%
2,457
1,757
1.40
1.399
Cash flow statement

PBT
Depreciation & amortization
Others
FY10
1,538
713
-156
2,485
Capex
Free cash flow
Others
Cashflow from investing
-1,426 -2,631 -2,600 -2,730 -2,867

1,059
-111
499 1,547 2,477
-2,204 -1,645 -2,762 -2,929 -3,104
Dividends paid
Other
Cashflow from financing
-245
364
-278
-998
-348
-274
-394
-219
-491
-290
Net change in cash

DPS
644
0.16
-123
0.20
62
0.20
1,130
0.25
1,950
0.31
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E Rmb in millions, year end Dec
6,698 6,523 6,585 7,715 9,665 Gross margin
555
275
282
314
361 EBITDA margin
1,235 1,903 1,999 2,099 2,203 Net margin
9,664 10,387 10,753 12,363 14,934
Sales growth
5,380 6,807 8,085 8,965 9,390 Net profit growth
- EPS growth
17,306 20,202 21,906 24,458 27,517
Net debt to equity
Liabilities
Short-term loans
551
538
538
538
538
2,061 2,543 2,691 3,098 3,555
Others
3,626 4,145 4,208 4,369 4,547
6,238 7,226 7,437 8,004 8,640
Long-term debt
150
0
0
0
0
Total Liabilities
7,088 8,153 8,438 9,180 10,017
Minorities
459
578
771 1,019 1,325
9,758 11,471 12,698 14,260 16,176
BVPS
5.62
6.49
7.18
8.07
9.15

2,061 2,039 2,615 3,231
864 1,322 1,849 2,442
69
143
96
104
2,520 3,099 4,277 5,344
Sales/assets
Assets/equity
ROE
ROCE

25.7% 25.7% 25.3% 25.6% 25.8%
7.2% 7.4% 7.9% 9.0% 9.8%
4.8% 5.1% 4.6% 5.1% 5.4%
4.1% 4.3% 3.9% 4.2% 4.4%
17.7% 23.5% 8.0% 17.5% 17.1%
10.9% 28.4% -1.0% 27.4% 22.7%
4.3% 27.3% (1.0%) 27.4% 22.7%
-61.5% -52.2% -47.6% -50.3% -56.4%
1.93
1.99
1.92
2.05
2.14
1.59
1.77
1.73
1.72
1.70
13.5% 15.0% 13.0% 14.9% 16.2%
14.1% 16.9% 14.6% 17.3% 19.0%
93

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
R-CHIP
Exchange Rate
Fiscal Year End
China Resources Enterprise (Reuters: 0291.HK, Bloomberg: 291 HK)

FY10A
FY11A
FY12E
FY13E
Revenue (HK$ mn)
86,728
110,164
135,786
160,350
Net Profit (HK$ mn)
2,673
2,832
3,293
3,805
EPS (HK$)
1.12
1.18
1.37
1.59
Recurring EPS (HK$)
0.79
0.79
1.00
1.21
DPS (HK$)
0.52
0.47
0.55
0.63
Revenue growth (%)
35.2%
27.0%
23.3%
18.1%
-4.0%
5.9%
16.3%
15.6%
9.2%
-0.3%
26.7%
21.4%
ROE
9.4%
8.4%
8.8%
9.6%
ROA
3.2%
2.8%
2.8%
2.9%
P/E (x)
20.6
19.4
16.7
14.5
Adjusted P/E
29.03
29.15
22.98
18.93
P/BV (x)
1.8
1.5
1.4
1.4
EV/EBITDA (x)
8.0
7.3
5.9
4.7
Dividend Yield
2.3%
2.1%
2.4%
2.8%
2,400
55,085
7,099
22.95
29 Jun 12
48.5%
3.77
97.56
14.34
3,722
7.76
Dec
FY14E
189,213
4,517
1.89
1.51
0.75
18.0%
18.7%
24.5%
10.8%
3.1%
12.2
15.20
1.3
3.7
3.3%

China Resources Enterprise Ltd. (HONG KONG / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
23.35
12 Mth Forward EPS
45.00
1.60
40.00
1.40
35.00
1.25
1.20
30.00
1.00
25.00
20.00
0.80
15.00
0.60
10.00
0.40
5.00
20%
12Mth fwd EY
Current:
Hong Kong BY
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
5%
Dec/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
Dec/97
0.20
0.00
15.65%
1.00
Proxy
18%
0.80
16%
0.60
14%
12%
0.40
10%
0.20
8%
6%
0.00
4%
Dec/11
May/11
Oct/10
Mar/10
Dec/11
May/11
Mar/10
Oct/10
Dec/11
1.91
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Current:
Jun/01
Nov/00
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Sep/99
Feb/99
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Jul/98
Dec/97
Apr/00
Apr/00
Sep/99
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
0.0
Mar/03
1.0
0.00
Jan/02
2.0
2.00
Aug/02
3.0
4.00
Jun/01
4.0
6.00
Apr/00
5.0
8.00
Nov/00
6.0
10.00
Sep/99
7.0
12.00
Feb/99
8.0
14.00
Jul/98
16.00
Dec/97
9.0
May/97
10.0
18.00
1.5x
PBV Forward
20.00
Feb/99
8.43
Current:
PBV hist
Jul/98
Current:
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
0.0x
Jan/02
1.0x
0.0x
Jun/01
2.0x
5.0x
Nov/00
3.0x
10.0x
Apr/00
4.0x
15.0x
Sep/99
5.0x
20.0x
Feb/99
6.0x
25.0x
Jul/98
30.0x
Dec/97
7.0x
May/97
8.0x
ROE (Trailing)
Dec/97
Price/Book Value
May/97
18.7x
35.0x
Dec/97
Current:
40.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
PE (1Yr Forward)
-0.40
May/97
-0.20
2%
0%
Current:
Summary
China Resources Enterprise Ltd.
HONG KONG
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
7220.76
14.353241 SEDOL
6972459
Food & Staples Retailing
Latest
Min
18.74x
5.47
1.54x
0.97
1.91
0.28
8.43
7.68
15.6%
-0.34
Max
35.43
7.60
8.77
18.84
0.77
Median
14.28
1.91
2.04
10.92
0.32
94
Average
17.17
2.10
2.89
11.78
0.29
2 S.D.+
31.72
4.10
7.18
17.53
0.78
2 S.D. 2.62
0.10
-1.40
6.02
-0.20
% to Min
-71%
-37%
-85%
-9%
-318%
As Of:
Local Price:
EPS:
% to Max
% to Med
89%
-24%
393%
24%
358%
7%
123%
30%
395%
103%
22-Jun-12
23.35
1.25
% to Avg
-8%
36%
51%
40%
84%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
China Resources Enterprise focuses on

the consumer businesses in both the
Chinese Mainland and Hong Kong, with
core activities being retail, beverage, food
processing and distribution, textile and
investment property. Its ultimate holding
company is China Resources National
Corporation, which had a 51.4% effective
interest in the Company as at the end of
December 2010. The Company employs
around 200,000 staff, of which about 95%
work in the Chinese Mainland.
Beer EBIT
EBITDA 12E
impact (%)
EPS 12E
impact (%)
-0.3%
-1.0%
-0.2%
-0.8%
-0.1%
-0.2%
Retail EBIT
Food EBIT
Our Dec-12 PT of HK$24.5 is based on SOTP in which we value the

beer division at 25x 2012E (in line with Tsingtao) and retail division at
22x 2012E (average of the space).
2011 core earnings breakdown
Food
processin
g and
distributio
n
13%
Retail
and
property
41%
Beverage
6%
A key risk to our call on the upside is a sizeable M&A and on the
downside is further deterioration in retail margins. Retail business
margins have disappointed in FY11. We are assuming that they will
slowly recover and at least maintain margin for FY12. If they don't it
would pose a downside risk to our 2012 earnings estimate and PT. We
assumed barley costs to be flat in 2012. If barley costs strengthen this
would present another downside risk to our estimates
Beer
40%

HK$
J. P. Morgan
Consensus
FY12E
1.00
1.10
FY13E
1.21
1.34
FY14E
1.51
1.63
Source: Bloomberg, J.P. Morgan.
Figure 62: Peer valuation comparison

Company
Ticker
Beer companies
Beijing Yanjing^
000729 CH
Tsingtao
168 HK
Food retailers
Lianhua^
980 HK
Wumart
1025 HK
Other China F&B companies
China Yurun
1068 HK
China Huiyuan Juice
1886 HK
China Mengniu Dairy
2319 HK
Tingyi
322 HK
Uni-president China
220 HK
Sector average
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(US$ MM)
2011
P/E
2012E
2013E
2012E
2013E
NR
UW
7.3
44.1
33.00
2,898
7,902
21.6
28.1
18.1
24.4
15.1
20.6
~
3.8
~
3.2
NR
NR
7.4
15.7
1,068
2,590
10.8
27.9
10.7
21.7
9.6
18.0
1.9
4.9
1.7
4.2
UW
N
OW
NR
UW
6.8
2.8
20.4
19.8
7.2
1,586
526
4,638
14,289
3,341
11.5
22.8
17.0
37.5
68.1
27.3
9.2
13.1
16.3
32.7
33.7
20.0
7.1
~
13.8
24.9
25.4
16.8
0.7
0.5
2.3
5.9
2.9
2.9
0.7
~
2.1
5.2
2.7
2.8
7.60
5.00
25.00
5.00
P/B
Source: J.P. Morgan estimates, Bloomberg. *Next yr estimates taken since FY ends in Jan-May. ^Bloomberg estimates used for the NR companies. Prices as of Jun 29, 2012.
95
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
China Resources Enterprise: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
FY11 FY12E
86,728 110,164 135,786
35.2% 27.0% 23.3%
22,324 27,357 34,082
32.6% 22.6% 24.6%
25.7% 24.8% 25.1%
7,564
8,233 10,334
13.3%
8.8% 25.5%
8.7%
7.5%
7.6%
4,988
5,339
6,610
18.4%
7.0% 23.8%
5.8%
4.9%
4.9%
-3
77
67
27
10
0
5,012
5,426
6,677
13.1%
8.3% 23.1%
-1,395 -1,556 -2,144
27.8% 28.7% 32.1%
-944 -1,038 -1,240
0
0
0
2,673
2,832
3,293
-4.0%
5.9% 16.3%
1,895
1,889
2,393
9.2% -0.3% 26.7%
1.12
1.18
1.37
(4.1%)
5.9% 16.4%
0.79
0.79
1.00
9.2% (0.4%) 26.8%
FY10
FY11 FY12E
14,071 18,256 16,946
6,843 11,534 14,217
15,626 20,715 25,442
280
309
309
36,820 50,814 56,914
9,873 11,065 11,048
376
432
432
41,443 50,240 54,833
890
1,098
1,098
89,402 113,649 124,325
Liabilities
Short-term loans
4,151
7,092
32,476 45,487
Others
871
618
37,498 53,197
Long-term debt
8,158
8,442
Others
2,457
3,028
Total Liabilities
48,113 64,667
Minorities
10,470 12,628
30,819 36,354
BVPS
12.86
15.15
96
7,092
52,942
618
60,652
8,442
3,028
72,122
13,868
38,335
16.00
Cash flow statement

FY13E FY14E HK$ in millions, year end Dec
160,350 189,213 PBT
18.1% 18.0% Depr. & amortization
40,408 47,682 Change in working capital
18.6% 18.0% Tax
25.2% 25.2% Other
12,416 14,462 Cash flow from operations
20.2% 16.5%
7.7%
7.6% Capex
7,862
9,278 Sale of assets
19.0% 18.0% Acquisition of subsidiaries/intangibles
4.9%
4.9% Other
79
150 Cash flow from investing
0
7,941
9,428 Equity raised/(repaid)
18.9% 18.7% Debt raised/(repaid)
-2,646 -3,141 Dividends paid
33.3% 33.3% Other
-1,490 -1,769 Cash flow from financing
0
0
3,805
4,517 Net change in cash
15.6% 18.7% FX gain/(loss)
2,905
3,617 Ending cash
21.4% 24.5% DPS
1.59
1.89
15.6% 18.7%
1.21
1.51
21.4% 24.5%
Ratio Analysis
FY13E FY14E HK$ in millions, year end Dec
19,339 24,827 Gross margin
16,788 19,810 EBITDA margin
30,005 35,406 Operating margin
309
309 Net margin
66,442 80,351 Recurring net profit margin
11,031 11,014 Sales growth
432
58,596 60,359 Recurring net profit growth
1,098
1,098 EPS growth
137,599 153,254
Net debt to equity
Sales/assets
7,092
7,092 Assets/equity
62,436 73,674 ROE
618
618 ROCE
70,146 81,384
8,442
8,442
3,028
3,028
81,616 92,854
15,358 17,128
40,625 43,273
16.96
18.06
FY10 FY11 FY12E

5,012 5,426 6,677
2,576 2,894 3,724
1,575 3,236
45
-991 -1556 -2144
-1,193 -1,279
-67
6,979 8,721 8,234
FY13E FY14E
7,941 9,428
4,554 5,184
2,360 2,816
-2646 -3141
-79 -150
12,130 14,136
-4,037 -10,246 -8,300 -8,300 -7,000

4,204
-457
0
0
0
0
360
301
317
329
400
70 -9,945 -7,983 -7,971 -6,600
26
86 3,225
0
0
0
-1,175 -1,128 -1,312 -1,516 -1,799
-392
-224 -250 -250
-250
-1,455 1,873 -1,562 -1,766 -2,049
5,594
649 -1,310 2,393 5,487
-51 3,536
14,071 18,256 16,946 19,339 24,827
0.52
0.47 0.55 0.63
0.75

25.7% 24.8% 25.1% 25.2% 25.2%
8.7% 7.5% 7.6% 7.7% 7.6%
5.8% 4.9% 4.9% 4.9% 4.9%
3.1% 2.6% 2.4% 2.4% 2.4%
2.2% 1.7% 1.8% 1.8% 1.9%
35.2% 27.0% 23.3% 18.1% 18.0%
-4.0% 5.9% 16.3% 15.6% 18.7%
9.2% -0.3% 26.7% 21.4% 24.5%
(4.1%) 5.9% 16.4% 15.6% 18.7%
-5.7% -7.5% -3.7% -9.4% -21.5%
1.05
1.09 1.14 1.22
1.30
182.30 193.43 3.24 3.39
3.54
9.4% 8.4% 8.8% 9.6% 10.8%
12.3% 11.2% 12.5% 14.3% 16.1%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
China Yurun Food Group

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
China Yurun Food Group (Reuters: 1068.HK, Bloomberg: 1068 HK)

FY10A
FY11A
FY12E
Revenue (HK$ mn)
21,473
32,315
30,825
Net Profit (HK$ mn)
2,728
1,799
1,710
Recurring Profit (HK$ mn)
1,788
1,071
1,465
EPS (HK$)
1.55
0.98
0.94
DPS (HK$)
0.41
0.22
0.23
Revenue growth (%)
54.8%
50.5%
-4.6%
49.5%
-40.1%
36.8%
EPS growth (%)
44.4%
-36.5%
-5.0%
ROE
23.9%
11.8%
10.2%
ROA
16.4%
7.9%
6.6%
P/E (x)
4.4
6.9
7.2
P/BV (x)
0.8
0.8
0.7
EV/EBITDA (x)
12.8
19.1
17.7
Dividend Yield
6.0%
3.3%
3.5%
1,823
12,304
1,586
6.75
29 Jun 12
74.2%
7.23
64.99
9.42
5,329
7.76
Dec
FY13E
38,620
2,229
1,750
1.22
0.30
25.3%
19.5%
30.4%
12.2%
8.1%
5.5
0.6
13.6
4.5%
FY14E
47,495
2,699
2,220
1.48
0.37
23.0%
26.9%
21.1%
13.4%
8.9%
4.6
0.6
10.7
5.5%

China Yurun Food Group Ltd. (CHINA / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
7.70
35.00
12 Mth Forward EPS
Current:
1.08
2.50
30.00
2.00
25.00
1.50
20.00
1.00
15.00
0.50
10.00
5.00
30%
12Mth fwd EY
Current:
China BY
14%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
-0.50
May/97
0.00
0.00
-64.47%
1.00
Proxy
25%
0.50
20%
0.00
15%
-0.50
10%
-1.00
5%
-1.50
Current:
11.78
6.0
30.00
5.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Dec/11
May/11
Oct/10
Mar/10
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Aug/09
Feb/99
Jul/98
Sep/99
Sep/99
0.9x
PBV Forward
35.00
25.00
Current:
PBV hist
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
0.0x
Nov/00
2.0x
0.0x
Apr/00
4.0x
5.0x
Sep/99
6.0x
10.0x
Feb/99
8.0x
15.0x
Jul/98
10.0x
20.0x
Dec/97
25.0x
May/97
12.0x
ROE (Trailing)
Dec/97
Price/Book Value
Feb/99
7.1x
30.0x
Jul/98
Current:
May/97
Dec/11
May/11
Oct/10
Mar/10
-2.00
Dec/97
PE (1Yr Forward)
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0%
Current:
2.77
4.0
20.00
3.0
15.00
2.0
10.00
1.0
5.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
Summary
China Yurun Food Group Ltd.
CHINA
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
1801.77
15.808397 SEDOL
B0D01C5
Food Products
Latest
Min
7.14x
4.18
0.87x
0.87
2.77
0.00
11.78
11.78
-64.5%
-1.63
Max
24.78
9.57
4.99
30.20
0.57
Median
15.73
3.88
1.43
24.99
0.26
Average
15.15
3.72
1.55
24.51
0.14
2 S.D.+
23.87
6.73
2.93
32.88
0.86
2 S.D. 6.43
0.72
0.18
16.15
-0.58
% to Min
-41%
0%
-100%
0%
-153%
As Of:
Local Price:
EPS:
% to Max
247%
999%
80%
156%
188%
% to Med
120%
345%
-48%
112%
140%
22-Jun-12
7.70
1.08
% to Avg
112%
327%
-44%
108%
121%
97

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
China Yurun Food is a leading meat

processing company in China. Its
business includes upstream hog
slaughtering and downstream meat
processing. China Yurun has been
expanding capacity over years and
expected to benefit from industry
consolidation.
Upstream chilled pork sales volume

EBITDA
impact (%)
Core EPS
impact (%)
3.0
4.1%
3.5%
4.7%
Downstream LTMP sales volume

2011Revenue Breakdown
LTMP
10%
Our Dec-12 target price of HK$7.6 is based on 0.8x 2012E book value.
We base target price on book value because we believe Yuruns
earnings has become less predictable given the increased risks on the
business model in light of declining sales volume and dollar
margins. We target 0.8x 2012E P/B, which is in-line with the 3-year
average PB of the U.S. peer , Smithfield (SFD US), the leading US
pork producer. At our target price of HK7.6 Yurun would be trading at
9.5x on 2012E core EPS.
HTMP
1%
Frozen
meat
15%
Chilled
meat
74%
Total Shareholders' Equity 2012 (HK$m)
Source: Company.

Reported EPS
FY12E
17,392
Number of shares
J.P. Morgan
0.936
Consensus
0.946
FY13E
1.220
1.307
FY14E
1.478
2.005
1,825
Book value per share 2012 (HK$)
9.5
Target P/B
0.8
Target price (HK$)
7.6
Key upside risks would be a fast recovery in demand for Yurun's pork
products, which would lead to upside in sales volume, and a reverse
shift in customer base towards higher margin supermarket clients,
which would lead to upside in margins.

Company
China Yurun
Zhongpin^
Henan Shuanghui^
Smithfield Foods*^
Average
Ticker
1068 HK
HOGS US
000895 CH
SFD US
Rating
UW
NR
NR
NR
Price
(HK$)
6.8
9.2
61.9
21.4
PT
(HK$)
7.6
NA
NA
NA
Mkt Cap
(US$m)
1,586
343
5,901
3,317
2011
11.5
5.6
66.5
8.1
22.9
P/E (x)
2012E
9.2
6.2
20.3
8.7
11.1
2013E
7.1
4.9
16.2
7.8
9.0
EV/EBITDA
2012E
5.5
6.6
10.4
5.2
6.9
ROE
2012E
9.5
13.0
30.9
9.8
15.8
P/B (x)
2012E
0.7
0.6
7.1
0.8
2.3
Source: Bloomberg, J.P. Morgan estimates. Share prices are as of close of 29 Jun 2012; ^Stock not under J.P. Morgan coverage. Bloomberg consensus estimates for NR stocks.
98
Yld (%)
2012E
3.2%
~
1.2%
0.0%
1.5%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
China Yurun Food Group: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
21,473
54.8%
3,098
43.4%
14.4%
3,260
54.6%
15.2%
2,974
52.1%
13.9%
-48
-0
2,926
54.7%
-189
6.5%
-9
1,014
2,728
56.3%
1,788
49.5%
1.55
44.4%
1.02
38.2%
FY11
32,315
50.5%
2,785
-10.1%
8.6%
2,348
-28.0%
7.3%
1,942
NM
6.0%
-36
-0
1,905
-34.9%
-100
5.2%
-7
740
1,799
-34.1%
1,071
-40.1%
0.98
(36.5%)
0.59
(42.3%)
FY12E
30,825
(4.6%)
3,043
9.3%
9.9%
2,544
8.4%
8.3%
1,932
NM
6.3%
-88
-0
1,843
-3.3%
-124
6.7%
-9
375
1,710
-5.0%
1,465
36.8%
0.94
(5.0%)
0.80
36.8%
FY13E
38,620
25.3%
3,934
29.3%
10.2%
3,361
32.1%
8.7%
2,530
31.0%
6.6%
-89
-0
2,441
32.5%
-201
8.2%
-11
611
2,229
30.4%
1,750
19.5%
1.22
30.4%
0.96
19.5%
FY14E
47,495
23.0%
4,888
24.3%
10.3%
4,273
27.1%
9.0%
3,118
23.2%
6.6%
-111
-0
3,006
23.2%
-292
9.7%
-14
613
2,699
21.1%
2,220
26.9%
1.48
21.1%
1.22
26.9%
Cash flow statement

PBT
Tax
Other
FY10
2,926
286
-134
-140
48
2,986

1,905 1,843 2,441 3,006
406
613
831 1,155
174
-188 -271
-63
-250
-100 -124 -201
37
0
0
0
2,272 2,168 2,878 3,898
Capex
Sale of assets
Other
-3,460
-39
-3,499
-4,812 -1,500 -3,223 -3,223

-0
-96
-99 -103
-4,812 -1,596 -3,323 -3,327
Dividends paid
Other
3,515
549
-502
296
3,858
0
2,245
-715
107
1,637
-164
-414
0
-577
43
-491
0
-448
49
-615
0
-566
Net change in cash

FX gain/(loss)
Ending cash
DPS
3,507
162
5,972
0.41
-904
0
5,069
0.22
-6
0
5,063
0.23
-893
0
4,170
0.30
5
0
4,176
0.37
FY10
FY11 FY12E FY13E
14.4%
8.6% 9.9% 10.2%
15.2%
7.3% 8.3% 8.7%
13.9%
6.0% 6.3% 6.6%
12.7%
5.6% 5.6% 5.8%
8.3%
3.3% 4.8% 4.5%
54.8% 50.5% (4.6%) 25.3%
56.3% -34.1% -5.0% 30.4%
33.4% 31.1% 24.7% 23.7%
44.4% (36.5%) (5.0%) 30.4%
FY14E
10.3%
9.0%
6.6%
5.7%
4.7%
23.0%
21.1%
19.3%
21.1%
Ratio Analysis
FY10
FY11 FY12E FY13E FY14E HK$ in millions, year end Dec
5,972 5,069 5,063 4,170 4,176 Gross margin
1,190 1,466 1,468 1,932 2,328 EBITDA margin
429
362
373
334
305 Net margin
0
0
0 Sales growth
- Net profit growth
3,464 4,494 4,584 4,675 4,769 EPS growth
20,361 25,479 26,466 28,941 31,869
Net debt to equity
Liabilities
Sales/assets
Short-term loans
3,151 5,141 5,141 5,141 5,141 Assets/equity
1,817 3,015 2,818 3,460 4,170 ROE
Others
30
33
89
195
323 ROCE
4,998 8,189 8,048 8,796 9,634
Long-term debt
530
785
785
785
785
Others
350
333
169
212
261
Total Liabilities
5,878 9,307 9,002 9,793 10,680
Minorities
46
63
72
83
98
14,437 16,109 17,392 19,065 21,091
BVPS
8.21
8.82
9.52 10.44 11.55
-15.9%
1.29
1.72
23.9%
20.1%
5.3% 5.0% 9.2% 8.3%

1.41
1.19 1.39
1.56
1.73
1.52 1.52
1.51
11.8% 10.2% 12.2% 13.4%
9.7% 8.5% 10.5% 12.0%
99

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Chow Tai Fook Jewellery Company Ltd.

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Chow Tai Fook Jewellery Company Ltd. (Reuters: 1929.HK, Bloomberg: 1929 HK)
FY11A
FY12A
FY13E
FY14E
FY15E
Revenue (HK$ mn)
35,043
56,571
69,818
86,487
104,636
Net Profit (HK$ mn)
3,538
6,341
7,296
8,952
10,848
EPS (HK$)
0.40
0.63
0.73
0.90
1.08
DPS (HK$)
0.08
0.56
0.15
0.18
0.22
Revenue growth (%)
52.8%
61.4%
23.4%
23.9%
21.0%
65.4%
79.2%
15.1%
22.7%
21.2%
EPS growth (%)
84.8%
60.4%
15.1%
22.7%
21.2%
ROE
36.4%
31.5%
22.9%
23.3%
23.4%
P/E (x)
24.3
15.1
13.2
10.7
8.8
P/BV (x)
7.6
3.3
2.8
2.3
1.9
EV/EBITDA (x)
20.5
10.6
9.0
7.3
6.1
Dividend Yield
0.9%
5.8%
1.5%
1.9%
2.3%
10,000
96,000
12,371
9.60
29 Jun 12
10.6%
6.41
66.54
8.29
19,025
7.76
Mar
Chow Tai Fook Jewellery Group Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
9.47
12 Mth Forward EPS
16.00
1.00
14.00
0.90
Current:
0.85
0.80
12.00
0.70
10.00
0.60
8.00
0.50
6.00
0.40
4.00
0.30
2.00
0.20
12%
12Mth fwd EY
Current:
Hong Kong BY
9%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
Dec/97
0.10
0.00
-42.18%
0.30
Proxy
0.20
10%
0.10
0.00
8%
-0.10
6%
-0.20
-0.30
4%
-0.40
-0.50
2%
PE (1Yr Forward)
Current:
11.1x
16.0x
18.0x
14.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Price/Book Value
20.0x
16.0x
Dec/97
-0.70
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.60
May/97
Current:
PBV hist
8.7x
PBV Forward
12.0x
14.0x
12.0x
10.0x
10.0x
8.0x
8.0x
6.0x
6.0x
ROE (Trailing)
Current:
36.35
40.00
1.0
35.00
0.9
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
0.0x
Dec/97
2.0x
0.0x
May/97
2.0x
Dec/97
4.0x
4.0x
May/97
0%
Current:
0.00
0.8
30.00
0.7
25.00
0.6
20.00
0.5
0.4
15.00
0.3
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.1
0.00
May/97
0.2
5.00
Summary
Chow Tai Fook Jewellery Group Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
11946.88
9.7438 SEDOL
B4R39F7
Specialty Retail
Latest
Min
11.12x
10.23
8.67x
8.22
0.00
0.00
36.35
29.50
-42.2%
-0.53
Max
16.67
13.42
0.00
36.35
0.03
Median
13.63
11.26
0.00
36.35
-0.14
100
Average
13.39
11.00
0.00
33.41
-0.21
2 S.D.+
18.21
14.95
0.00
40.32
0.24
2 S.D. 8.57
7.06
0.00
26.51
-0.65
As Of:
Local Price:
EPS:
% to Min
% to Max
% to Med
-8%
50%
23%
-5%
55%
30%
-19%
-27%
0%
107%
0%
67%
22-Jun-12
9.47
0.85
% to Avg
20%
27%
-8%
51%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Chow Tai Fook is a leading jewellery and watch

retailer in the Greater China region. Jewellery sales
represent c93% of sales with the remainder coming
from watch sales. It retails mass luxury and highend luxury jewellery products including gem-set
jewellery, platinum/karat gold products, gold
products and watches. It has an extensive retail
network, with 1,421 jewellery POS and 85 watch
POS as of Sep-2011. With its 80-year heritage
Chow Tai Fook ranks #1 in the jewellery retail
industry in the PRC with 12.6% market share and in
Hong Kong and Macau with 20.1% market share,
according to Frost & Sullivan.
Same store sales growth assumption
Watches
6%
Gem-set
jewellery
27%
Gold products
53%
EBITDA FY13E
impact (%)
EPS FY13E
impact (%)
+0.9%
+1.0%
+0.5%
+0.5%
+6.8%
+7.3%
-0.3%
-0.3%
Gold price assumptions
--Impact of 1% ppt increase
Hong Hong rentals
We have come up with the following peer group for Chow Tai
Fook. We think both Golden Eagle and Trinity provide good
comparisons for high-end exposure in China with strong
management track records and self-operated store networks Belle is
a good comparison from a penetration and size bias point of view
as it is one of the leading players among China retailers. The
companies in this peer group trade at an average P/E of 16x for
2012E (Mar-13E period for Chow Tai Fook). Based on 16x Mar-13
P/E, our Mar-13 PT is HK$12.
Platinum/karat
gold products
14%
Main risks to our view are a further slowdown in sales, inability to

keep cost plus model, and unexpected pressure on margins from
promotions and costs.

FY13E
FY14E
FY15E
J. P. Morgan
Consensus
0.73
0.90
1.08
0.76
0.95
1.14

Company
Ticker
Rating
Asian and Global jewellery and watch retailers

Luk Fook*^
590 HK
Chow Sang Sang^
116 HK
Tiffany*
TIF US
Richemont*
CFR VX
Swatch
UHR VX
Hengdeli^
3389 HK
Titan Industries*
TTAN IN
Chinese retailers
Golden Eagle
3308 HK
Parkson
3368 HK
Belle
1880 HK
Trinity
891 HK
Sector average
Price
(LC)
PT
(LC)
Mkt Cap
(USD mn)
11
P/E
12E
13E
P/B
12E
6.8
9.3
14.2
15.6
15.3
10.8
32.7
7.1
8.1
13.8
14.6
15.8
10.1
26.9
6.1
6.8
12.2
12.3
13.1
8.3
22.1
1.5
1.4
2.5
2.4
1.3
1.6
10.2
1.3
1.2
~
2.1
1.1
1.4
7.9
21.0
14.1
21.3
16.5
16.1
18.8
13.7
19.3
14.6
14.8
15.1
12.0
15.7
11.6
12.3
4.8
2.7
4.0
2.5
3.2
4.1
2.4
3.5
2.3
2.7
NR
NR
N
N
N
NR
UW
16.1
15.0
51.1
51.5
373.4
2.4
223.4
62.00
60.00
355.00
225.00
1,220
1,309
6,472
30,950
20,543
1,382
3,552
OW
N
OW
OW
15.7
6.9
13.1
4.9
22.50
7.50
15.50
8.00
3,940
2,486
14,266
1,076
13E
Source: Company, Bloomberg, J.P. Morgan estimates. Prices as of 29 June 2012 close. ^Bloomberg consensus estimates used for the NR (not rated) companies. FY12 data given under 11E as
the year ends in Jan-Jun.
101
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Chow Tai Fook Jewellery Company Ltd.: Summary of Financials

Income Statement
FY11 FY12
Revenues
35,043 56,571
% change Y/Y
52.8% 61.4%
Gross Profit
9,928 16,448
% change Y/Y
51.4% 65.7%
Gross margin
28.3% 29.1%
EBITDA
4,869 8,815
% change Y/Y
65.6% 81.0%
EBITDA Margin
13.9% 15.6%
EBIT
4,614 8,413
% change Y/Y
70.0% 82.3%
EBIT Margin
13.2% 14.9%
Net Interest
-32 -274
Share of JVs
-5
0
Earnings before tax
4,620 8,166
% change Y/Y
69.9% 76.8%
Tax
-947 -1,595
as % of EBT
20.5% 19.5%
3,538 6,341
% change Y/Y
65.4% 79.2%
3,538 6,341
% change Y/Y
65.4% 79.2%
EPS (reported)
0.40
0.63
% change Y/Y
84.8% 60.4%
Recurring EPS
0.40
0.63
% change Y/Y
84.8% 60.4%
Balance sheet
FY11 FY12
7,175 10,169
Accounts receivable
3,228 5,323
Inventories
17,101 29,694
Others
0
72
Current assets
27,503 45,258
Intangible assets
87
96
Net fixed assets
1,165 1,688
Other assets
293
373
Total Assets
29,049 47,414
Liabilities
Short-term loans
14,646 11,381
2,050 1,838
Others
518
999
17,213 14,218
Long-term debt
0
0
Others
163 3,623
Total Liabilities
17,376 17,841
11,307 28,978
BVPS
1.26
2.90
102
FY13E
69,818
23.4%
20,030
21.8%
28.7%
10,325
17.1%
14.8%
9,824
16.8%
14.1%
-363
0
9,501
16.3%
-1,900
20.0%
7,296
15.1%
7,296
15.1%
0.73
15.1%
0.73
15.1%
FY13E
11,637
6,570
34,102
72
52,382
96
2,287
373
55,137
12,520
2,281
999
15,800
0
3,623
19,423
34,815
3.48
Cash flow statement

FY14E FY15E HK$ in millions, year end Mar
86,487 104,636 PBT
23.9% 21.0% Depr. & amortization
24,836 30,079 Change in working capital
24.0% 21.1% Tax
28.7% 28.7% Other
12,693 15,250 Cash flow from operations
22.9% 20.1%
14.7% 14.6% Capex
12,133 14,640 Acquisition of subsidiaries/intangibles
23.5% 20.7% Other
14.0% 14.0% Cash flow from investing
-386
-412
0
- Equity raised/(repaid)
11,804 14,304 Debt raised/(repaid)
24.2% 21.2% Dividends paid
-2,479 -3,004 Other
21.0% 21.0% Cash flow from financing
8,952 10,848
22.7% 21.2% Net change in cash
8,952 10,848 FX effects
22.7% 21.2% Ending Cash
0.90
1.08 DPS
22.7% 21.2%
0.90
1.08
22.7% 21.2%
Ratio Analysis
FY14E FY15E HK$ in millions, year end Mar
8,139
9,846 EBITDA margin
40,538 49,024 Operating margin
72
73 Net margin
96
96 Sales growth
2,327
2,216 Net profit growth
373
63,654 74,877 EPS growth
Net debt to equity
12,958 14,458 Sales/assets
2,825
3,416 Assets/equity
999
999 ROE
16,782 18,873 ROCE
0
0
3,623
3,623
20,405 22,497
41,977 50,655
4.20
5.07

4,620 8,166 9,501 11,804 14,304
255
402
501
561
611
-7,507 -14,900 -5,211 -7,461 -9,603
-730 -1595 -1900 -2479 -3004
749 1,274 1,002
525
412
-2,612 -6,654 3,891 2,949 2,720
-769
-55
748
-76
-850 -1,100
1,327
96
477 -1,004
-600
104
-496
-500
94
-406
2 16,249
6,123
161
500
300 1,500
-9 -5,550 -1,459 -1,790 -2,170
-8
-363 -462
-491 -510
6,107 10,497 -1,422 -1,981 -1,180
3,419
79
5,605
0.08
4,320 1,466
472 1,134
63
0
0
0
9,988 11,453 11,925 13,059
0.56
0.15
0.18
0.22
FY11
28.3%
13.9%
13.3%
10.1%
10.1%
52.8%
65.4%
65.4%
84.8%
66.1%
1.52
2.57
36.4%
22.5%
FY12
29.1%
15.6%
14.9%
11.2%
11.2%
61.4%
79.2%
79.2%
60.4%
4.2%
1.48
1.64
31.5%
25.4%
FY13E
28.7%
14.8%
14.1%
10.5%
10.5%
23.4%
15.1%
15.1%
15.1%
2.5%
1.36
1.58
22.9%
22.4%
FY14E
28.7%
14.7%
14.1%
10.4%
10.4%
23.9%
22.7%
22.7%
22.7%
2.0%
1.46
1.52
23.3%
23.7%
FY15E
28.7%
14.6%
14.1%
10.4%
10.4%
21.0%
21.2%
21.2%
21.2%
2.4%
1.51
1.48
23.4%
24.4%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Dairy Farm International Holdings Limited

Company Data
Shares O/S (mn)
Market cap ($ mn)
Market cap ($ mn)
Price ($)
Date Of Price
Free float (%)
3M - Average daily Value ($
mn)
($ mn)
FTSTI
Exchange Rate
Fiscal Year End
Dairy Farm International Holdings Limited (Reuters: DAIR.SI, Bloomberg: DFI SP)
$ in mn, year-end Dec
FY10A
FY11A
FY12E
FY13E
FY14E
Revenue ($ mn)
7,971
9,134
10,215
11,548
12,938
Net Profit ($ mn)
412
484
551
642
761
EPS ($)
0.31
0.36
0.41
0.48
0.56
Recurring EPS ($)
0.31
0.36
0.41
0.48
0.56
DPS ($)
0.16
0.19
0.19
0.24
0.29
Revenue growth (%)
13.4%
14.6%
11.8%
13.1%
12.0%
13.2%
17.4%
13.7%
16.7%
18.5%
EPS growth (%)
13.0%
17.3%
13.7%
16.7%
18.5%
ROE
65.5%
58.5%
51.5%
46.8%
44.3%
ROA
13.6%
14.2%
14.7%
15.0%
15.5%
P/BV (x)
19.5
15.5
11.8
9.4
7.5
P/E (x)
34.7
29.6
26.0
22.3
18.8
EV/EBITDA (x)
17.9
15.6
13.7
11.4
9.4
Dividend Yield
1.6%
1.8%
1.8%
2.3%
2.7%
1,350
14,339
14,339
10.62
29 Jun 12
22.0%
0.09
0.77
0.83
2,847
1.00
Dec

Dairy Farm International Holdings Ltd. (HONG KONG / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
10.34
12 Mth Forward EPS
12.00
0.50
10.00
0.40
Current:
0.43
0.30
8.00
0.20
6.00
0.10
4.00
0.00
2.00
-0.10
16%
12Mth fwd EY
Current:
Hong Kong BY
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
4%
Dec/97
-0.20
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
33.88%
1.20
Proxy
14%
1.00
12%
0.80
10%
8%
0.60
6%
0.40
4%
0.20
2%
0.00
Current:
23.9x
Price/Book Value
80.0x
50.0x
60.0x
40.0x
Current:
PBV hist
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Jan/09
Aug/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
PE (1Yr Forward)
-0.20
May/97
0%
-2%
15.1x
PBV Forward
30.0x
40.0x
20.0x
20.0x
10.0x
0.0x
0.0x
-20.0x
Dec/11
May/11
Oct/10
Mar/10
Dec/11
Oct/10
2.00
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Current:
Jun/01
Nov/00
Apr/00
Sep/99
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Jul/98
Feb/99
Feb/99
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
0.0
Mar/03
5.0
-40.00
Aug/02
10.0
-20.00
Jan/02
15.0
0.00
Jun/01
20.0
20.00
Nov/00
25.0
40.00
Apr/00
30.0
60.00
Sep/99
35.0
80.00
Feb/99
100.00
Jul/98
40.0
Dec/97
45.0
120.00
May/97
Dec/97
140.00
Jul/98
58.50
May/97
Dec/11
May/11
Oct/10
Mar/10
Current:
-20.0x
Dec/97
ROE (Trailing)
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
-40.0x
-10.0x
Summary
Dairy Farm International Holdings Ltd.
13934.06
HONG KONG
0.9290535 SEDOL
6180274
Consumer Staples
Food & Staples Retailing
Latest
Min
12mth Forward PE
23.91x
P/BV (Trailing)
15.13x
0.91
2.00
0.00
ROE (Trailing)
58.50
-30.92
33.9%
-0.13
Max
Median
Average
2 S.D.+
2 S.D. -
39.88
41.73
122.17
1.00
10.66
2.67
58.50
0.37
11.15
6.27
51.94
0.38
30.09
21.78
137.26
0.73
-7.79
-9.25
-33.37
0.03
As Of:
Local Price:
EPS:
% to Min
% to Max
-94%
-100%
-153%
-140%
164%
1987%
109%
195%
% to Med
22-Jun-12
10.34
0.43
% to Avg
-30%
34%
0%
10%
-26%
213%
-11%
13%
103

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Dairy Farm operates 5,267 retail outlets

(supermarkets, hypermarkets, health and
beauty stores, convenience stores, home
furnishings stores and restaurants) in
Hong Kong, Taiwan, China, Singapore,
Malaysia, Indonesia and India. Its retail
names would include Wellcome, Cold
Storage, Giant, Health & Glow,
Woolworths, Hero, Guardian and 7Eleven. The Group has a 50% interest in
Maxims, Hong Kongs leading catering
chain. It employs over 76,000 people.
North Asia Sales
EBITDA
impact (%)
EPS
impact (%)
2.9%
2.7%
2.7%
2.5%
1.4%
1.3%
7.6%
7.0%
5.1%
4.7%
3.4%
3.1%

East Asia Sales
South Asia Sales
North Asia Operating margin assumption
East Asia Operating margin assumption
South Asia Operating margin assumption
Our Dec-12 target price is S$9.0. Our target price is based on 1x PEG,
with 2-year (2012-14) EPS CAGR of 14.2%. We base our PT on 1x
PEG, in-line with the average for Chinese consumer staples companies.
Home furnishing stores

Convenience
Stores
4%
17%
Supermarkets/
hypermarkets
60%
Health and
Beauty
Services
19%
Target PEG
2012-14E EPS CAGR
17.6%
17.6
Dec-12 EPS (US$)
0.408
Target price (S$)
9.0
Downside risks include a sudden slowdown in store expansion and

higher than expected costs in HK. Upside risks include stronger SSS
growth on benign food inflation and higher currency benefits.

US$
FY12E
J.P. Morgan
0.39
Consensus
0.41
FY13E
0.46
0.46
FY14E
0.55
0.52

Company
Dairy Farm
Beijing Jingkelong^
Lianhua^
Wumart Stores^
Sun Art^
Yonghui Supers-A^
Sector average
Ticker
DFI SP
814 HK
980 HK
1025 HK
6808 HK
601933 CH
Rating
N
NR
NR
NR
NR
NR
Price
(HK$)
10.6
5.7
7.4
15.7
8.5
27.1
PT
(HK$)
9.00
NA
NA
NA
NA
NA
Mkt Cap
(US$m)
14,339
305
1,068
2,590
10,442
3,274
2011
29.6
9.2
10.8
27.9
34.8
44.4
26.1
P/E (x)
2012E 2013E
27.0
23.1
8.1
6.8
10.7
9.6
21.7
18.0
27.8
22.6
34.8
25.6
21.7
17.6
EV/EBITDA
2012E
17.5
5.7
0.4
10.4
11.2
15.1
10.0
ROE
2012E
49.9
13.6
18.1
22.1
14.9
12.6
21.9
Source: Bloomberg, Share prices are as of close of 29 Jun 2012; ^Stock not under J.P. Morgan coverage. Bloomberg consensus estimates for NR stocks.
104
P/B (x)
2012E
11.8
1.1
1.9
4.9
4.1
4.5
4.7
Yld (%)
2012E
2.2%
4.9%
3.2%
2.1%
1.3%
0.3%
2.3%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Dairy Farm International Holdings Limited: Summary of Financials

Income Statement
$ in millions, year end Dec
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
7,971
13.4%
2,375
12.2%
29.8%
637
12.3%
8.0%
469
10.8%
5.9%
-23
47
495
12.9%
-84
16.9%
1
122
412
13.2%
412
13.2%
0.31
13.0%
0.31
13.0%
FY11
9,134
14.6%
2,683
13.0%
29.4%
717
12.6%
7.9%
535
14.1%
5.9%
-18
66
584
18.0%
-99
17.0%
-0
133
484
17.4%
484
17.4%
0.36
17.3%
0.36
17.3%
FY12E
10,215
11.8%
3,000
11.8%
29.4%
793
10.7%
7.8%
598
11.7%
5.9%
-5
69
662
13.4%
-113
17.0%
1
0
551
13.7%
551
13.7%
0.41
13.7%
0.41
13.7%
FY13E
11,548
13.1%
3,391
13.1%
29.4%
907
14.3%
7.9%
705
17.9%
6.1%
-5
73
773
16.7%
-131
17.0%
1
0
642
16.7%
642
16.7%
0.48
16.7%
0.48
16.7%
FY14E
12,938
12.0%
3,799
12.0%
29.4%
1,026
13.1%
7.9%
845
19.8%
6.5%
-5
77
916
18.5%
-156
17.0%
1
0
761
18.5%
761
18.5%
0.56
18.5%
0.56
18.5%
Cash flow statement

PBT
Tax
Other
FY10
495
167
101
-74
-13
677
FY11 FY12E FY13E

584
662
773
181
195
201
73
116
142
-88
-113
-131
-19
0
0
730
860
985
FY14E
916
181
148
-156
0
1,089
Capex
Sale of assets
Other
-211
38
-65
0
-238
-214
1
-29
0
-242
-288
0
0
0
-288
-118
0
0
0
-118
-90
0
0
0
-90
Dividends paid
Other
8
-75
-223
0
-289
2
-199
-257
7
-447
0
0
-257
1
-256
0
0
-330
1
-329
0
0
-385
1
-384
Net change in cash

FX gain/(loss)
Ending cash
DPS
159
10
680
0.16
39
-3
719
0.19
316
0
1,035
0.19
537
0
1,573
0.24
615
0
2,187
0.29
FY10
29.8%
8.0%
5.9%
5.2%
5.2%
13.4%
13.2%
13.2%
13.0%
FY11
29.4%
7.9%
5.9%
5.3%
5.3%
14.6%
17.4%
17.4%
17.3%
FY12E
29.4%
7.8%
5.9%
5.4%
5.4%
11.8%
13.7%
13.7%
13.7%
FY13E
29.4%
7.9%
6.1%
5.6%
5.6%
13.1%
16.7%
16.7%
16.7%
FY14E
29.4%
7.9%
6.5%
5.9%
5.9%
12.0%
18.5%
18.5%
18.5%
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E $ in millions, year end Dec
682
730 1,035 1,573 2,187 Gross margin
160
218
196
221
248 EBITDA margin
816
949
988 1,117 1,252 Operating margin
1
48
59
59
58 Net margin
344
352
352
352
352 Sales growth
161
194
194
194
921
896
989
906
173
152
152
152
152 EPS growth
3,258 3,539 3,966 4,575 5,260
Net debt to equity
Liabilities
Sales/assets
Short-term loans
121
130
130
130
130 Assets/equity
1,870 2,140 2,273 2,570 2,879 ROE
Others
75
87
87
87
87 ROCE
2,065 2,357 2,490 2,787 3,096
Long-term debt
338
133
133
133
133
Others
121
118
118
118
118
Total Liabilities
2,524 2,609 2,742 3,038 3,348
Minorities
1
8
8
8
8
733
923 1,217 1,529 1,904
BVPS
0.54 0.68
0.90
1.13
1.41
-30.5% -50.5% -63.4% -85.6% -101.1%

2.63
2.69
2.72
2.70
2.63
4.71
4.09
3.26
2.99
2.76
65.5% 58.5% 51.5% 46.8%
44.3%
42.4% 45.0% 44.9% 43.1%
42.7%
105

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Giordano
Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Giordano (Reuters: 0709.HK, Bloomberg: 709 HK)

FY10A
FY11A
Revenue (HK$ mn)
4,731
5,614
Net Profit (HK$ mn)
537
728
EPS (HK$)
0.36
0.48
Recurring EPS (HK$)
0.36
0.48
DPS (HK$)
0.27
0.38
Revenue growth (%)
11.8%
18.7%
86.5%
35.6%
EPS growth (%)
86.3%
34.1%
ROE
23.7%
28.3%
ROA
17.5%
20.4%
P/BV (x)
3.4
3.0
P/E (x)
15.2
11.3
EV/EBITDA (x)
9.4
7.2
Dividend Yield
5.0%
7.0%
1,538
8,415
1,085
5.47
29 Jun 12
72.8%
6,145,092.00
37.08
4.78
19,441
7.76
Dec
FY12E
5,790
768
0.51
0.51
0.36
3.1%
5.5%
5.5%
26.9%
19.9%
2.8
10.8
6.7
6.5%
FY13E
6,915
963
0.64
0.64
0.45
19.4%
25.4%
25.4%
31.0%
23.9%
2.5
8.6
5.6
8.2%
FY14E
7,485
1,101
0.73
0.73
0.51
8.2%
14.3%
14.3%
32.2%
26.0%
2.3
7.5
4.6
9.3%

Giordano International Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
5.52
12 Mth Forward EPS
8.00
0.70
7.00
0.60
6.00
Current:
0.58
0.50
5.00
0.40
4.00
3.00
0.30
2.00
0.20
1.00
30%
12Mth fwd EY
Current:
Hong Kong BY
10%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.00
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.10
May/97
0.00
-64.66%
1.00
Proxy
25%
0.50
20%
0.00
15%
-0.50
10%
PE (1Yr Forward)
Current:
9.6x
30.0x
Price/Book Value
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-1.50
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0%
May/97
-1.00
5%
Current:
16.0x
PBV hist
3.1x
PBV Forward
14.0x
25.0x
12.0x
20.0x
10.0x
8.0x
15.0x
6.0x
10.0x
4.0x
2.0x
5.0x
ROE (Trailing)
Current:
28.31
12.0
30.00
10.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
35.00
25.00
Dec/97
-2.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0x
0.0x
Current:
6.69
8.0
20.00
6.0
15.00
4.0
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
May/97
2.0
5.00
Summary
Giordano International Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
1041.07
3.655118 SEDOL
6282040
Specialty Retail
Latest
Min
9.60x
3.97
3.07x
1.06
6.69
0.27
28.31
6.16
-64.7%
-1.28
Max
24.44
14.40
9.90
30.48
0.65
Median
13.52
3.09
3.70
19.92
0.19
106
Average
13.17
3.66
3.95
18.75
0.11
2 S.D.+
20.48
8.24
8.28
34.53
0.77
2 S.D. 5.86
-0.92
-0.37
2.98
-0.55
% to Min
-59%
-66%
-96%
-78%
-98%
As Of:
Local Price:
EPS:
% to Max % to Med
155%
41%
369%
1%
48%
-45%
8%
-30%
201%
130%
22-Jun-12
5.52
0.58
% to Avg
37%
19%
-41%
-34%
117%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Giordano is an HK-based retailer and

distributor of casual apparel and accessories
under the Giordano & Giordano Junior
(87% of FY11 retail revenue), Giordano
Ladies (7% of FY11 retail revenue),
Giordano Concepts (1% of FY10retail
revenue) and BSX (5% of FY11 retail
revenue) brands. It is also engaged in
manufacturing apparel and supplying
products to third parties.
Mainland China Sales growth assumption

EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
5.0%
5.1%
5.2%
5.2%
-2.0%
-2.1%

Our new Dec-12 PT is HK$6.5 based on unchanged target PE of 13x,

corresponding to its 5-yr historical average. Our PT is revised down 5%
due to earnings revision.
Retail and Distribution sales - FY11
Australia
4%
Other
markets
14%
Singapo
re
8%
Taiwan
15%
Mainlan
d China
40%
Risks to our thesis include 1) Lower-than-expected HK sales will lead

to worse-than expected operating deleverage and result in downside
risks to our 2012 earnings forecasts and PT. 2) Slower-than-expected
sales through will cause higher pressure on inventory and hence
margins. This would also result in downside risks to our 2012 earnings
estimates and PT. 3) Slower-than-expected execution of China
management restructuring plan will also dilute the countrys margin
assumptions and result in downside risks to our forecasts.
HK &
Macau
19%
Source: Company data

J. P. Morgan
Consensus
FY12E
0.51
0.54
FY13E
0.64
0.61
FY14E
0.73
0.69
Valuation Table
Company
HK retailers
Lifestyle
I.T*^
China sportswear
Li Ning
Anta
Xtep
China Dongxiang^
Average
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
2012E
P/B
2013E
1212 HK
178 HK
999 HK
OW
N
OW
16.9
4.9
3.4
19.00
5.30
5.50
3,631
1,763
530
18.0
19.8
8.6
15.7
17.2
7.9
13.9
14.3
6.6
3.0
5.6
1.6
2.7
4.8
1.4
2331 HK
2020 HK
1368 HK
3818 HK
UW
UW
UW
4.3
4.7
2.7
0.7
4.50
4.00
2.20
591
1,505
758
500
9.7
5.5
5.0
31.5
14.0
13.9
6.6
5.7
8.1
10.7
9.2
7.6
7.7
7.4
9.5
1.0
1.4
1.1
0.4
2.0
0.9
1.3
1.0
0.4
1.8
Source: Bloomberg, J.P. Morgan estimates. Based on COB prices as at 29 June 2012. ^ Consensus estimates used for NR companies, * Next FY figures taken because FY ends in the period JanMay
107

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Giordano: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
4,731
11.8%
2,731
25.6%
57.7%
794
88.1%
16.8%
695
121.3%
14.7%
-2
68
748
106.1%
-181
24.2%
-30
123
537
86.5%
550
91.0%
0.36
86.3%
0.36
86.3%
FY11
5,614
18.7%
3,283
20.2%
58.5%
1,004
26.5%
17.9%
909
30.8%
16.2%
-2
97
1,004
34.2%
-225
22.4%
-51
148
728
35.6%
728
32.4%
0.48
34.1%
0.48
34.1%
FY12E
5,790
3.1%
3,371
2.7%
58.2%
1,059
5.5%
18.3%
964
6.1%
16.7%
-2
91
1,053
4.9%
-232
22.0%
-54
150
768
5.5%
768
5.5%
0.51
5.5%
0.51
5.5%
FY13E
6,915
19.4%
4,065
20.6%
58.8%
1,353
27.7%
19.6%
1,255
30.2%
18.2%
-2
82
1,335
26.8%
-294
22.0%
-78
158
963
25.4%
963
25.4%
0.64
25.4%
0.64
25.4%
FY14E
7,485
8.2%
4,408
8.4%
58.9%
1,543
14.1%
20.6%
1,444
15.0%
19.3%
-2
84
1,526
14.3%
-336
22.0%
-90
166
1,101
14.3%
1,101
14.3%
0.73
14.3%
0.73
14.3%
Cash flow statement

PBT
Tax
Other
108

1,004 1,053 1,335 1,526
95
95
97
100
-175
5
-223
113
-153
-264
-263
-315
-68
-91
-82
-84
704
798
866 1,340
Capex
Other
-91
-132
-223
-125
70
-55
-115
-40
-155
-121
-563
-684
-121
-40
-161
Dividends paid
Other
15
0
-336
-20
-341
0
-21
-578
0
-599
0
0
-538
0
-538
0
0
-674
0
-674
0
0
-770
0
-770
Net change in cash

FX gain/(loss)
Ending cash
DPS
46
52
688
0.27
50
0
738
0.38
106
0
843
0.36
-492
0
351
0.45
409
0
760
0.51
FY10
57.7%
16.8%
12.1%
11.4%
11.6%
11.8%
86.5%
91.0%
86.3%
FY11
58.5%
17.9%
13.6%
13.0%
13.0%
18.7%
35.6%
32.4%
34.1%
FY12E
58.2%
18.3%
14.1%
13.3%
13.3%
3.1%
5.5%
5.5%
5.5%
FY13E
58.8%
19.6%
15.9%
13.9%
13.9%
19.4%
25.4%
25.4%
25.4%
FY14E
58.9%
20.6%
17.1%
14.7%
14.7%
8.2%
14.3%
14.3%
14.3%
Ratio Analysis
1,272 1,418
636
728
901
863 EBITDA margin
605
323
770
45
45
45
45 Net margin
5
5
5
5 Sales growth
988 1,079 1,161 1,244 Net profit growth
229
249
273
42
42
42
42 EPS growth
3,822 3,889 4,162 4,318
Net debt to equity
Liabilities
Sales/assets
Short-term loans
84
63
63
63
63 Assets/equity
548
689
504
901
616 ROE
Others
87
148
116
147
168 ROCE
719
900
683 1,111
847
Long-term debt
0
0
0
0
0
Others
108
101
101
101
101
Total Liabilities
827 1,001
784 1,212
948
Minorities
85
86
140
218
308
2,408 2,735 2,965 3,254 3,584
BVPS
1.61 1.81
1.96
2.16
2.37
FY10
1,062
597
404
41
2,104
5
980
202
29
3,320
FY10
748
99
-114
-103
-20
610
-40.6% -44.2% -45.7% -27.7% -37.7%

1.54
1.57
1.50
1.72
1.77
1.45
1.40
1.31
1.28
1.20
23.7% 28.3% 26.9% 31.0% 32.2%
29.7% 34.4% 33.1% 39.6% 41.5%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Golden Eagle Retail Group Ltd

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Golden Eagle Retail Group Ltd (Reuters: 3308.HK, Bloomberg: 3308 HK)
FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
2,450
3,217
3,912
5,202
Net Profit (Rmb mn)
959
1,212
1,331
1,658
EPS (Rmb)
0.49
0.62
0.68
0.85
Recurring EPS (Rmb)
0.49
0.61
0.68
0.85
DPS (Rmb)
0.11
0.15
0.34
0.43
Revenue growth (%)
32.5%
31.3%
21.6%
33.0%
282.3%
26.4%
9.8%
24.6%
EPS growth (%)
260.8%
26.2%
9.8%
24.6%
ROE
29.1%
29.4%
27.2%
29.4%
ROA
13.7%
12.6%
11.1%
12.2%
P/BV (x)
6.8
5.5
4.8
4.1
P/E (x)
26.1
20.7
18.8
15.1
EV/EBITDA (x)
16.7
13.6
12.2
9.9
Dividend Yield
0.8%
1.2%
2.7%
3.3%
1,941
25,038
3,938
15.74
29 Jun 12
31.5%
4,308,926.00
76.66
9.88
5,329
7.76
Dec
FY14E
7,001
2,192
1.13
1.13
0.56
34.6%
32.2%
32.2%
33.2%
14.0%
3.5
11.4
7.5
4.4%

Golden Eagle Retail Group Ltd. (CHINA / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
15.90
12 Mth Forward EPS
25.00
1.00
20.00
0.90
0.80
Current:
0.80
0.70
15.00
0.60
10.00
0.50
0.40
0.30
0.20
5.00
12%
12Mth fwd EY
Current:
China BY
6%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
-0.10
May/97
0.10
0.00
0.00
27.82%
1.00
Proxy
0.80
10%
0.60
8%
0.40
6%
0.20
4%
0.00
2%
-0.20
PE (1Yr Forward)
Current:
16.3x
45.0x
Price/Book Value
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.40
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0%
Current:
25.0x
PBV hist
5.5x
PBV Forward
40.0x
20.0x
35.0x
30.0x
15.0x
25.0x
20.0x
10.0x
15.0x
10.0x
5.0x
5.0x
ROE (Trailing)
Current:
29.39
70.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0x
Current:
1.35
9.0
8.0
60.00
7.0
50.00
6.0
40.00
5.0
30.00
4.0
3.0
20.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
1.0
0.00
Dec/97
2.0
10.00
Summary
Golden Eagle Retail Group Ltd.
CHINA
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
3952.53
9.650587 SEDOL
B10S7M1
Multiline Retail
Latest
Min
16.26x
10.33
5.55x
3.87
1.35
0.00
29.39
10.97
27.8%
-0.19
Max
39.51
21.88
8.52
66.62
0.73
Median
24.61
9.03
0.88
29.20
0.52
Average
23.76
9.66
1.38
30.32
0.47
2 S.D.+
35.81
17.30
4.94
63.22
0.84
2 S.D. 11.71
2.02
-2.18
-2.59
0.10
% to Min
-36%
-30%
-100%
-63%
-168%
As Of:
Local Price:
EPS:
% to Max
143%
294%
531%
127%
163%
% to Med
51%
63%
-35%
-1%
86%
22-Jun-12
15.90
0.80
% to Avg
46%
74%
2%
3%
68%
109

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Golden Eagle Retail Group is the biggest

department store chain operator in the
Jiangsu province of China. Its flagship store
is Nanjing Xinjiekou Store which was its first
store, set up in April 1996 at Nanjing. The
company got listed on the Hong Kong Stock
Exchange in March 2006. The company
operated 20 chain department stores in 13
cities with an aggregate gross floor area of
over 677,000 sqm.
Gross concessionaire sales
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-6.5%
-7.0%
-8.3%
-8.8%
-9.1%
-9.6%

Concessionary rate assumption
Operating expenses as % of revenue
The stock is trading at 16x 1-yr forward PE pricing in the short term
weakness already in our view. We believe it is one of the best
positioned department stores in China and we are looking for 27%
earnings CAGR post 2012 driven largely by new store additions and
SSSG (around 14% post 2012). Our new Dec-12 PT is HK$22.5
(down 5% from the previous PT) is based on 1x PEG and 27% 2-yr
earnings CAGR post 2012.
FY11 gross sales breakdown

Manageme
nt service
fee
0%
Rental
Income
0%
Direct Sales
8%
Concession
aire sales
92%
Main risk on the downside is execution risk at opening new stores.

We assumed 11% SSSG for all the stores at a blended level in
2012E and 14% for 2013E and 2014E. If SSSG come below our
estimates this will pose downside risk to our estimates and PT - we
assumed c1% EBIT margin erosion due to new stores. If new stores
perform below our expectations given the slowdown in 2012E, this
will also pose downside risks to our 2012E estimates and PT.

J. P. Morgan
Consensus
0.68
0.85
1.13
0.72
0.89
1.07
FY12E
FY13E
FY14E

Company
Other Department stores
Parkson Retail
Belle International
Li Ning
China Dongxiang^
Anta
Sector average
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
2013E
3368 HK
6.9
7.50
2,486
14.1
13.7
12.0
2.7
2.4
1880 HK
2331 HK
3818 HK
2020 HK
OW
UW
NR
UW
13.1
4.3
0.7
4.7
15.50
4.50
14,266
591
500
1,505
21.3
9.7
31.5
5.5
16.4
19.3
13.9
8.1
6.6
12.3
15.7
9.2
7.4
7.6
10.4
4.0
1.0
0.4
1.4
1.9
3.5
0.9
0.4
1.3
1.7
4.00
Source: J.P. Morgan estimates. Prices as of 29 Jun 2012. ^ Bloomberg consensus estimates for NR company
110
P/B
2012E
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Golden Eagle Retail Group Ltd: Summary of Financials

Income Statement
FY10 FY11
Gross Sales
10,949 14,340
Revenues
2,450 3,217
% change Y/Y
32.5% 31.3%
Gross Profit
1,925 2,453
% change Y/Y
32.6% 27.4%
Gross margin
17.6% 17.1%
EBITDA
1,364 1,672
% change Y/Y
29.1% 22.6%
EBITDA Margin
12.5% 11.7%
EBIT
1,246 1,533
% change Y/Y
30.0% 23.1%
EBIT Margin
11.4% 10.7%
Net Interest
33
73
Share of JVs
1
-20
Earnings before tax
1,296 1,626
% change Y/Y
157.3% 25.4%
Minorities
0
-0
Other income/(exp)
17
40
Tax
-337
-414
as % of EBT
26.0% 25.5%
959 1,212
% change Y/Y
282.3% 26.4%
942 1,193
% change Y/Y
34.7% 26.6%
EPS (reported)
0.49
0.62
% change Y/Y
260.8% 26.2%
Recurring EPS
0.49
0.61
% change Y/Y
27.1% 26.4%
Balance sheet
FY10 FY11
2,747 3,799
Accounts receivable
211
248
Inventories
213
304
Others
27
32
Current assets
3,197 4,383
Intangible assets
252
257
39
112
Net fixed assets
2,722 3,906
Other assets
1,770 2,684
Total Assets
7,979 11,343
Liabilities
Short-term loans
458 1,484
1,719 2,063
Others
2,027 3,101
4,204 6,648
Long-term debt
0
0
Others
95
125
Total Liabilities
4,299 6,773
Minorities
0
3
3,680 4,567
BVPS
1.90
2.35
FY12E
17,633
3,912
21.6%
2,945
20.1%
16.7%
1,917
14.6%
10.9%
1,727
12.6%
9.8%
71
0
1,798
10.6%
0
0
-468
26.0%
1,331
9.8%
1,331
11.6%
0.68
9.8%
0.68
11.6%
FY13E
23,368
5,202
33.0%
3,840
30.4%
16.4%
2,452
27.9%
10.5%
2,186
26.6%
9.4%
54
0
2,240
24.6%
0
0
-583
26.0%
1,658
24.6%
1,658
24.6%
0.85
24.6%
0.85
24.6%
FY14E
31,089
7,001
34.6%
5,083
32.4%
16.3%
3,270
33.4%
10.5%
2,927
33.9%
9.4%
35
0
2,962
32.2%
0
0
-770
26.0%
2,192
32.2%
2,192
32.2%
1.13
32.2%
1.13
32.2%
Cash flow statement

PBT
Tax
Other
FY10
1,296
119
797
-280
-18
1,914
Capex
Sale of assets
Other
-1,740 -1,990 -2,400 -2,600 -2,600

-379
-78
0
0
0
30
-166
95
78
59
-2,089 -2,234 -2,305 -2,522 -2,541
Dividends paid
Other
Net change in cash
Ending cash flow
DPS
Ratio Analysis
FY12E FY13E FY14E Rmb in millions, year end Dec
3,039 2,259 2,070 Gross margin
242
320
426 EBITDA margin
265
373
32
32
32 Net margin
3,578 2,984 3,053 Recurring net profit margin
257
257
257 Gross Sales growth
112
112
112 Sales growth
6,116 8,451 10,708 Net profit growth
2,684 2,684 2,684 Recurring net profit growth
12,747 14,487 16,814 EPS growth
Net debt to equity
1,484 1,484 1,484 Sales/assets
2,802 3,713 4,940 Assets/equity
3,101 3,101 3,101 ROE
7,387 8,298 9,525 ROCE
0
0
0
125
125
125
7,512 8,423 9,650
3
3
3
5,232 6,061 7,161
2.69
3.12
3.68

1,626 1,798 2,240 2,962
139
190
266
343
919
785
725
969
-414
-468
-583 -770
-110
-71
-54
-35
2,160 2,235 2,594 3,469
189
-208
-8
-27
0
1,026
-290
390
1,126
0
0
-665
-24
-689
0
1
0
1
-829 -1,096
-24
-23
-853 -1,117
-202
1,819
0.11
1,052
2,872
0.15
-759
1,304
0.34
-781
996
0.43
-188
1,370
0.56
FY10
17.6%
12.5%
11.4%
8.8%
8.6%
33.7%
32.5%
282.3%
34.7%
260.8%
-62.2%
0.35
2.46
29.1%
34.0%
FY11
17.1%
11.7%
10.7%
8.5%
7.8%
31.0%
31.3%
26.4%
26.6%
26.2%
-50.7%
0.33
2.24
29.4%
30.1%
FY12E
16.7%
10.9%
9.8%
7.5%
7.4%
23.0%
21.6%
9.8%
11.6%
9.8%
-29.7%
0.32
2.44
27.2%
27.1%
FY13E
16.4%
10.5%
9.4%
7.1%
7.4%
32.5%
33.0%
24.6%
24.6%
24.6%
-12.8%
0.38
2.39
29.4%
30.7%
FY14E
16.3%
10.5%
9.4%
7.1%
7.4%
33.0%
34.6%
32.2%
32.2%
32.2%
-8.2%
0.45
2.35
33.2%
36.2%
111

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Hengan International Group Ltd

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Hengan International Group Ltd (Reuters: 1044.HK, Bloomberg: 1044 HK)

FY10A
FY11A
FY12E
FY13E
Revenue (HK$ mn)
13,432
17,051
21,573
26,968
Net Profit (HK$ mn)
2,438.3
2,648.8
3,637.5
4,327.4
EPS (HK$)
2.00
2.16
2.96
3.52
DPS (HK$)
1.30
1.35
1.92
2.29
Revenue growth (%)
24.0%
26.9%
26.5%
25.0%
EPS growth (%)
12.8%
8.2%
37.0%
19.0%
ROE
25.0%
23.2%
28.0%
30.1%
ROA
14.9%
12.6%
14.9%
16.1%
P/E (x)
37.5
34.7
25.3
21.3
P/BV (x)
8.7
7.5
6.8
6.1
EV/EBITDA (x)
24.8
22.3
16.2
13.1
Dividend Yield
1.7%
1.8%
2.6%
3.1%
1,229
92,116
11,871
74.95
29 Jun 12
59.4%
2.15
166.34
21.63
5,329
7.76
Dec
FY14E
32,675
5,047.9
4.11
2.67
21.2%
16.7%
31.5%
17.0%
18.2
5.5
10.9
3.6%
JPM Q-Profile
Hengan International Group Co. Ltd. (CHINA / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
76.65
12 Mth Forward EPS
90.00
3.50
80.00
3.00
70.00
2.50
60.00
2.00
50.00
1.50
40.00
1.00
Current:
3.24
0.50
30.00
0.00
20.00
-0.50
10.00
25%
12Mth fwd EY
Current:
China BY
4%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
-1.50
May/97
-1.00
0.00
50.40%
1.50
Proxy
1.00
20%
0.50
15%
0.00
10%
-0.50
5%
-1.00
PE (1Yr Forward)
Current:
23.7x
35.0x
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Price/Book Value
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-1.50
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0%
Current:
14.0x
PBV hist
7.6x
PBV Forward
12.0x
30.0x
10.0x
25.0x
8.0x
20.0x
6.0x
15.0x
4.0x
2.0x
10.0x
0.0x
5.0x
ROE (Trailing)
Current:
23.19
35.00
16.0
30.00
14.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-4.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0x
-2.0x
Current:
1.82
12.0
25.00
10.0
20.00
8.0
15.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
0.0
Dec/97
2.0
0.00
May/97
4.0
5.00
May/97
6.0
10.00
Summary
Hengan International Group Co. Ltd.
CHINA
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
12536.71
21.588 SEDOL
6136233
Personal Products
Latest
Min
23.66x
4.72
7.63x
0.96
1.82
1.55
23.19
11.93
50.4%
-0.97
Max
31.70
11.73
14.37
29.65
0.67
Median
16.40
3.60
3.33
20.36
0.32
112
Average
17.30
4.38
4.87
20.12
0.18
2 S.D.+
33.20
10.19
11.89
31.20
1.05
2 S.D. 1.39
-1.44
-2.15
9.04
-0.69
% to Min
-80%
-87%
-15%
-49%
-293%
As Of:
Local Price:
EPS:
% to Max
% to Med
34%
-31%
54%
-53%
690%
83%
28%
-12%
33%
-37%
22-Jun-12
76.65
3.24
% to Avg
-27%
-43%
168%
-13%
-64%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Established in 1985 and listed in 1998,

Hengan is the leading personal hygiene
products company in China with No.1 position
in the tissue paper, sanitary napkin, and diaper
markets. In 2008, it acquired 51% equity
interests in QinQin food, a confectionary
manufacture in China.
Change in wood pulp cost (%)
EBITDA
impact (%)
EPS
impact (%)
-4.4%
-4.5%
-1.6%
-1.6%
-4.3%
-4.4%

Chang in petrochemical cost (%)
A&P cost % of sales

Our Dec-12 target price of HK$53.0 is based on 1x PEG, in-line with other
Skin care
Food and and
snacks others
9%
4%
China consumer staples, with 2-year (2012-2014) EPS CAGR of 18%.

We are using PEG in order to capture earnings growth prospects.
Disposabl
e diapers
16%
Tissue
papers
47%
Target PEG
2012-14E EPS CAGR
17.8%
Sanitary
napkins
24%
17.8
Dec-12 EPS (HK$)
2.961
Target price (HK$)
53.0
Source: Company

HK$
FY12E
J.P. Morgan
2.96
Consensus
2.91
FY13E
3.52
3.59
FY14E
4.11
4.29
Key upside risk to our TP would be a larger than expected decline in

wood pulp prices. Wood pulp accounts for c56% of the COGs for tissue
paper products. We had assumed wood pulp costs to drop 15% yoy in
2012. Also, a faster than expected roll out of new diaper products
would be another upside risk. We are cautious on Hengans ability to
outgrow the diaper market and assume diaper sales growth of 13% yoy
in 2012.

Company
Hengan
Vinda^
Bawang^
HUL*
Unilever Indonesia
Unicharm Corp*^
Ticker
1044 HK
3331 HK
1338 HK
HUVR IN
UNVR IJ
8113 JP
Rating
UW
NR
NR
UW
UW
NR
Price
(HK$)
75.0
11.5
0.6
454.5
22900.0
4545.0
PT
(HK$)
53.0
NA
NA
410.0
18000.0
NA
Mkt Cap
(US$m)
11,876
1,477
225
17,599
18,602
11,832
2011
34.7
26.5
(2.6)
37.0
41.9
31.4
P/E (x)
2012E
25.3
15.9
(5.1)
31.7
37.9
26.1
2013E
21.3
13.0
(44.7)
27.9
30.0
23.1
EV/EBITDA
2012E
17.7
11.0
(1.7)
22.2
26.5
13.2
ROE
2012E
28.0
19.4
(33.1)
78.4
103.4
15.2
P/B (x)
2012E
6.8
2.8
1.9
22.0
33.4
3.6
Yld (%)
2012E
2.6%
1.6%
0.6%
1.9%
1.7%
0.8%
Source: Bloomberg for NR companies, J.P. Morgan estimates. Share prices are as of close of 29 June 2012; ^Stock not under J.P. Morgan coverage, Bloomberg consensus used.
113
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Hengan International Group Ltd: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10 FY11 FY12E

13,432 17,051 21,573
24.0% 26.9% 26.5%
5,945 6,800 9,330
19.4% 14.4% 37.2%
44.3% 39.9% 43.3%
3,356 3,709 5,164
14.9% 10.5% 39.3%
25.0% 21.8% 23.9%
3,000 3,294 4,609
15.4% 9.8% 39.9%
22.3% 19.3% 21.4%
39
-38
-3
0
0
0
3,038 3,255 4,605
17.6% 7.1% 41.5%
-552
-570
-921
18.2% 17.5% 20.0%
2,438.3 2,648.8 3,637.5
15.2% 8.6% 37.3%
2.00
2.16
2.96
12.8% 8.2% 37.0%
-
FY13E
26,968
25.0%
11,879
27.3%
44.1%
6,333
22.6%
23.5%
5,655
22.7%
21.0%
-19
0
5,636
22.4%
-1,240
22.0%
4,327.4
19.0%
3.52
19.0%
-
FY14E
32,675
21.2%
14,650
23.3%
44.8%
7,503
18.5%
23.0%
6,757
19.5%
20.7%
-5
0
6,752
19.8%
-1,620
24.0%
5,047.9
16.7%
4.11
16.7%
-
Cash flow statement

PBT
Tax
Other
FY10
3,038
357
-689
-388
39
2,280
Capex
Sale of assets
Other
-1,261 -2,437 -2,681 -1,000 -1,100

-316 -1,064
-87
-89
-91
-1,577 -3,526 -2,800 -1,135 -1,247
Dividends paid
Other
2,582 1,913
49
58
62
-1,341 -1,625 -2,012 -2,589 -3,047
-506
735
288 -1,963 -2,530 -2,985
Net change in cash

FX gain/(loss)
Ending cash
DPS
1,539 2,269
5,989 8,258
1.30 1.35
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E HK$ in millions, year end Dec
5,989 8,258 7,369 8,171 9,225 Gross margin
1,396 1,893 2,395 2,993 3,627 EBITDA margin
606
659
370
227
85 Net margin
- Sales growth
- Net profit growth
3,308 4,372 4,459 4,549 4,640 EPS growth
18,577 23,319 25,634 28,231 31,204
Net debt to equity
Liabilities
Sales/assets
Short-term loans
3,815 6,815
361
361
361 Assets/equity
1,319 1,881 2,380 2,976 3,605 ROE
Others
943 1,316 1,763 2,123 2,555 ROCE
6,077 10,012 4,504 5,460 6,521
Long-term debt
1,497
404 6,857 6,857 6,857
Others
178
185
234
292
354
Total Liabilities
7,752 10,600 11,595 12,609 13,732
Minorities
322
377
424
493
576
10,503 12,341 13,615 15,129 16,896
BVPS
8.61 10.04 11.08 12.31 13.75
114
FY10
44.3%
25.0%
22.3%
18.2%
24.0%
15.2%
8.0%
12.8%

3,255 4,605 5,636 6,752
415
556
678
746
2,389 -718 -925
-971
-552 -570 -921 -1240
-38
-3
-19
-5
5,508 3,873 4,467 5,287
FY11
39.9%
21.8%
19.3%
15.5%
26.9%
8.6%
32.4%
8.2%
-890
7,369
1.92
802
8,171
2.29
1,055
9,225
2.67
FY12E
43.3%
23.9%
21.4%
16.9%
26.5%
37.3%
25.4%
37.0%
FY13E
44.1%
23.5%
21.0%
16.1%
25.0%
19.0%
18.0%
19.0%
FY14E
44.8%
23.0%
20.7%
15.5%
21.2%
16.7%
13.8%
16.7%
-6.4% -8.4% -1.1% -6.3% -11.9%

0.82 0.81
0.88 1.00
1.10
1.23 1.24
1.88 1.87
1.85
25.0% 23.2% 28.0% 30.1% 31.5%
21.8% 18.6% 22.8% 26.2% 29.1%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
I.T Ltd.
Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
I.T Ltd. (Reuters: 0999.HK, Bloomberg: 999 HK)

HK$ in mn, year-end Feb
FY11A
FY12A
Revenue (HK$ mn)
3,834
5,742
Net Profit (HK$ mn)
388
471
Recurring EPS (HK$)
0.34
0.39
EPS (HK$)
0.33
0.39
DPS (HK$)
0.15
0.15
Revenue growth (%)
28.0%
49.7%
47.7%
21.5%
51.4%
19.0%
EPS growth (%)
45.1%
17.4%
ROE
23.3%
22.9%
ROA
14.8%
13.0%
P/E (x)
10.2
8.6
P/BV (x)
2.1
1.8
EV/EBITDA (x)
1.4
5.1
Dividend Yield
4.4%
4.6%
1,228
4,114
530
3.35
29 Jun 12
36.1%
3,919,949.00
13.80
1.78
19,441
7.76
Feb
FY13E
6,684
519
0.43
0.43
0.17
16.4%
10.1%
9.4%
10.1%
21.4%
12.4%
7.9
1.6
4.4
5.1%
FY14E
7,812
616
0.51
0.51
0.20
16.9%
18.8%
18.8%
18.8%
22.3%
13.4%
6.6
1.4
3.6
6.0%
FY15E
9,257
731
0.60
0.60
0.24
18.5%
18.6%
18.6%
18.6%
23.1%
14.4%
5.6
1.2
3.0
7.2%

JPM Q-Profile
I.T Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
3.36
9.00
12 Mth Forward EPS
Current:
0.46
0.70
8.00
0.60
7.00
6.00
0.50
5.00
0.40
4.00
16%
12Mth fwd EY
Current:
Hong Kong BY
14%
Dec/11
Oct/10
Current:
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
0.00
Dec/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
0.10
0.00
Dec/97
0.20
1.00
May/97
2.00
May/97
0.30
3.00
-118.30%
1.00
Proxy
14%
0.50
12%
10%
0.00
8%
-0.50
6%
4%
Current:
7.2x
25.0x
Price/Book Value
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-1.50
Dec/11
Oct/10
Mar/10
May/11
Jan/09
Jun/08
PE (1Yr Forward)
Aug/09
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0%
May/97
-1.00
2%
Current:
6.0x
PBV hist
1.8x
PBV Forward
5.0x
20.0x
4.0x
15.0x
3.0x
2.0x
10.0x
1.0x
5.0x
ROE (Trailing)
Current:
22.89
80.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-1.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0x
0.0x
Current:
4.39
30.0
70.00
25.0
60.00
20.0
50.00
15.0
40.00
30.00
10.0
20.00
5.0
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Apr/07
Nov/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
Summary
I.T Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
481.17
1.958654 SEDOL
B0693Z6
Specialty Retail
Latest
Min
7.24x
7.14
1.81x
0.35
4.39
0.00
22.89
3.50
-118.3%
-1.20
Max
21.19
5.42
23.94
71.00
0.32
Median
11.73
2.01
3.12
22.89
-0.23
Average
12.64
2.22
3.94
26.97
-0.25
2 S.D.+
21.09
4.65
12.37
64.11
0.65
2 S.D. 4.19
-0.21
-4.49
-10.16
-1.15
% to Min
-1%
-81%
-100%
-85%
-1%
As Of:
Local Price:
EPS:
% to Max
193%
200%
446%
210%
127%
% to Med
62%
11%
-29%
0%
80%
22-Jun-12
3.36
0.46
% to Avg
75%
23%
-10%
18%
79%
115

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company description
I.T offers a wide range of fashion apparels and

accessories from international labels and inhouse brands, via multi-brand or mono-brand
stores, targeting diversified customers with
varying spending power in Greater China and
Japan. I.T sells over 300 international designer
labels in Hong Kong and the PRC, and also
owns 10 in-house brands. As of FY12, inhouse brands and international brands
accounted for 58% and 39% of the companys
total retail sales, respectively, with remaining
3% from licensed brands. As of FY12, I.T had a
total of 534 directly operated stores with an
aggregated GFA of over 1.3 million sqft in
Greater China, including FCUK stores.
Hong Kong SSS growth

EBITDA FY13E
impact (%)
EPS FY13E
impact (%)
-2.1%
-2.7%
-1.1%
-1.5%
-0.8%
-1.0%
-7.1%
-9.3%
Mainland China SSS growth

Mainland China retail space
Gross Margin assumption
Our new Mar-13 PT of HK$5.5 is based on 0.7x PEG (discount to

big cap space due to lower Mcap and liquidity) and 18% 2-yr
earnings CAGR post FY13. Our PT is revised down due to FY13
earnings revision and cut in our long term EPS CAGR expectation.
FY12 sales breakdown

Others
4%
Japan
10%
Mainlan
d China
27%
Hong
Kong
59%

J. P. Morgan
Consensus
0.43
0.51
0.60
0.43
0.53
0.61
FY13E
FY14E
FY15E
Downside risks to our rating and price target: We currently assume

2H FY12 will be the trough of the current cycle. Worse-than
expected macro slowdown would cause downside for FY13,
especially for 1H; an abrupt slowdown in SSS growth; higher-than
expected operating expenses. Professionalization of the business is a
potential long-term risk, i.e., how the family-based management
team will grow to include more non-family professionals as the
business expands, especially in China.
Source: Bloomberg,.J.P. Morgan estimates.

Company
Belle
Lifestyle
Golden Eagle
Luk Fook*^
Chow Sang Sang^
Sa Sa*
Trinity
China Lilang
Giordano
Sector average
Ticker
1880 HK
1212 HK
3308 HK
590 HK
116 HK
178 HK
891 HK
1234 HK
709 HK
Rating
OW
OW
OW
NR
NR
N
OW
OW
OW
Price
(HK$)
13.1
16.9
15.7
16.1
15.0
4.9
4.9
5.3
5.5
PT
(HK$)
15.50
19.00
22.50
5.30
8.00
8.30
6.50
Mkt cap
(US$ MM)
14,266
3,631
3,940
1,220
1,309
1,763
1,076
819
1,085
2011
21.3
18.0
21.0
6.8
9.3
19.8
16.5
8.4
11.3
14.7
P/E
2012E
19.3
15.7
18.8
7.1
8.1
17.2
14.6
8.1
10.8
13.3
2013E
15.7
13.9
15.1
6.1
6.8
14.3
11.6
6.9
8.6
11.0
P/B
2012E
4.0
3.0
4.8
1.5
1.4
5.6
2.5
2.0
2.8
3.1
Source: Bloomberg, J.P. Morgan estimates. Prices are as of 29 Jun 2012. ^Bloomberg consensus estimates used for NR companies; * FY11 estimates given under 2010 as the year ends in
January-June.
116
2013E
3.5
2.7
4.1
1.3
1.2
4.8
2.3
1.8
2.5
2.7

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
I.T Ltd.: Summary of Financials

Income Statement
HK$ in millions, year end Feb
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY11
3,834
28.0%
2,429
33.5%
63.3%
604
39.0%
15.8%
471
53.0%
12.3%
2
16
481
13.9%
-93
19.4%
-0
-8
388
47.7%
398
51.4%
0.33
45.1%
0.34
48.7%
FY12
5,742
49.7%
3,540
45.7%
61.7%
810
34.1%
14.1%
578
22.8%
10.1%
-6
4
574
19.2%
-101
17.5%
-2
-3
471
21.5%
474
19.0%
0.39
17.4%
0.39
15.1%
FY13E
6,684
16.4%
4,087
15.5%
61.2%
898
10.9%
13.4%
640
10.8%
9.6%
-6
24
658
14.7%
-138
21.0%
-1
0
519
10.1%
519
9.4%
0.43
10.1%
0.43
9.4%
FY14E
7,812
16.9%
4,951
21.1%
63.4%
1,071
19.2%
13.7%
776
21.2%
9.9%
-6
23
793
20.4%
-174
22.0%
-2
0
616
18.8%
616
18.8%
0.51
18.8%
0.51
18.8%
FY15E
9,257
18.5%
5,904
19.3%
63.8%
1,245
16.3%
13.5%
909
17.2%
9.8%
-5
36
940
18.7%
-207
22.0%
-2
0
731
18.6%
731
18.6%
0.60
18.6%
0.60
18.6%
Cash flow statement

PBT
Tax
Other

574
658
793
940
232
258
295
336
-366
-160
-121
-206
-101
-138
-174
-207
19
-31
-31
-46
359
587
762
817
Capex
Sale of assets
Other
-489
0
-14
-5
-508
-388
0
6
-382
-262
0
6
-256
-367
0
6
-361
-411
0
8
-403
Dividends paid
Other
26
267
-88
-0
204
0
27
-155
3
-125
0
0
-207
0
-207
0
0
-246
0
-246
0
0
-292
0
-292
Net change in cash

FX gain/(loss)
Ending cash
DPS
146
7
775
0.15
-148
0
627
0.15
124
0
751
0.17
155
0
906
0.20
122
0
1,028
0.24
FY11
63.3%
15.8%
12.1%
10.1%
10.4%
28.0%
47.7%
51.4%
45.1%
FY12
61.7%
14.1%
10.0%
8.2%
8.3%
49.7%
21.5%
19.0%
17.4%
FY13E
61.2%
13.4%
9.6%
7.8%
7.8%
16.4%
10.1%
9.4%
10.1%
FY14E
63.4%
13.7%
9.9%
7.9%
7.9%
16.9%
18.8%
18.8%
18.8%
FY15E
63.8%
13.5%
9.8%
7.9%
7.9%
18.5%
18.6%
18.6%
18.6%
Ratio Analysis
FY12 FY13E FY14E FY15E HK$ in millions, year end Feb
627
751
155
181
212
251 EBITDA margin
1,238 1,460 1,609 1,885 Operating margin
240
240
240
240 Net margin
373
360
347
335 Sales growth
118
142
164
881
898
983 1,071 Recurring net profit growth
360
360
360
360 EPS growth
3,992 4,391 4,821 5,369
Net debt to equity
Liabilities
Sales/assets
Short-term loans
215
184
184
184
184 Assets/equity
361
488
576
634
743 ROE
Others
437
562
562
562
562 ROCE
1,012 1,235 1,322 1,381 1,490
Long-term debt
379
437
437
437
437
Others
51
52
52
52
52
Total Liabilities
1,442 1,723 1,811 1,869 1,978
Minorities
-4
-2
-1
1
3
1,847 2,271 2,581 2,950 3,388
BVPS
1.57 1.87
2.12
2.43
2.78
FY11
776
121
737
239
1,873
371
64
727
251
3,286
FY11
481
134
-98
-71
4
450
-9.8% -0.3% -5.0% -9.6% -12.0%

1.46 1.58
1.59
1.70
1.82
1.78 1.76
1.70
1.63
1.58
23.3% 22.9% 21.4% 22.3% 23.1%
8.8% 21.7% 21.0% 22.9% 24.0%
117

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
L'Occitane International SA
Company Data
Shares O/S (mn)
Market cap ( mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
L'Occitane International SA (Reuters: 0973.HK, Bloomberg: 973 HK)

in mn, year-end Mar
FY11A
FY12A
FY13E
Revenue ( mn)
772
913
1,056
Net Profit ( mn)
100
121
142
EPS ()
0.07
0.08
0.10
Recurring EPS ()
0.07
0.08
0.10
DPS ()
0.01
0.02
0.03
Revenue growth (%)
26.1%
18.3%
15.6%
21.9%
21.8%
17.0%
21.9%
21.8%
17.0%
EPS growth (%)
6.7%
20.2%
16.9%
ROE
27.7%
20.0%
20.2%
ROA
16.3%
14.3%
14.6%
P/E (x)
32.3
26.9
23.0
P/BV (x)
5.7
5.0
4.3
EV/EBITDA (x)
18.5
15.7
13.1
Dividend Yield
0.6%
1.1%
1.3%
1,477
3,266
4,064
21.35
29 Jun 12
30.7%
896,348.00
17.62
2.27
19,441
7.76
Mar
FY14E
1,212
168
0.11
0.11
0.03
14.8%
18.3%
18.3%
18.3%
20.5%
15.3%
19.4
3.7
10.8
1.5%
FY15E
1,380
200
0.14
0.14
0.04
13.8%
19.5%
19.5%
19.5%
21.0%
16.2%
16.3
3.2
8.7
1.8%

JPM Q-Profile
L'Occitane International S.A. (LUXEMBOURG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
20.65
12 Mth Forward EPS
25.00
0.12
20.00
0.10
Current:
0.10
0.08
15.00
0.06
10.00
0.04
5.00
8%
12Mth fwd EY
Current:
US BY
5%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.02
0.00
37.13%
0.70
Proxy
7%
0.60
6%
0.50
5%
0.40
4%
Current:
20.02
60.00
Dec/11
Oct/10
May/11
4.8x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
PBV Forward
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Mar/10
Aug/09
Jan/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Current:
PBV hist
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
0.0x
Nov/00
2.0x
0.0x
Apr/00
4.0x
5.0x
Sep/99
6.0x
10.0x
Feb/99
8.0x
15.0x
Jul/98
10.0x
20.0x
Dec/97
25.0x
May/97
12.0x
ROE (Trailing)
Sep/99
Price/Book Value
Feb/99
22.0x
Jul/98
Current:
30.0x
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
PE (1Yr Forward)
0.00
Feb/99
0.10
0%
Jul/98
0.20
1%
Dec/97
2%
May/97
0.30
3%
Current:
1.25
4.5
4.0
50.00
3.5
3.0
40.00
2.5
30.00
2.0
1.5
20.00
1.0
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/97
0.0
May/97
0.5
0.00
Summary
L'Occitane International S.A.
LUXEMBOURG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
3780.28
2.994704 SEDOL
B3PG229
Specialty Retail
Latest
Min
22.00x
14.13
4.76x
0.20
1.25
0.70
20.02
18.54
37.1%
0.01
Max
25.91
6.31
3.89
47.66
0.52
Median
21.47
4.53
1.24
32.81
0.40
118
Average
21.03
4.11
1.88
33.43
0.37
2 S.D.+
26.68
7.82
4.39
52.62
0.60
2 S.D. 15.39
0.40
-0.63
14.25
0.13
% to Min
-36%
-96%
-44%
-7%
-98%
As Of:
Local Price:
EPS:
% to Max
18%
33%
211%
138%
39%
% to Med
-2%
-5%
-1%
64%
7%
22-Jun-12
20.65
0.10
% to Avg
-4%
-14%
50%
67%
-2%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
LOccitane is a leading natural ingredient

cosmetics and personal care product
retailer. It originated in Provence, in the
south of France, with three self-owned
premium brands, LOccitane, Melvita, and
Le Couvent des Minimes. LOccitane is the
companys signature brand, contributing
96% of total sales in FY09. In FY12, the
company operated a direct-operated retail
network of 1,053 stores worldwide; sell-out
segment (i.e. retail business) accounted for
c.75% of total revenue. The products
include face care, body care, hair care,
fragrances, toiletries, Men's grooming, and
home fragrances.
Average number of stores
EBITDA FY13 E
impact (%)
EPS FY13 E
impact (%)
-4.3%
-5.2%
-4.3%
-5.2%
-4.8%
-5.7%

Average retail sales per store
Our Mar-13 price target of HK$18 is based on a 19% two-year EPS

CAGR and a 1x PEG ratio, in line with our big-cap discretionary
target PEG.
Russia
5%
Brazil
5%
Other
countries
22%
Japan
24%
Hong
Kong
10%
USA
11%
China
6%
UK France Taiwan
4%
5% 8%
Key downside risks to our PT are any abrupt change in euro exposure
and A&P budget, execution risks in expansion of the store network,
and slower SSS growth in key markets. Key upside risks include faster
than expected sell-in sales growth and lower than expected tax rates.

J. P. Morgan
Consensus
FY13E
0.096
0..096
FY14E
FY15E
0.114
0.136
0.114
0.136
Source: Bloomberg, J.P. Morgan.
Peer valuation comparison

Company
Trinity
Lifestyle
Hengdeli^
Belle
Sa Sa*
L'Oreal
Estee Lauder*
Shiseido*
LVMH
Richemont*
Burberry^*
Sector average
Ticker
891 HK
1212 HK
3389 HK
1880 HK
178 HK
OR FP
EL US
4911 JP
MC FP
CFR VX
BRBY LN
Rating
OW
OW
NR
OW
N
OW
N
OW
N
N
N
Price
(LC)
4.9
16.9
2.4
13.1
4.9
91.3
52.9
1255.0
118.6
51.5
1324.0
PT
(LC)
8.00
19.00
15.50
5.30
97.00
65.00
1700.00
120.00
60.00
1460.00
Mkt cap
(USD mn)
1,076
3,631
1,382
14,266
1,763
69,330
20,582
6,315
75,782
30,950
9,064
2011
16.5
18.0
10.8
21.3
19.8
21.1
22.7
22.4
19.0
15.6
0.2
17.0
P/E (x)
2012E
14.6
15.7
10.1
19.3
17.2
19.6
20.0
17.0
18.2
14.6
0.2
15.1
2013E
11.6
13.9
8.3
15.7
14.3
18.0
~
15.3
16.2
12.3
0.2
12.6
P/BV (x)
2012E
2013E
2.5
2.3
3.0
2.7
1.6
1.4
4.0
3.5
5.6
4.8
3.1
2.9
7.6
~
1.6
1.5
2.5
2.3
2.4
2.1
5.5
4.5
3.6
2.8
Source: Bloomberg, J.P. Morgan estimates. Prices as of Jun 29, 2012. *FY11 figures given under 2010 as the year ends in Jan-Jun. ^Bloomberg consensus estimates
119

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
L'Occitane International SA: Summary of Financials

Income Statement
in millions, year end Mar
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY11
772
26.1%
637
28.1%
82.5%
160
19.5%
20.7%
130
20.8%
16.8%
0
128
13.8%
-25
19.5%
-3
-1
100
21.9%
100
21.9%
0.07
6.7%
0.07
6.8%
FY12
913
18.3%
755
18.6%
82.7%
189
18.3%
20.7%
153
18.2%
16.8%
0
0
157
22.7%
-32
20.7%
-3
3
121
21.8%
121
21.8%
0.08
20.2%
0.08
20.2%
FY13E
1,056
15.6%
872
15.5%
82.6%
222
17.3%
21.0%
181
18.1%
17.1%
1
186
18.9%
-41
22.0%
-4
4
142
17.0%
142
17.0%
0.10
16.9%
0.10
17.0%
FY14E
1,212
14.8%
1,002
14.9%
82.7%
265
19.2%
21.9%
219
20.8%
18.1%
2
220
18.3%
-48
22.0%
-4
0
168
18.3%
168
18.3%
0.11
18.3%
0.11
18.3%
FY15E
1,380
13.8%
1,141
13.8%
82.7%
312
17.8%
22.6%
261
19.3%
18.9%
2
263
19.5%
-58
22.0%
-5
0
200
19.5%
200
19.5%
0.14
19.5%
0.14
19.5%
Cash flow statement

PBT
Tax
Other
120

157
186
220
263
36
41
46
51
-4
-8
-42
-23
-53
-41
-48
-58
135
178
176
233
Capex
Sale of assets
Other
-49
4
-3
-1
-49
-71
-13
0
-83
-90
0
-90
-70
0
-70
-60
0
-60
Dividends paid
Other
301
-3
-80
-5
213
0
16
-20
-34
-38
0
0
-36
0
-36
0
0
-43
0
-43
0
0
-50
0
-50
Net change in cash

FX gain/(loss)
Ending cash
DPS
263
-1
300
0.01
14
-6
308
0.02
52
360
0.03
64
424
0.03
123
547
0.04
FY11
82.5%
20.7%
17.1%
12.9%
12.9%
26.1%
21.9%
21.9%
6.7%
FY12
82.7%
20.7%
16.7%
13.3%
13.3%
18.3%
21.8%
21.8%
20.2%
FY13E
82.6%
21.0%
17.1%
13.4%
13.4%
15.6%
17.0%
17.0%
16.9%
Ratio Analysis
FY12 FY13E FY14E FY15E in millions, year end Mar
308
360
424
547 Gross margin
77
87
100
113 EBITDA margin
126
141
155
49
49
49
49 Net margin
560
637
728
886 Recurring net profit margin
162
162
162
162 Sales growth
0
0
0
0 Net profit growth
121
170
193
68
68
68
68 EPS growth
910 1,036 1,151 1,318
Net debt to equity
Liabilities
Sales/assets
Short-term loans
6
4
4
4
4 Assets/equity
72
85
101
86
98 ROE
Others
69
76
76
76
76 ROCE
148
165
181
167
179
Long-term debt
54
65
65
65
65
Others
19
25
25
25
25
Total Liabilities
221
255
271
257
269
Minorities
5
5
9
13
18
560
650
756
881 1,031
BVPS
0.38 0.44
0.51
0.60
0.70
FY11
300
60
101
35
496
138
0
91
61
786
FY11
128
30
-19
-41
99
FY14E FY15E
82.7% 82.7%
21.9% 22.6%
18.1% 18.9%
13.8% 14.5%
13.8% 14.5%
14.8% 13.8%
18.3% 19.5%
18.3% 19.5%
18.3% 19.5%
-42.9% -36.8% -38.5% -40.3% -46.4%

1.26
1.08
1.09
1.11
1.12
1.40
1.40
1.37
1.31
1.28
27.7% 20.0% 20.2% 20.5% 21.0%
30.9% 22.9% 23.5% 24.7% 25.5%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Li Ning Co Ltd
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Li Ning Co Ltd (Reuters: 2331.HK, Bloomberg: 2331 HK)

FY10A
FY11A
Revenue (Rmb mn)
9,479
8,929
Net Profit (Rmb mn)
1,108
386
EPS (Rmb)
1.06
0.37
DPS (Rmb)
0.42
0.11
Revenue growth (%)
13.0%
-5.8%
17.4%
-65.2%
EPS growth (%)
16.6%
-65.3%
ROE
34.5%
10.7%
P/E (x)
3.4
9.7
P/BV (x)
1.0
1.0
EV/EBITDA (x)
2.4
6.1
Dividend Yield
11.9%
3.1%
1,056
3,759
591
4.34
29 Jun 12
65.5%
3.32
21.76
3.26
5,329
7.76
Dec
FY12E
8,041
269
0.26
0.10
-9.9%
-30.2%
-30.2%
7.2%
13.9
1.0
7.7
2.9%
FY13E
8,518
405
0.39
0.15
5.9%
50.5%
50.5%
10.2%
9.2
0.9
6.0
4.3%
FY14E
9,262
489
0.46
0.19
8.7%
20.6%
20.6%
11.4%
7.7
0.8
4.9
5.2%
JPM Q-Profile
Li Ning Co. Ltd. (CHINA / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
4.99
12 Mth Forward EPS
35.00
1.80
30.00
1.60
1.40
25.00
1.20
0.37
1.00
20.00
0.80
0.60
15.00
0.40
10.00
0.20
5.00
12%
12Mth fwd EY
Current:
China BY
9%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
-0.40
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.00
-0.20
May/97
0.00
Current:
-5.45%
1.00
Proxy
0.80
10%
0.60
8%
0.40
6%
0.20
4%
0.00
2%
PE (1Yr Forward)
Current:
11.1x
60.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
Price/Book Value
Current:
20.0x
50.0x
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.40
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.20
May/97
0%
PBV hist
1.2x
PBV Forward
15.0x
40.0x
10.0x
30.0x
ROE (Trailing)
Current:
11.28
7.0
40.00
6.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
45.00
35.00
Jul/98
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
-5.0x
Dec/97
0.0x
0.0x
May/97
10.0x
Dec/97
5.0x
20.0x
Current:
2.15
5.0
30.00
25.00
4.0
20.00
3.0
15.00
2.0
10.00
1.0
5.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
Summary
Li Ning Co. Ltd.
CHINA
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
672.10
3.937268 SEDOL
B01JCK9
Latest
Min
Max
11.13x
9.46
48.65
1.24x
1.24
18.64
2.15
0.00
6.36
11.28
11.28
41.33
-5.5%
-0.30
0.78
Median
21.11
6.47
1.28
31.08
0.47
Average
22.32
6.92
1.54
29.07
0.38
2 S.D.+
41.33
14.71
3.82
47.96
0.91
2 S.D. 3.32
-0.86
-0.75
10.18
-0.14
% to Min
-15%
0%
-100%
0%
-446%
As Of:
Local Price:
EPS:
% to Max
337%
1399%
196%
266%
1528%
% to Med
90%
420%
-41%
176%
956%
22-Jun-12
4.99
0.37
% to Avg
101%
457%
-28%
158%
800%
121

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Established in 1989, Li Ning Co. Ltd. is one

of the largest domestic sportswear
companies in the PRC in terms of market
share. It is engaged in the research and
development, design, manufacturing,
distribution and retail of sports footwear,
apparel and accessories. These are primarily
sold under its flagship LI-NING brand which
contributed c.91% of total revenues in 2011.
In July 2008, the company acquired 57.5%
stake in Double Happiness, and in Aug 2008
signed an exclusive 20 year license
agreement to manufacture and sell Lotto
branded products in the PRC.
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-2.7%
-4.7%
-2.7%
-4.7%
-12.8%
-22.4%
-5.8%
-10.1%

As we assume the sectors margin to fall to a new normalized level by

2014, our Dec-12 PT of HK$4.5 equals the present value of the long
term target PE of 10x 2014 earnings, which are based on normalized
margins. Our normalized target PE represents c30% discount to the
international brands long term average of 15-16x on brand recognition.
2011 Li Ning brands sales breakdown

Accesso
ries and
equipme
nt
6%
Footwea
r
42%
Apparel
52%
The company is working on streamlining operations for different

markets which could lead to lower than expected staff costs and thus
some margin upside. Better than expected sell-through of outlet
business could help accelerate destocking and thus improve top line
growth; this would cause upside risks to our sales forecasts. Other risks
include lower than expected A&P expenses (we think at the expense of
long term sustainability), and higher than expected trade fair order
growth (we think at the expense of retail inventory level).

J. P. Morgan
Consensus
FY12E
0.26
0.31
FY13E
0.39
0.42
FY14E
0.46
0.56
Table 65: Peer comparison valuation table

Company
China retailers
Sportswear Brands
China Dongxiang^
Anta
Xtep
Belle International
Parkson Retail
Golden Eagle
Ports Design
Sector average
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
2013E
3818 HK
2020 HK
1368 HK
NR
UW
UW
0.7
4.7
2.7
4.00
2.20
500
1,505
758
31.5
5.5
5.0
8.1
6.6
5.7
7.4
7.6
7.7
0.4
1.4
1.1
0.4
1.3
1.0
1880 HK
3368 HK
3308 HK
589 HK
OW
N
OW
UW
13.1
6.9
15.7
8.1
15.50
7.50
22.50
7.00
14,266
2,486
3,940
587
21.3
14.1
21.0
8.7
15.3
19.3
13.7
18.8
8.2
11.5
15.7
12.0
15.1
7.3
10.4
4.0
2.7
4.8
1.8
2.3
3.5
2.4
4.1
1.6
2.1
Source: J.P. Morgan estimates, Bloomberg. Prices as of Jun 29, 2012. ^Bloomberg consensus estimates used for the company.
122
P/B
2012E
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Li Ning Co Ltd: Summary of Financials

Income Statement
FY10
FY11
Revenues
9,479 8,929
% change Y/Y
13.0% (5.8%)
Gross Profit
4,482 4,115
% change Y/Y
12.9% -8.2%
Gross margin
47.3% 46.1%
EBITDA
1,565
749
% change Y/Y
11.9% -52.1%
EBITDA Margin
16.5%
8.4%
Operating Profit
1,547
631
% change Y/Y
15.3% -59.2%
Operating margin
16.3%
7.1%
Net Interest
-37
-82
Earnings before tax
1,510
547
% change Y/Y
17.6% -63.7%
Tax
-377
-136
as % of EBT
25.0% 24.9%
1,108
386
% change Y/Y
17.4% -65.2%
1,108
386
% change Y/Y
17.4% -65.2%
EPS (reported)
1.06
0.37
% change Y/Y
16.6% (65.3%)
Recurring EPS
1.06
0.37
% change Y/Y
16.6% (65.3%)
Balance sheet
FY10
FY11
1,472 1,210
Accounts receivable
1,613 2,094
Inventories
806 1,133
Others
303
345
Current assets
4,194 4,782
Intangible assets
1,195 1,124
Net fixed assets
721
832
Other assets
453
592
Total Assets
6,562 7,329
Liabilities
Short-term loans
312
838
1,191 1,462
Others
868
763
2,372 3,063
Long-term debt
Others
631
601
Total Liabilities
3,002 3,664
3,559 3,665
BVPS
3.40
3.49
FY12E
8,041
(9.9%)
3,653
-11.2%
45.4%
626
-16.4%
7.8%
507
-19.7%
6.3%
-51
397
-27.5%
-99
25.0%
269
-30.2%
269
-30.2%
0.26
(30.2%)
0.26
(30.2%)
FY13E
8,518
5.9%
3,794
3.8%
44.5%
759
21.3%
8.9%
643
26.8%
7.6%
-63
580
46.2%
-145
25.0%
405
50.5%
405
50.5%
0.39
50.5%
0.39
50.5%
FY14E
9,262
8.7%
4,085
7.7%
44.1%
876
15.4%
9.5%
754
17.3%
8.1%
-62
693
19.5%
-173
25.0%
489
20.6%
489
20.6%
0.46
20.6%
0.46
20.6%
FY12E
1,721
1,542
1,803
345
5,411
1,021
768
592
7,792
FY13E
2,011
1,634
1,942
345
5,931
918
700
592
8,140
FY14E
2,285
1,776
2,128
345
6,533
815
626
592
8,566
1,588
986
763
3,336
601
3,937
3,854
3.67
1,588
1,061
763
3,412
601
4,013
4,127
3.93
1,588
1,163
763
3,514
601
4,115
4,451
4.23
Cash flow statement

PBT
Tax
Other
FY10
1,510
212
-384
-484
136
991

547
397
580
693
261
266
271
276
-563
-594
-154
-227
-136
-99 -145
-173
-94
51
63
62
16
20
615
631
Capex
Other
-269
-59
-324
-386
-105
-491
-100
-51
-151
-100
-63
-163
-100
-62
-162
Dividends paid
Other
36
55
-497
-49
-454
529
-348
20
201
750
-108
-0
642
0
-162
0
-162
0
-195
0
-195
212
1,470
0.42
-274
1,196
0.11
512
1,708
0.10
290
1,998
0.15
274
2,271
0.19
FY10
47.3%
16.5%
16.3%
11.7%
11.7%
13.0%
17.4%
17.4%
16.6%
-32.6%
1.59
1.87
34.5%
38.7%
FY11
46.1%
8.4%
7.1%
4.3%
4.3%
(5.8%)
-65.2%
-65.2%
(65.3%)
-10.1%
1.29
1.78
10.7%
11.6%
FY12E
45.4%
7.8%
6.3%
3.4%
3.4%
(9.9%)
-30.2%
-30.2%
(30.2%)
-3.5%
1.06
2.02
7.2%
7.2%
FY13E
44.5%
8.9%
7.6%
4.8%
4.8%
5.9%
50.5%
50.5%
50.5%
-10.3%
1.07
1.97
10.2%
8.7%
FY14E
44.1%
9.5%
8.1%
5.3%
5.3%
8.7%
20.6%
20.6%
20.6%
-15.7%
1.11
1.92
11.4%
10.2%
Net change in cash

Ending Cash
DPS
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Sales growth
Net profit growth
EPS growth
Net debt to equity
Sales/assets
Assets/equity
ROE
ROCE
123

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Lifestyle International Holdings

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Lifestyle International Holdings (Reuters: 1212.HK, Bloomberg: 1212 HK)

FY10A
FY11A
FY12E
FY13E
Revenue (HK$ mn)
4,322
5,132
5,536
6,268
Net Profit (HK$ mn)
1,411
1,886
1,816
2,047
EPS (HK$)
0.84
1.12
1.08
1.22
Recurring EPS (HK$)
0.74
0.94
1.08
1.22
DPS (HK$)
0.34
0.40
0.43
0.49
Revenue growth (%)
15.1%
18.7%
7.9%
13.2%
23.5%
33.7%
-3.7%
12.7%
EPS growth (%)
24.5%
33.6%
-3.8%
12.7%
ROE
21.2%
24.2%
20.3%
20.3%
ROA
10.8%
11.6%
8.8%
8.7%
P/BV (x)
3.9
3.4
3.0
2.7
P/E (x)
20.1
15.1
15.7
13.9
EV/EBITDA (x)
15.7
12.3
10.7
9.0
Dividend Yield
2.0%
2.4%
2.6%
2.9%
1,665
28,164
3,630
16.92
29 Jun 12
27.8%
1,723,923.00
30.00
3.87
19,441
7.76
Dec
FY14E
7,050
2,324
1.38
1.38
1.95
12.5%
13.5%
13.5%
22.7%
9.5%
2.9
12.2
8.7
11.5%

JPM Q-Profile
Lifestyle International Holdings Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
16.76
12 Mth Forward EPS
30.00
1.40
25.00
1.20
20.00
1.00
Current:
1.26
0.80
15.00
0.60
10.00
0.40
5.00
16%
12Mth fwd EY
Current:
Hong Kong BY
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
May/97
8%
Dec/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.20
-18.75%
1.00
Proxy
0.80
14%
0.60
12%
0.40
10%
0.20
8%
0.00
6%
-0.20
4%
-0.40
-0.60
2%
Current:
13.3x
Price/Book Value
40.0x
10.0x
35.0x
8.0x
30.0x
6.0x
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
PE (1Yr Forward)
-1.00
May/97
-0.80
0%
Current:
PBV hist
3.3x
PBV Forward
4.0x
25.0x
2.0x
20.0x
0.0x
15.0x
-2.0x
10.0x
ROE (Trailing)
Current:
24.16
6.0
120.00
5.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
140.00
100.00
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
-8.0x
Dec/97
-6.0x
0.0x
May/97
5.0x
Dec/97
-4.0x
May/97
0.00
Current:
2.67
4.0
80.00
3.0
60.00
2.0
40.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/97
0.0
0.00
May/97
1.0
20.00
Summary
Lifestyle International Holdings Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
3614.68
4.432921 SEDOL
B00LN47
Multiline Retail
Latest
Min
13.31x
7.22
3.33x
-5.82
2.67
0.00
24.16
14.36
-18.7%
-0.73
Max
37.87
8.99
5.10
122.48
0.73
124
Median
18.73
4.33
1.96
22.26
0.36
Average
19.76
4.28
2.00
28.56
0.31
2 S.D.+
31.31
8.31
3.68
79.07
0.84
2 S.D. 8.22
0.25
0.32
-21.95
-0.23
% to Min
-46%
-275%
-100%
-41%
-290%
As Of:
Local Price:
EPS:
% to Max
184%
170%
91%
407%
487%
% to Med
41%
30%
-27%
-8%
293%
22-Jun-12
16.76
1.26
% to Avg
48%
29%
-25%
18%
263%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Lifestyle is a Hong Kong based retailer

of high-end department stores through
its two brand names, SOGO and
Jiuguang, in HK and the PRC. Currently
the group operates two SOGO stores in
HK (including the flagship store in
Causeway Bay) and three stores in
China (Shanghai, Dalian, Suzhou). Sogo
Store has approx 290 concessionaire
counters and merchandises include men,
women and children fashion; cosmetic
and beauty products; accessories; shoes
and leather goods; sports goods;
bathroom and kitchen equipment, and
household electrical appliances.
SOGO CWB sales
Revenue breakdown (2011)

China
20%
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
0.8%
0.9%
0.3%
0.2%
5.2%
6.8%

Shanghai Jiuguang sales
Operating margin
Source: J.P. Morgan Estimates
Our Dec-12 PT is HK$19 based on SOTP method where we value HK

operations at 15x PE and Shanghai at 13x. There is no change to our PT
as we had only 3% tweak in our FY12 earnings estimates. Lifestyle's
share price has been weak for the past 3 months mainly due to i) weak
sales performance in Shanghai ii) departure of the general manager iii)
news flow around one of the major shareholder Joseph Lau (please see
link Chinese estates announcement dated 23 May). We believe Shanghai
store weakness is more than in the price and the latter two news items will
not have any material fundamental impact on Lifestyles operations.
Hence we believe selling is overdone and upgrade the stock to OW as a
proxy to Hong Kong retail sales growth (with no pressure on cost side
given that the main store is self-owned).
Main risk to our PT would be further weakening of performance at

Shanghai store, HK store sales seeing a sharp slowdown in 2H12, Suzhou
store and Dalian store posting higher than expected losses in 2012 due to
weakness in demand.
HK
80%
Source: Company.

J. P. Morgan
Consensus
FY12E
1.08
1.17
FY13E
1.22
1.35
FY14E
1.38
1.62
Source: J.P. Morgan Estimates & Bloomberg

Company
HK Retailers
Caf de Coral*
Giordano
China department stores
Golden Eagle
Parkson Retail
Sector average
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
P/B
2012E
2013E
341 HK
709 HK
178 HK
N
OW
N
20.7
5.5
4.9
18.70
6.50
5.30
1,520
1,085
1,763
27.5
11.3
19.8
21.5
10.8
17.2
18.0
8.6
14.3
3.5
2.8
5.6
3.3
2.5
4.8
3308 HK
3368 HK
OW
N
15.7
6.9
22.50
7.50
3,940
2,486
21.0
14.1
18.7
18.8
13.7
16.4
15.1
12.0
13.6
4.8
2.7
3.9
4.1
2.4
3.4
Source: Bloomberg, J.P. Morgan estimates. Based on COB prices as at February 27, 2012. * Next FY figures taken because FY ends in the period Jan-May
125
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Lifestyle International Holdings: Summary of Financials

Income Statement
FY10 FY11
Gross Sales
9,839 12,052
Revenues
4,322 5,132
% change Y/Y
15.1% 18.7%
Gross Profit
2,486 3,000
% change Y/Y
16.7% 20.7%
Gross margin
25.3% 24.9%
EBITDA
1,787 2,251
% change Y/Y
22.9% 26.0%
EBITDA Margin
18.2% 18.7%
EBIT
1,578 2,039
% change Y/Y
25.8% 29.2%
EBIT Margin
16.0% 16.9%
Net Interest
-23
-6
Share of JVs
124
251
Earnings before tax
1,901 2,594
% change Y/Y
26.9% 36.4%
Minorities
-159
-173
Other income/(exp)
396
560
Tax
-331
-535
as % of EBT
17.4% 20.6%
1,411 1,886
% change Y/Y
23.5% 33.7%
1,237 1,576
% change Y/Y
29.0% 27.4%
EPS (reported)
0.84
1.12
% change Y/Y
24.5% 33.6%
Recurring EPS
0.74
0.94
% change Y/Y
30.1% 27.3%
Balance sheet
FY10 FY11
3,761 7,269
Accounts receivable
214
327
Inventories
62
72
Others
1,245 1,237
Current assets
5,281 8,905
Intangible assets
3,426 3,673
Net fixed assets
3,815 3,986
Other assets
1,351 2,017
Total Assets
13,873 18,581
Liabilities
Short-term loans
2,985 2,693
2,009 2,079
Others
197
277
5,191 5,049
Long-term debt
580 4,105
Others
199
221
Total Liabilities
5,970 9,375
Minorities
686
807
7,217 8,400
BVPS
4.30
5.00
126
FY12E
13,184
5,536
7.9%
3,272
9.1%
24.8%
2,484
10.3%
18.8%
2,274
11.5%
17.2%
-108
284
2,450
-5.6%
-182
266
-453
18.5%
1,816
-3.7%
1,816
15.2%
1.08
(3.8%)
1.08
15.1%
FY13E
15,203
6,268
13.2%
3,750
14.6%
24.7%
2,807
13.0%
18.5%
2,530
11.2%
16.6%
-78
329
2,780
13.5%
-212
280
-522
18.8%
2,047
12.7%
2,047
12.7%
1.22
12.7%
1.22
12.7%
FY14E
17,574
7,050
12.5%
4,273
13.9%
24.3%
3,027
7.9%
17.2%
2,844
12.4%
16.2%
-78
375
3,141
13.0%
-244
296
-573
18.3%
2,324
13.5%
2,324
13.5%
1.38
13.5%
1.38
13.5%
FY12E
11,051
357
79
1,237
12,725
3,957
4,036
2,017
22,735
FY13E
12,351
412
87
1,237
14,088
4,286
4,129
2,017
24,520
FY14E
11,460
476
96
1,237
13,270
4,660
4,281
2,017
24,229
2,693 2,693 2,693

2,274 2,622 3,031
277
277
277
5,244 5,592 6,001
6,796 6,796 6,796
221
221
221
12,261 12,609 13,018
988 1,200 1,444
9,486 10,711 9,767
5.65
6.38
5.81
Cash flow statement

PBT
Tax
Other

1,901 2,594 2,450 2,780 3,141
209
212
210
277
183
83 -124
158
285
336
-248 -535
-453
-522
-573
-163 -193
-88
-133
-179
1,782 1,954 2,277 2,688 2,908
Capex
Sale of assets
Other
-335
0
-158
772
280
-482
658
-493
-317
Dividends paid
Other
34
0
187 3,226
-583 -672
123 -1,492
-238 1,061
-260
0
-260
-370
0
-370
-335
0
-335
0
0
0
2,691
0
0
-730
-822 -3,268
-196
-196
-196
1,766 -1,018 -3,464
Net change in cash

Ending cash flow
DPS
1,823 2,697 3,782 1,300

-891
4,617 7,269 11,051 12,351 11,460
0.34 0.40
0.43
0.49
1.95
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Gross Sales growth
Sales growth
Net profit growth
EPS growth
Net debt to equity
Sales/assets
Assets/equity
ROE
ROCE
FY10
25.3%
18.2%
16.0%
14.3%
12.6%
17.1%
15.1%
23.5%
29.0%
24.5%
-2.7%
0.33
1.95
21.2%
15.7%
FY11
24.9%
18.7%
16.9%
15.7%
13.1%
22.5%
18.7%
33.7%
27.4%
33.6%
-5.6%
0.32
1.89
24.2%
15.7%
FY12E
24.8%
18.8%
17.2%
13.8%
13.8%
9.4%
7.9%
-3.7%
15.2%
(3.8%)
-16.5%
0.27
2.40
20.3%
13.3%
FY13E
24.7%
18.5%
16.6%
13.5%
13.5%
15.3%
13.2%
12.7%
12.7%
12.7%
-26.7%
0.27
2.29
20.3%
12.9%
FY14E
24.3%
17.2%
16.2%
13.2%
13.2%
15.6%
12.5%
13.5%
13.5%
13.5%
-20.2%
0.29
2.48
22.7%
14.4%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Parkson Retail Group Ltd

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Parkson Retail Group Ltd (Reuters: 3368.HK, Bloomberg: 3368 HK)

FY10A
FY11A
FY12E
Revenue (Rmb mn)
4,400
4,938
5,462
Net Profit (Rmb mn)
992
1,123
1,150
EPS (Rmb)
0.35
0.40
0.41
Recurring EPS (Rmb)
0.35
0.40
0.41
DPS (Rmb)
0.16
0.18
0.20
Revenue growth (%)
12.6%
12.2%
10.6%
8.9%
13.2%
2.4%
8.9%
13.2%
2.4%
EPS growth (%)
8.7%
13.2%
2.4%
ROCE
18.2%
18.3%
18.7%
ROE
23.5%
23.0%
20.7%
ROA
8.4%
9.1%
9.1%
P/E (x)
15.9
14.1
13.7
P/BV (x)
3.5
3.0
2.7
EV/EBITDA (x)
119.2
111.6
109.3
Dividend Yield
2.9%
3.2%
3.6%
2,810
15,815
2,485
6.86
29 Jun 12
48.5%
4.80
38.46
5.87
5,329
7.76
Dec
FY13E
6,442
1,320
0.47
0.47
0.23
17.9%
14.7%
14.7%
14.7%
19.8%
21.4%
9.5%
12.0
2.4
95.1
4.2%
FY14E
7,387
1,521
0.54
0.54
0.27
14.7%
15.3%
15.3%
15.3%
20.7%
22.1%
9.9%
10.4
2.2
83.8
4.8%

JPM Q-Profile
Parkson Retail Group Ltd. (CHINA / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
7.04
20.00
0.48
0.60
16.00
14.00
0.50
12.00
0.40
10.00
8.00
0.30
6.00
0.20
4.00
2.00
9%
12Mth fwd EY
Current:
China BY
8%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.10
3.09%
0.90
Proxy
8%
0.80
7%
0.70
6%
0.60
5%
0.50
4%
0.40
3%
0.30
2%
0.20
1%
Current:
12.1x
60.0x
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Price/Book Value
Current:
25.0x
50.0x
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.00
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
PE (1Yr Forward)
Aug/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.10
May/97
0%
Current:
0.70
18.00
0.00
12 Mth Forward EPS
PBV hist
3.1x
PBV Forward
20.0x
40.0x
15.0x
30.0x
ROE (Trailing)
Current:
17.28
3.0
30.00
2.5
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
35.00
25.00
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
0.0x
Dec/97
5.0x
0.0x
May/97
10.0x
May/97
10.0x
20.0x
Current:
2.84
2.0
20.00
1.5
15.00
1.0
10.00
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
May/97
0.5
5.00
Summary
Parkson Retail Group Ltd.
CHINA
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
2549.94
6.078036 SEDOL
B0HZZ57
Multiline Retail
Latest
Min
12.11x
12.11
3.08x
3.08
2.84
0.00
17.28
17.28
3.1%
0.03
Max
54.12
19.19
2.84
28.91
0.80
Median
25.39
7.80
1.34
23.72
0.53
Average
26.96
8.37
1.42
23.88
0.51
2 S.D.+
45.72
15.30
2.60
29.90
0.85
2 S.D. 8.20
1.44
0.23
17.87
0.18
% to Min
0%
0%
-100%
0%
0%
As Of:
Local Price:
EPS:
% to Max
347%
523%
0%
67%
2495%
% to Med
110%
153%
-53%
37%
1633%
22-Jun-12
7.04
0.48
% to Avg
123%
172%
-50%
38%
1566%
127

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Parkson Retail is one of the few

foreign-owned departmental stores
operating in China since 1994. It
targets the middle to upper middleincome consumers and focuses on four
segments (% of revenue): Fashion &
Apparel (48%); Cosmetics &
Accessories (42%); Household &
Electrical (4%); and Groceries &
Perishables (7%).
Gross concessionaire sales
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-5.0%
-6.3%
-5.2%
-6.6%
-8.7%
-11.0%

Concessionary rate assumption
Operating expenses as % of revenue
Our Dec-12 PT of HK$7.5 is based on 1x PEG and 15% two-year

earnings CAGR post 2012.
FY11 gross sales breakdown

Others
5%
Direct
Sales
9%
Concessi
onaire
sales
86%
Key risks on the downside is SSSG further slowing down in Shanghai

and Beijing stores and on the upside better than expected cost control,
better than expected margins and performance at the new stores.

J. P. Morgan
Consensus
0.41
0.47
0.54
0.44
0.51
0.59
FY12E
FY13E
FY14E
Peer Valuation Table.

Company
Other Department stores

Golden Eagle
Maoye^
Belle International
Li Ning
China Dongxiang^
Anta
Sector average
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
2013E
3308 HK
848 HK
OW
15.7
1.4
22.50
3,940
976
21.0
9.6
18.8
9.1
15.1
7.0
4.8
0.9
4.1
0.9
1880 HK
2331 HK
3818 HK
2020 HK
OW
UW
NR
UW
13.1
4.3
0.7
4.7
15.50
4.50
14,266
591
500
1,505
21.3
9.7
31.5
5.5
16.4
19.3
13.9
8.1
6.6
12.6
15.7
9.2
7.4
7.6
10.3
4.0
1.0
0.4
1.4
2.1
3.5
0.9
0.4
1.3
1.9
4.00
Source: J.P. Morgan estimates, Bloomberg. Prices as of 29 June 2012 close. ^Bloomberg consensus estimates have been used
128
P/B
2012E
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Parkson Retail Group Ltd: Summary of Financials

Income Statement
FY10 FY11
Gross Sales
14,106 16,426
Revenues
4,400 4,938
% change Y/Y
12.6% 12.2%
Gross Profit
3,301 3,699
% change Y/Y
15.2% 12.0%
Gross margin
23.4% 22.5%
EBITDA
1,648 1,745
% change Y/Y
10.1% 5.9%
EBITDA Margin
11.7% 10.6%
EBIT
1,468 1,509
% change Y/Y
10.4% 2.8%
EBIT Margin
10.4% 9.2%
Net Interest
-140
9
Share of JVs
0
0
Earnings before tax
1,328 1,519
% change Y/Y
8.5% 14.4%
Minorities
-32
-30
Other income/(exp)
Tax
-304 -366
as % of EBT
22.9% 24.1%
992 1,123
% change Y/Y
8.9% 13.2%
992 1,123
% change Y/Y
8.9% 13.2%
EPS (reported)
0.35
0.40
% change Y/Y
8.7% 13.2%
Recurring EPS
0.35
0.40
% change Y/Y
8.7% 13.2%
Balance sheet
FY10 FY11
5,238 5,103
Accounts receivable
20
14
Inventories
234
278
Others
1,777
725
Current assets
7,269 6,120
Intangible assets
2,172 2,172
53
52
Net fixed assets
2,494 2,683
Other assets
603 1,035
Total Assets
12,591 12,063
Liabilities
Short-term loans
2,620
0
1,721 1,982
Others
1,646 1,900
5,987 3,882
Long-term debt
1,615 2,467
Others
400
373
Total Liabilities
8,002 6,722
Minorities
77
73
4,512 5,268
BVPS
1.61
1.88
FY12E
18,212
5,462
10.6%
4,113
11.2%
22.6%
1,780
2.0%
9.8%
1,495
NM
8.2%
83
0
1,579
4.0%
-34
-395
25.0%
1,150
2.4%
1,150
2.4%
0.41
2.4%
0.41
2.4%
FY13E
21,586
6,442
17.9%
4,840
17.7%
22.4%
2,035
14.4%
9.4%
1,710
14.4%
7.9%
101
0
1,811
14.7%
-39
-453
25.0%
1,320
14.7%
1,320
14.7%
0.47
14.7%
0.47
14.7%
FY14E
25,016
7,387
14.7%
5,541
14.5%
22.1%
2,297
12.9%
9.2%
1,937
13.3%
7.7%
150
0
2,087
15.3%
-45
-522
25.0%
1,521
15.3%
1,521
15.3%
0.54
15.3%
0.54
15.3%
FY12E FY13E FY14E

5,418 6,315 7,367
15
18
20
233
276
319
649
769
891
6,314 7,378 8,597
2,172 2,172 2,172
51
50
49
3,614 4,054 4,458
1,009
991
973
13,161 14,645 16,249
0
2,245
2,132
4,378
2,467
373
7,218
106
5,837
2.08
0
2,661
2,502
5,163
2,467
373
8,003
145
6,497
2.31
0
3,084
2,878
5,962
2,467
373
8,802
190
7,257
2.58
Cash flow statement

PBT
Tax
Other
FY10
1,328
180
360
-301
112
1,679
Capex
Sale of assets
Other
-435
-389 -1,200
60
5
5
-32
0
0
-1,563
-678
281
-1,970 -1,062
-914
-750
5
0
298
-447
-750
5
0
347
-398
Dividends paid
Other
22
0
1,612
150
-451
-506
-1,306
-816
-145 -1,172
0
0
-575
-197
-773
0
0
-660
-197
-857
0
0
-760
-197
-958
Net change in cash

Ending cash flow
DPS
-436
2,323
0.16
-633
1,690
0.18
314
2,707
0.20
897
3,604
0.23
1,052
4,656
0.27
FY10
23.4%
11.7%
10.4%
7.0%
7.0%
14.1%
12.6%
8.9%
8.9%
8.7%
-22.2%
0.37
2.40
23.5%
18.2%
FY11
22.5%
10.6%
9.2%
6.8%
6.9%
16.5%
12.2%
13.2%
13.2%
13.2%
-50.0%
0.40
2.29
23.0%
18.3%
FY12E
22.6%
9.8%
8.2%
6.3%
6.8%
10.9%
10.6%
2.4%
2.4%
2.4%
-50.5%
0.43
2.25
20.7%
18.7%
FY13E
22.4%
9.4%
7.9%
6.1%
6.9%
18.5%
17.9%
14.7%
14.7%
14.7%
-59.2%
0.46
2.25
21.4%
19.8%
FY14E
22.1%
9.2%
7.7%
6.1%
6.9%
15.9%
14.7%
15.3%
15.3%
15.3%
-67.5%
0.48
2.24
22.1%
20.7%
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Gross Sales growth
Sales growth
Net profit growth
EPS growth
Net debt to equity
Sales/assets
Assets/equity
ROE
ROCE

1,519 1,579 1,811 2,087
236
284
325
360
226
616
619
632
-366
-395
-453
-522
-14
-83
-101
-150
1,601 2,001 2,202 2,407
129

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Ports Design
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Ports Design Ltd. (Reuters: 0589.HK, Bloomberg: 589 HK)

FY10A
FY11A
FY12E
Revenue (Rmb mn)
1,718
1,985
2,190
Net Profit (Rmb mn)
473
430
456
EPS (Rmb)
0.84
0.76
0.81
Recurring EPS (Rmb)
0.81
0.76
0.81
DPS (Rmb)
0.49
0.38
0.40
Revenue growth (%)
11.7%
15.5%
10.3%
1.0%
-9.1%
6.0%
4.7%
-7.1%
6.4%
ROE
31.5%
24.7%
23.4%
ROA
18.1%
15.5%
14.4%
P/E (x)
7.9
8.7
8.2
P/BV (x)
2.3
2.0
1.8
EV/EBITDA (x)
11.1
10.7
9.0
Dividend Yield
7.4%
5.8%
6.1%
565
3,729
587
8.05
29 Jun 12
53.7%
2.59
19.27
2.48
19,441
7.76
Dec
FY13E
2,436
512
0.90
0.90
0.45
11.2%
12.3%
12.3%
23.4%
15.5%
7.3
1.6
7.8
6.9%
FY14E
2,667
558
0.99
0.99
0.49
9.5%
9.1%
9.1%
22.7%
15.6%
6.7
1.4
6.9
7.5%

JPM Q-Profile
Ports Design Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
8.79
12 Mth Forward EPS
35.00
1.60
30.00
1.40
25.00
1.20
20.00
1.00
0.85
0.80
15.00
0.60
10.00
0.40
5.00
18%
12Mth fwd EY
Current:
Hong Kong BY
12%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.00
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.20
May/97
0.00
Current:
-86.48%
1.50
Proxy
16%
1.00
14%
0.50
12%
10%
0.00
8%
-0.50
6%
-1.00
4%
PE (1Yr Forward)
Current:
8.5x
Price/Book Value
40.0x
18.0x
35.0x
16.0x
30.0x
14.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
-2.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
-1.50
May/97
Current:
PBV hist
2.2x
PBV Forward
12.0x
25.0x
10.0x
20.0x
8.0x
15.0x
6.0x
10.0x
ROE (Trailing)
Current:
24.69
9.0
45.00
8.0
40.00
7.0
35.00
6.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
50.00
30.00
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0x
May/97
2.0x
0.0x
Dec/97
4.0x
5.0x
May/97
0%
Dec/97
2%
Current:
7.75
5.0
25.00
4.0
20.00
3.0
15.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
0.0
Dec/97
1.0
0.00
May/97
5.00
May/97
2.0
10.00
Summary
Ports Design Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
638.49
2.357892 SEDOL
B03XK94
Latest
Min
Max
8.48x
6.40
36.74
2.24x
1.96
15.68
7.75
1.18
7.75
24.69
21.04
44.37
-86.5%
-1.45
0.71
Median
17.31
6.64
2.51
30.35
0.28
130
Average
18.98
6.96
2.72
31.47
0.19
2 S.D.+
33.91
13.73
5.35
45.67
1.08
2 S.D. 4.04
0.18
0.08
17.27
-0.71
% to Min
-24%
-12%
-85%
-15%
-68%
As Of:
Local Price:
EPS:
% to Max
% to Med
333%
104%
602%
197%
0%
-68%
80%
23%
182%
132%
22-Jun-12
8.79
0.85
% to Avg
124%
211%
-65%
27%
121%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Ports Design, headquartered in Xiamen China, is

a vertically integrated high-end fashion apparel
retailer. Its retail business operates under two
formatsPorts, its own brand, and BMW
Lifestyle, a licensed brand. Its target customers
are the emerging affluent middle class in China.
Ports Design also has 58% stake in a JV carrying
out Vivienne Tam business in the PRC, has nonexclusive license to distribute imported Armani
products and recently received an exclusive 15
year license to operate Ferrari concept stores in
the PRC and HK.
Average retail sales per store

EBITDA FY12 E
impact (%)
EPS FY12 E
impact (%)
-7.5%
-8.1%
-7.5%
-8.1%
-3.0%
-3.2%
-1.3%
-1.4%
Average no of stores
Our new Dec-12 PT is HK$7 based on 0.7x PEG and 10.5% two-year
earnings CAGR post 2012. We have not changed our PT method but due
to the revision in 2012 earnings and earnings CAGR we lower our PT by
27%.
OEM
4%
Others
2%
Retail
94%
Key upside risks include better than expected SSS growth and faster
network growth. Faster than expected network expansion or better than
expected sales efficiency of new stores will result in upside risks to our
retail sales growth forecasts and lead to upside risks to our 2012 earnings
estimates and PT. Lower than expected effective tax rates will pose upside
risks to our 2012 earnings estimates and PT.

J. P. Morgan
Consensus
FY12E
0.81
0.81
FY13E
0.90
0.92
FY14E
0.99
0.97
Peer Valuation Table

Company
Belle International
Parkson Retail
China Dongxiang^
Li Ning
Anta
Golden Eagle
Intime Stores^
Sector average
Ticker
1880 HK
3368 HK
3818 HK
2331 HK
2020 HK
3308 HK
1833 HK
Rating
OW
N
NR
UW
UW
OW
NR
Price
(HK$)
13.1
6.9
0.7
4.3
4.7
15.7
7.6
PT
(HK$)
15.50
7.50
4.50
4.00
22.50
Mkt Cap
(USD mn)
14,266
2,486
500
591
1,505
3,940
1,957
2011
21.3
14.1
31.5
9.7
5.5
21.0
14.5
16.8
P/E
2012E
19.3
13.7
8.1
13.9
6.6
18.8
13.2
13.4
2013E
15.7
12.0
7.4
9.2
7.6
15.1
11.3
11.2
P/B
2012E
4.0
2.7
0.4
1.0
1.4
4.8
1.7
2.3
2013E
3.5
2.4
0.4
0.9
1.3
4.1
1.5
2.0
Source: J.P. Morgan estimates, Bloomberg. Prices as of June 29, 2012. ^Bloomberg consensus estimates used for the company.
131
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Ports Design: Summary of Financials

Income Statement
FY10 FY11
Revenues
1,718 1,985
% change Y/Y
11.7% 15.5%
Gross Profit
1,360 1,629
% change Y/Y
8.4% 19.8%
Gross margin
79.1% 82.1%
EBITDA
561
613
% change Y/Y
4.0% 9.3%
EBITDA Margin
32.6% 30.9%
EBIT
498
526
% change Y/Y
0.5% 5.5%
EBIT Margin
29.0% 26.5%
Net Interest
11
12
Share of JVs
Earnings before tax
533
589
% change Y/Y
2.1% 10.6%
Tax
-61 -159
as % of EBT
11.5% 26.9%
473
430
% change Y/Y
1.0% -9.1%
461
428
% change Y/Y
4.7% -7.1%
EPS (reported)
0.84 0.76
% change Y/Y
0.8% (9.1%)
Recurring EPS
0.81 0.76
% change Y/Y
4.5% (7.1%)
Balance sheet
FY10 FY11
348
380
Accounts receivable
447
572
Inventories
545
633
Others
667
996
Current assets
2,007 2,580
Intangible assets
Net fixed assets
349
515
Other assets
47
68
Total Assets
2,402 3,163
Liabilities
Short-term loans
356
702
366
493
Others
23
117
745 1,312
Long-term debt
0
0
Others
8
7
Total Liabilities
754 1,319
1,649 1,833
BVPS
2.91 3.24
132
FY12E
2,190
10.3%
1,793
10.0%
81.9%
708
15.6%
32.4%
616
17.2%
28.2%
17
633
7.5%
-177
28.0%
456
6.0%
456
6.4%
0.81
6.0%
0.81
6.4%
FY13E
2,436
11.2%
2,002
11.7%
82.2%
787
11.1%
32.3%
690
12.0%
28.3%
21
711
12.3%
-199
28.0%
512
12.3%
512
12.3%
0.90
12.3%
0.90
12.3%
FY14E
2,667
9.5%
2,196
9.7%
82.3%
855
8.6%
32.0%
753
9.1%
28.2%
23
775
9.1%
-217
28.0%
558
9.1%
558
9.1%
0.99
9.1%
0.99
9.1%
Cash flow statement

PBT
Tax
Other
FY10
533
62
-164
-71
28
388

589
633
711
775
87
92
97
102
-154
-114
-85
-83
-88
-177
-199
-217
12
0
0
0
445
434
524
578
Capex
Other
-155
0
269
131
-183
0
-385
-567
-50
0
0
-50
-50
0
0
-50
-50
0
0
-50
Dividends paid
Other
45
-378
-418
-213
-965
17
346
-279
69
154
0
-228
0
-228
0
-256
0
-256
0
-279
0
-279
Net change in cash

Ending Cash
DPS
-446
348
0.49
32
380
0.38
156
535
0.40
218
754
0.45
248
1,002
0.49
FY10
79.1%
32.6%
29.0%
27.5%
26.9%
11.7%
1.0%
4.7%
0.8%
0.5%
0.66
1.50
31.5%
24.3%
FY11
82.1%
30.9%
26.5%
21.7%
21.6%
15.5%
-9.1%
-7.1%
(9.1%)
17.6%
0.71
1.44
24.7%
23.2%
FY12E
81.9%
32.4%
28.2%
20.8%
20.8%
10.3%
6.0%
6.4%
6.0%
8.1%
0.69
1.53
23.4%
23.3%
FY13E
82.2%
32.3%
28.3%
21.0%
21.0%
11.2%
12.3%
12.3%
12.3%
-2.2%
0.74
1.48
23.4%
23.9%
FY14E
82.3%
32.0%
28.2%
20.9%
20.9%
9.5%
9.1%
9.1%
9.1%
-11.6%
0.74
1.44
22.7%
23.8%
Ratio Analysis
FY12E FY13E FY14E Rmb in millions, year end Dec
535
396
440
482 EBITDA margin
685
749
996
996
996 Net margin
2,612 2,939 3,294 Recurring net profit margin
- Sales growth
473
426
68
68
3,153 3,433 3,736 EPS growth
Net debt to equity
702
702
702 Sales/assets
256
279
304 Assets/equity
117
117
117 ROE
1,074 1,098 1,122 ROCE
0
0
0
7
7
7
1,081 1,105 1,129
2,061 2,317 2,596
3.64
4.09
4.59

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Sa Sa International Holdings Limited

Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Sa Sa International Holdings Limited (Reuters: 0178.HK, Bloomberg: 178 HK)

FY11A
FY12A
FY13E
FY14E
Revenue (HK$ mn)
4,901
6,405
7,596
8,890
Net Profit (HK$ mn)
509
690
793
956
EPS (HK$)
0.18
0.25
0.28
0.34
DPS (HK$)
0.14
0.18
0.20
0.24
Revenue growth (%)
19.2%
30.7%
18.6%
17.0%
33.4%
35.4%
15.0%
20.5%
ROE
40.1%
46.2%
39.1%
36.4%
ROA
29.6%
31.8%
28.2%
27.5%
P/E (x)
26.6
19.7
17.2
14.3
P/BV (x)
10.0
8.4
5.6
4.8
EV/EBITDA (x)
19.3
13.8
11.3
9.6
Dividend Yield
2.9%
3.6%
4.1%
4.9%
2,819
13,673
1,762
4.85
29 Jun 12
34.5%
4,981,453.00
22.50
2.90
19,441
7.76
Mar
FY15E
10,523
1,161
0.41
0.29
18.4%
21.5%
37.8%
29.0%
11.7
4.1
7.8
6.0%
JPM Q-Profile
Sa Sa International Holdings Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
4.72
12 Mth Forward EPS
7.00
0.35
6.00
0.30
0.30
0.25
5.00
0.20
4.00
0.15
3.00
0.10
0.05
2.00
0.00
1.00
45%
12Mth fwd EY
Current:
Hong Kong BY
6%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
-0.10
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
-0.05
May/97
0.00
Current:
0.36%
1.50
Proxy
40%
1.00
35%
0.50
30%
25%
0.00
20%
-0.50
15%
-1.00
10%
PE (1Yr Forward)
Current:
15.9x
30.0x
Price/Book Value
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
-2.00
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
-1.50
Dec/97
0%
May/97
5%
Current:
14.0x
PBV hist
8.1x
PBV Forward
12.0x
25.0x
10.0x
20.0x
8.0x
6.0x
15.0x
4.0x
10.0x
2.0x
0.0x
5.0x
ROE (Trailing)
Current:
46.23
30.0
40.00
25.0
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
50.00
30.00
Dec/97
-4.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0x
May/97
-2.0x
Current:
1.25
20.0
20.00
15.0
10.00
10.0
0.00
5.0
-10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
-20.00
Summary
Sa Sa International Holdings Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
1694.02
2.899351 SEDOL
6003401
Specialty Retail
Latest
Min
15.87x
2.39
8.15x
0.52
1.25
0.65
46.23
-8.37
0.4%
-1.71
Max
25.06
12.82
23.91
46.23
0.68
Median
15.13
3.78
3.98
22.65
0.22
Average
14.41
3.97
4.88
17.74
0.15
2 S.D.+
24.36
9.81
12.60
52.14
0.88
2 S.D. 4.46
-1.86
-2.83
-16.66
-0.59
% to Min
-85%
-94%
-48%
-118%
-47167%
As Of:
Local Price:
EPS:
% to Max
58%
57%
1813%
0%
18477%
% to Med
-5%
-54%
219%
-51%
6078%
22-Jun-12
4.72
0.30
% to Avg
-9%
-51%
291%
-62%
3911%
133

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Sa Sa International is primarily
engaged in the retailing and
wholesaling of cosmetic products in
Hong Kong, Macau, China, Taiwan,
Singapore and Malaysia, with a total
store network of 227 stores and 22
counters as of Mar-12. There are three
classes of products at a Sa Sa store in
HK 1) Department store
products/parallel imports; 2) Local
agent products; & 3) Private label and
exclusively distributed products.
HK sales growth assumption
EBITDA FY13E
impact (%)
EPS FY13E
impact (%)
-11.1%
-10.7%
-7.1%
-7.1%
-7.9%
-7.8%

Source: JP Morgan estimates.
Our new Mar-13 PT is HK$5.3 based on 0.9x PEG and two-year

earnings CAGR of 21%. While we slightly lower our earnings
CAGR estimate from 22% to 21% we rolled forward the time frame
by 6 months and lifted FY13 estimates by 4%, hence our PT
changed only marginally. Sa Sa trades at 17x Mar-13 earnings and
currently we see c13% potential upside to our PT and would be
buyers of the stock on declines.
FY12 Revenue breakdown

SaSa.co
m
5%
Malaysia
4%
Singapo
re
4%
Taiwan
China
3%
5%
HK/Mac
au
79%
Key upside risks include higher-than-expected gross margins; key

downside risks include lower-than-expected transaction volume and
higher-than-expected losses of China market.

J. P. Morgan
Consensus
FY13E
0.28
0.29
FY14E
0.34
0.34
FY15E
0.41
0.40

Company
HK Retailers
Lifestyle
Chow Sang Sang^
Luk Fook*^
Giordano
I.T*^
Bonjour^
Sector average
Ticker
1212 HK
116 HK
590 HK
709 HK
999 HK
653 HK
Rating
OW
NR
NR
OW
OW
NR
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
16.9
15.0
16.1
5.5
3.4
1.1
19.00
3,631
1,309
1,220
1,085
530
433
6.50
5.50
2011
P/E
2012E
2013E
18.0
9.3
6.8
11.3
8.6
14.0
11.3
15.7
8.1
7.1
10.8
7.9
11.4
10.1
13.9
6.8
6.1
8.6
6.6
9.3
8.5
P/B
2012E
3.0
1.4
1.5
2.8
1.6
9.3
2.1
2013E
2.7
1.2
1.3
2.5
1.4
8.0
1.8
Source: Company reports, Bloomberg, J.P. Morgan estimates. Based on COB prices as at 29 June 2012. ^ Consensus estimates used for the company, * Next FY figures taken because FY ends
in the period Jan-May
134

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Sa Sa International Holdings Limited: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Other income (expense)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
EPS (reported)
% change Y/Y
FY11
4,901
19.2%
2,212
21.9%
45.1%
676
29.2%
13.8%
597
29.5%
12.2%
11
5
614
31.7%
-104
17.0%
509
33.4%
0.18
32.2%
Balance sheet
Accounts receivable
Inventories
Others
Current assets

618
599 1,236 1,278 1,700
48
70
54
92
81
802 1,191 1,084 1,574 1,564
91
136
136
136
136
1,560 1,996 2,510 3,079 3,481
Intangible assets
Net fixed assets
Other assets
Total Assets
0
0
205
333
111
138
1,877 2,466
0
507
138
3,155
0
577
138
3,794
Liabilities
Short-term loans
0
0
254
451
Others
251
357
506
808
Long-term debt
0
0
Others
0
0
Total Liabilities
524
836
Minorities
0
0
1,353 1,631
BVPS
0.48 0.58
0
346
357
703
0
0
731
0
2,424
0.86
0
585
357
942
0
0
970
0
2,824
1.01
FY12
6,405
30.7%
2,897
31.0%
45.2%
945
39.8%
14.8%
828
38.7%
12.9%
0
6
835
36.1%
-145
17.4%
690
35.4%
0.25
34.7%
FY13E
7,596
18.6%
3,444
18.9%
45.3%
1,098
16.1%
14.5%
972
17.3%
12.8%
0
8
979
17.3%
-186
19.0%
793
15.0%
0.28
15.0%
FY14E
8,890
17.0%
4,040
17.3%
45.4%
1,291
17.6%
14.5%
1,161
19.5%
13.1%
0
19
1,180
20.5%
-224
19.0%
956
20.5%
0.34
20.5%
FY15E
10,523
18.4%
4,796
18.7%
45.6%
1,545
19.6%
14.7%
1,414
21.7%
13.4%
0
19
1,433
21.5%
-272
19.0%
1,161
21.5%
0.41
21.5%
Cash flow statement

PBT
Taxes
Other
FY11
614
79
-156
-92
769
443

835
979 1,180 1,433
117
126
130
131
-153
18
-288
-51
-145
-186
-224
-272
1,067 1,224 1,421 1,676
651
930
779 1,221
Capex
Disposal/(purchase)
Others
-137
1
171
35
-247
0
10
-237
-300
0
8
-292
-200
0
19
-181
-150
0
19
-131
Dividends paid
Other
28
0
-391
363
-363
1
0
-435
434
-434
0
0
0
0
0
0
0
-555
555
-555
0
0
-669
669
-669
Net change in cash

FX effect
Ending cash
DPS
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net profit margin
115
17
524
0.14
-20
0
505
0.18
637
0
1,142
0.20
42
0
1,184
0.24
422
0
1,606
0.29
Sales growth
0 Net profit growth
596 EPS growth
138
4,215 Interest coverage (x)
Net debt to equity
Sales/assets
0 Assets/equity
514 ROE
357 ROCE
871
0
0
899
0
3,316
1.18
FY11
45.1%
13.8%
12.2%
10.4%

45.2% 45.3% 45.4% 45.6%
14.8% 14.5% 14.5% 14.7%
12.9% 12.8% 13.1% 13.4%
10.8% 10.4% 10.8% 11.0%
19.2%
33.4%
32.2%
30.7%
35.4%
34.7%
18.6%
15.0%
15.0%
17.0%
20.5%
20.5%
18.4%
21.5%
21.5%
-45.7% -36.7% -51.0% -45.3% -51.3%

2.84
2.95
2.70
2.56
2.63
1.32
1.51
1.30
1.34
1.27
40.1% 46.2% 39.1% 36.4% 37.8%
47.1% 55.5% 47.9% 44.3% 46.1%
135

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Tibet 5100 Water Resources Holdings Ltd

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Tibet 5100 Water Resources Holdings Ltd (Reuters: 1115.HK, Bloomberg: 1115 HK)
FY10A
FY11E
FY12E
FY13E
FY14E
Revenue (Rmb mn)
361
633
814
1,032
1,266
Net Profit (Rmb mn)
115
373
440
582
589
Recurring Profit (Rmb mn)
113
268
336
451
564
EPS (Rmb)
0.06
0.16
0.17
0.23
0.23
DPS (Rmb)
Revenue growth (%)
67.1%
75.6%
28.6%
26.7%
22.8%
150.8%
137.4%
25.6%
34.1%
25.2%
EPS growth (%)
143.5%
186.4%
5.9%
32.2%
1.2%
ROE
51.4%
34.9%
21.4%
23.3%
19.7%
P/E (x)
21.5
7.5
7.1
5.4
5.3
P/BV (x)
8.7
1.5
1.4
1.1
1.0
EV/EBITDA (x)
39.1
11.4
8.2
5.7
5.2
Dividend Yield
-
2,569
3,115
490
1.48
29 Jun 12
30.8%
5.31
9.26
1.21
19,025
7.76
Dec
JPM Q-Profile
Tibet 5100 Water Resources Holdings Ltd. (HONG KONG / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
1.46
4.50
12 Mth Forward EPS
Current:
0.22
0.25
4.00
0.20
3.50
3.00
0.15
2.50
2.00
0.10
1.50
1.00
20%
12Mth fwd EY
Current:
Hong Kong BY
18%
Dec/11
Oct/10
Current:
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
0.00
Dec/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
May/97
0.05
0.50
-187.29%
0.50
Proxy
18%
0.00
16%
14%
-0.50
12%
10%
-1.00
8%
-1.50
6%
4%
PE (1Yr Forward)
Current:
5.5x
16.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
Price/Book Value
Current:
6.0x
14.0x
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-2.50
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0%
May/97
-2.00
2%
PBV hist
1.7x
PBV Forward
5.0x
12.0x
4.0x
10.0x
8.0x
3.0x
6.0x
2.0x
4.0x
ROE (Trailing)
Current:
34.91
60.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
0.0x
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0x
May/97
1.0x
2.0x
Current:
1.79
2.0
1.8
50.00
1.6
1.4
40.00
1.2
1.0
30.00
0.8
20.00
0.6
0.4
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.2
May/97
0.00
Summary
Tibet 5100 Water Resources Holdings Ltd.
496.61
HONG KONG
1.471397 SEDOL
B5BQTQ0
Consumer Staples
Beverages
Latest
Min
5.50x
12mth Forward PE
5.50
P/BV (Trailing)
1.66x
1.66
1.79
0.00
ROE (Trailing)
34.91
34.04
-187.3%
-1.87
Max
13.61
5.47
1.79
51.44
-0.01
Median
7.41
2.35
1.44
34.91
-1.12
136
Average
8.16
3.06
0.89
40.97
-0.99
2 S.D.+
12.69
5.69
2.61
57.89
0.09
2 S.D. 3.64
0.42
-0.83
24.05
-2.08
% to Min
0%
0%
-100%
-3%
0%
As Of:
Local Price:
EPS:
% to Max
147%
230%
0%
47%
99%
% to Med
35%
42%
-20%
0%
40%
22-Jun-12
1.46
0.22
% to Avg
48%
84%
-50%
17%
47%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Tibet 5100 Water Resource Holdings Ltd

(Tibet 5100) is a leading manufacturer of
premium bottled mineral water under the
5100 Tibet Glacier Spring Water" or
"5100" brand in China. CRE, the
procurement agent of MOR, is the single
largest customer of Tibet 5100 and
accounted for 80.5% of its revenue in
2010.
Sales volume for water cards
EBIT
impact (%)
Core EPS
impact (%)
2.9%
2.9%
2.1%
2.1%
2.6%
2.5%

PET prices
Transportation costs
Our Dec-12 PT of HK$2.2 (lowered from HK$2.6) is based on DCF

methodology, using 15.5% cost of equity (risk free rate of 5%, equity
risk premium of 7% and beta of 1.5) and 2.0% terminal growth
rate,( the bottled water volume growth rate in the U.S. in 2010). We
believe the U.S. market is a good proxy for the growth rate for a
matured market. We use a two-stage DCF model30% core earnings
CAGR over 2012-2014E and 3% core earnings CAGR over 20152021E. Our Dec-12 price target is lowered to HK$2.2 from HK$2.6 due
to the earnings revision. At our target price, Tibet 5100 would be
trading at 10x 2012E reported earnings and 14x 2012E core earnings.
Non
CRE
19%
CRE
81%
Risk free rate:
5%
Market risk premium:
7%
Beta:
1.5
Cost of equity
15.5%
Terminal "g":
2.0%
Source: Company.

Rmb
FY12E
J.P. Morgan
0.13
Consensus
0.20
FY13E
0.18
0.25
FY14E
0.22
NA
Key downside risks to our TP would be any quality issue with the water
source as the company relies on single water source to produce all of its
products. Also, any political and social changes in Tibet would be
another risk to the company.
Source: Bloomberg, JPMorgan estimates

Company
Tibet 5100 Water
Want Want China
Hengan Intl
CRE
Tsingtao Beer - H
China Mengniu Diary
China Foods
Uni-president
China Yurun
Huabao International
Sector average
Ticker
1115 HK
151 HK
1044 HK
291 HK
168 HK
2319 HK
506 HK
220 HK
1068 HK
336 HK
Rating
OW
N
UW
N
UW
OW
OW
UW
UW
N
Price
(HK$)
1.5
9.5
75.0
23.0
44.1
20.4
7.6
7.2
6.8
3.8
PT
(HK$)
2.20
7.60
53.00
24.50
33.00
25.00
8.40
5.00
7.60
3.70
Mkt Cap
(US$m)
490
16,201
11,876
7,102
7,902
4,638
2,742
3,341
1,586
1,540
2011
10.4
38.6
34.7
29.1
28.1
17.0
32.9
68.1
11.5
6.8
27.7
P/E (x)
2012E
9.3
28.4
25.3
23.0
24.4
16.3
23.8
33.7
9.2
6.5
20.0
2013E
6.9
23.3
21.3
18.9
20.6
13.8
18.5
25.4
7.1
5.9
16.2
EV/EBITDA
2012E
3.5
19.1
17.7
6.3
13.5
7.6
11.1
16.1
5.5
4.6
10.5
ROE
2012E
21.4
39.6
28.0
8.8
16.7
13.0
12.8
9.0
9.5
26.4
18.5
P/B (x)
2012E
1.4
10.5
6.8
1.4
3.8
2.3
2.9
2.9
0.7
1.6
3.4
Yld (%)
2012E
0.0%
2.2%
2.6%
2.4%
0.6%
1.2%
1.5%
0.9%
3.2%
4.6%
1.9%
Source: J.P. Morgan estimates, Bloomberg. Share prices are as of close of 29 Jun 2012. Huabao is March year end, using annualized P/E.
137

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Tibet 5100 Water Resources Holdings Ltd: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY09
216
80.6%
124
107.5%
57.6%
67
166.3%
31.2%
55
203.7%
25.5%
-4
51
292.6%
-3
6.8%
47
323.0%
45
300.8%
0.02
321.8%
0.02
300.8%
FY10
361
67.1%
232
86.8%
64.4%
150
122.7%
41.6%
135
145.3%
37.4%
-2
133
160.8%
-17
13.2%
115
142.9%
113
150.8%
0.06
143.5%
0.06
150.8%
FY11E
633
75.6%
499
114.8%
78.8%
457
204.8%
72.2%
441
227.4%
69.6%
14
455
242.9%
-82
18.0%
373
223.8%
268
137.4%
0.16
186.4%
0.12
110.1%
FY12E
814
28.6%
649
30.2%
79.7%
529
15.7%
64.9%
505
14.5%
62.0%
14
519
14.1%
-79
15.2%
440
18.0%
336
25.6%
0.17
5.9%
0.13
12.7%
FY13E
1,032
26.7%
825
27.1%
80.0%
690
30.4%
66.8%
656
29.9%
63.6%
31
688
32.5%
-106
15.4%
582
32.2%
451
34.1%
0.23
32.2%
0.18
34.1%
Cash flow statement

PBT
Tax
Other
138

133
455
519
688
15
16
24
33
-57
-373
-109
-123
-21
-61
-82
-79
0 1,114
588
30
93
157
940
549
Capex
Sale of assets
Other
-82
-48
-62
-17
-90
-601
-50
-75
-100
-150
Dividends paid
Other
-37
5
-79
-104
0
-0
0
-0
0
-0
Net change in cash

FX gain/(loss)
Ending cash
DPS
17
64
-
-28
35
-
670
705
-
865
1,569
-
399
1,968
-
FY09 FY10 FY11E

57.6% 64.4% 78.8%
31.2% 41.6% 72.2%
22.0% 32.0% 58.9%
20.8% 31.3% 42.3%
80.6% 67.1% 75.6%
323.0% 142.9% 223.8%
321.8% 143.5% 186.4%
FY12E
79.7%
64.9%
54.1%
41.3%
28.6%
18.0%
5.9%
FY13E
80.0%
66.8%
56.4%
43.7%
26.7%
32.2%
32.2%
Ratio Analysis
35
705 1,569 1,968 Gross margin
72
356
467
560 EBITDA margin
32
22
27
34 Operating margin
54 1,357 1,616 1,961 Net margin
158 1,736 2,110 2,555 Recurring net profit margin
- Sales growth
- Net profit growth
292
283
309
9
17
16
18 EPS growth
460 2,036 2,435 2,949
Net debt to equity
Liabilities
Sales/assets
Short-term loans
9
0
0
0
0 Assets/equity
23
15
49
59
71 ROE
Others
145
151
111
107
113 ROCE
177
165
161
166
185
Long-term debt
70
0
0
0
0
Others
0
12
22
14
18
Total Liabilities
247
177
182
180
203
Minorities
165
283 1,854 2,254 2,746
BVPS
0.08
0.14
0.80 0.88 1.07
FY09
64
43
20
99
162
246
5
412
FY09
51
12
-2
-3
0
60
9.1% -12.3% -38.0% -69.6% -71.7%

0.55
0.83
0.51
0.36
0.38
2.50
1.62
1.10
1.08
1.07
33.5% 51.4% 34.9% 21.4% 23.3%
23.0% 51.1% 41.3% 24.6% 26.2%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Tingyi (Cayman Islands) Holding Corp

Company Data
Shares O/S (mn)
Market cap ($ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Tingyi (Reuters: 0322.HK, Bloomberg: 322 HK)

FY10A
FY11A
Revenue ($ mn)
6,681
7,867
EPS ($)
0.085
0.075
Recurring EPS ($)
0.073
0.068
DPS ($)
0.043
0.038
Revenue growth (%)
31.5%
17.7%
24.4%
-12.0%
6.4%
-6.7%
ROE
29.0%
21.4%
P/E (x)
29.9
34.0
P/BV (x)
7.8
6.8
EV/EBITDA (x)
13.6
15.4
Dividend Yield
1.7%
1.5%
5,592
14,283
14,283
19.82
29 Jun 12
33.4%
7.44
149.83
23.15
5,329
7.76
Dec
FY12E
11,001
0.095
0.078
0.048
39.9%
26.9%
14.8%
23.5%
26.8
5.9
11.7
1.9%
FY13E
13,734
0.103
0.103
0.051
24.8%
7.8%
31.4%
22.3%
24.9
5.2
10.6
2.0%
FY14E
16,356
0.131
0.131
0.066
19.1%
27.9%
27.9%
24.8%
19.5
4.5
8.0
2.6%
JPM Q-Profile
Tingyi (Cayman Islands) Holding Corp. (CHINA / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
19.28
30.00
12 Mth Forward EPS
Current:
0.10
0.14
0.12
25.00
0.10
0.08
20.00
0.06
15.00
0.04
10.00
0.02
5.00
-0.02
0.00
25%
12Mth fwd EY
Current:
China BY
4%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
-0.06
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
-0.04
May/97
0.00
51.82%
1.50
Proxy
1.00
20%
0.50
15%
0.00
10%
-0.50
5%
Current:
24.4x
12.0x
40.0x
10.0x
35.0x
8.0x
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Price/Book Value
45.0x
30.0x
Dec/97
-1.50
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
PE (1Yr Forward)
Aug/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-1.00
May/97
Current:
PBV hist
5.6x
PBV Forward
6.0x
25.0x
4.0x
20.0x
Dec/11
May/11
Oct/10
Mar/10
Dec/11
Oct/10
1.58
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Current:
Jun/01
Nov/00
Apr/00
Sep/99
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Feb/99
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
0.0
Jan/02
10.0
-20.00
Jun/01
20.0
-10.00
Apr/00
30.0
0.00
Nov/00
40.0
10.00
Sep/99
50.0
20.00
Feb/99
60.0
30.00
Jul/98
40.00
Dec/97
70.0
May/97
Jul/98
Jul/98
22.33
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Current:
50.00
Dec/97
ROE (Trailing)
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
-4.0x
Jul/98
-2.0x
0.0x
Dec/97
0.0x
5.0x
May/97
10.0x
May/97
2.0x
15.0x
May/97
0%
Summary
Tingyi (Cayman Islands) Holding Corp.
13895.13
CHINA
20.64389 SEDOL
6903556
Consumer Staples
Food Products
Latest
Min
24.36x
12mth Forward PE
P/BV (Trailing)
5.59x
0.56
1.58
0.00
22.33
ROE (Trailing)
-7.87
51.8%
-0.93
Max
Median
Average
2 S.D.+
2 S.D. -
9.86
59.98
43.81
1.00
2.62
3.12
17.39
0.50
4.01
5.74
16.90
0.38
9.94
27.53
42.51
1.12
-1.92
-16.06
-8.70
-0.36
As Of:
Local Price:
EPS:
% to Min
% to Max
-90%
-100%
-135%
-279%
76%
3696%
96%
93%
% to Med
22-Jun-12
19.28
0.10
% to Avg
-53%
97%
-22%
-3%
-28%
263%
-24%
-27%
139

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Tingyi (Cayman Islands) Holding Corp. specializes

in the production and distribution of instant noodles,
beverages and baked goods in the People's
Republic of China. The company operates primarily
in four business segments: instant noodles,
beverages, bakery and other businesses. As per the
Dec 2011 survey of ACNielsen, the Group holds the
leading position in the market of instant noodles and
RTD tea, with market share of 40.9% and 50.0% by
volume, respectively. The companys products are
marketed under the Master Kong brand name.
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-12.5%
-21.8%
-1.5%
-2.6%
-1.2%
-2.0%

Palm oil price
Our Dec-12 PT of HK$16.5 based on SOTP. We value existing Tingyi

business at HK$16 based on 1x PEG and 25% two-year earnings
CAGR post 2012 and Pepsi business at HK$ 0.3 based on DCF.
Bakery
2%
Others
1%
Instant
noodles
46%
Beverag
e
51%
Key upside risks to our PT are a deep unexpected cut in distribution

costs in remainder of 2012, and a sharp decline in input costs across the
board, while downside risks are a sudden slowdown in sales growth and
longer than expected turn-around time for acquired Pepsi biz.

J. P. Morgan
Consensus
2012E
0.078
0.089
2013E
0.103
0.108
2014E
0.131
0.134
Table 66: Peer comparison valuation

Company
China Mengniu Dairy
China Yurun
Huabao*
Tsingtao
Unipresident China
Sector average
Ticker
2319 HK
291 HK
1068 HK
1044 HK
336 HK
168 HK
220 HK
Rating
OW
N
UW
UW
N
UW
UW
Price
(HK$)
20.4
23.0
6.8
75.0
3.8
44.1
7.2
PT
(HK$)
25.00
24.50
7.60
53.00
3.70
33.00
5.00
Mkt Cap
(US$ MM)
4,638
7,102
1,586
11,876
1,540
7,902
3,341
2011
17.0
29.1
11.5
34.7
6.8
28.1
68.1
27.9
Source: J.P. Morgan estimates, Bloomberg. *Next yr estimates taken since FY ends in Jan-May. Prices as of June 29, 2012 close
140
P/E
2012E
16.3
23.0
9.2
25.3
6.5
24.4
33.7
19.8
2013E
13.8
18.9
7.1
21.3
5.9
20.6
25.4
16.2
P/B
2012E
2.3
1.4
0.7
6.8
1.6
3.8
2.9
2.8
2013E
2.1
1.4
0.7
6.1
1.3
3.2
2.7
2.5

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Tingyi (Cayman Islands) Holding Corp: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
6,681
7,867 11,001 13,734 16,356
31.5% 17.7% 39.9% 24.8% 19.1%
1,899
2,088 3,091 3,992 4,862
8.0%
9.9% 48.0% 29.2% 21.8%
28.4% 26.5% 28.1% 29.1% 29.7%
994
939 1,200 1,299 1,624
22.1% -5.5% 27.8% 8.3% 25.0%
14.9% 11.9% 10.9% 9.5% 9.9%
714
618
805
868 1,169
16.6%
NM 30.3% 7.8% 34.6%
10.7%
7.9% 7.3% 6.3% 7.1%
15
29
20
33
57
10
0
0
0
747
663
825
902 1,226
19.5% -11.2% 24.5% 9.3% 35.9%
-134
-163
-173
-225
-302
18.0% 24.6% 21.0% 25.0% 24.6%
-136
-80
-120
-103
-191
162
131
286
170
205
477
420
532
574
733
24.4% -12.0% 26.9% 7.8% 27.9%
408
381
437
574
733
6.4% -6.7% 14.8% 31.4% 27.9%
0.085
0.075 0.095 0.103 0.131
24.3% (12.0%) 26.8% 7.9% 27.8%
0.073
0.068 0.078 0.103 0.131
6.4% (6.7%) 14.8% 31.4% 27.9%
Cash flow statement

PBT
Tax
Other

663
825
902 1,226
321
395
431
455
-160
280
238
227
-163
-173
-225
-302
-105
-27
-42
-65
556 1,299 1,303 1,540
Capex
Sale of assets
Other
-966
33
1
-31
-963
-1,349
39
-1,311
-800
111
-689
-800
42
-758
-600
65
-535
Dividends paid
Other
298
-192
-54
52
616
-239
-0
377
0
-210
0
-210
0
-266
0
-266
0
-287
0
-287
349
24
893
0.043
-377
189
705
0.038
401
1,106
0.048
279
1,385
0.051
719
2,104
0.066
FY10
FY11 FY12E
28.4% 26.5% 28.1%
14.9% 11.9% 10.9%
10.7%
7.9% 7.3%
7.1%
5.3% 4.8%
6.1%
4.8% 4.0%
31.5% 17.7% 39.9%
24.4% -12.0% 26.9%
6.4% -6.7% 14.8%
24.3% (12.0%) 26.8%
FY13E
29.1%
9.5%
6.3%
4.2%
4.2%
24.8%
7.8%
31.4%
7.9%
FY14E
29.7%
9.9%
7.1%
4.5%
4.5%
19.1%
27.9%
27.9%
27.8%
Net change in cash

FX gain/(loss)
Ending cash
DPS
Ratio Analysis
FY11 FY12E FY13E FY14E $ in millions, year end Dec
600 1,001 1,280 1,999 Gross margin
155
217
271
322 EBITDA margin
313
428
527
368
515
643
765 Net margin
0
8
8
8 Sales growth
291
445
442
4,030 4,439 4,812 4,961 Recurring net profit growth
52
52
52
52 EPS growth
5,809 7,105 8,034 9,167
Net debt to equity
Liabilities
Sales/assets
Short-term loans
457
701
701
701
701 Assets/equity
1,084
974 1,333 1,642 1,938 ROE
Others
685
753
997 1,207 1,407 ROCE
2,225
2,428 3,031 3,549 4,045
Long-term debt
177
549
549
549
549
Others
120
145
145
145
145
Total Liabilities
2,522
3,123 3,726 4,244 4,740
Minorities
548
587
957 1,060 1,250
1,821
2,100 2,422 2,730 3,177
BVPS
0.33
0.38
0.43
0.49
0.57
FY10
893
128
310
357
1,688
0
230
2,923
50
4,891
FY10
747
280
350
-129
14
1,260
-14.2%
1.61
2.31
29.0%
33.6%
31.0% 10.3% -1.1% -23.6%

1.47
1.70
1.81
1.90
2.31
2.93
2.94
2.89
21.4% 23.5% 22.3% 24.8%
21.3% 22.9% 22.7% 27.8%
141

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Tsingtao Brewery A & H

Tsingtao Brewery (Reuters: 600600.SS, 0168.HK; Bloomberg: 600600 CH, 168 HK)
FY10A
FY11A
FY12E
FY13E
FY14E
Revenue (Rmb mn)
19,898
23,158
26,508
30,235
34,452
Net Profit (Rmb mn)
1,520
1,738
2,000
2,365
2,777
EPS (Rmb)
1.13
1.29
1.48
1.75
2.06
DPS (Rmb)
0.16
0.18
0.22
0.26
0.31
Revenue growth (%)
10.4%
16.4%
14.5%
14.1%
14.0%
21.6%
14.3%
15.1%
18.2%
17.4%
EPS growth (%)
18.4%
14.3%
15.1%
18.2%
17.4%
ROE
17.1%
16.8%
16.7%
17.0%
17.1%
ROA
9.3%
8.8%
8.8%
9.5%
10.1%
P/E (x) -A Share
33.9
29.7
25.8
21.8
18.6
P/E (x) -H Share
32.1
28.1
24.4
20.6
17.6
P/BV (x) -A Share
5.4
4.6
4.0
3.4
3.0
P/BV (x) -H Share
5.1
4.4
3.8
3.3
2.8
EV/EBITDA (x) -A Share
16.0
15.2
12.8
10.9
9.3
EV/EBITDA (x) -H Share
16.0
15.2
12.8
10.9
9.3
Dividend Yield -A Share
0.4%
0.5%
0.6%
0.7%
0.8%
Dividend Yield -H Share
0.4%
0.5%
0.6%
0.7%
0.9%
A-shares H-shares
696
655
Rmb26,577 Rmb23,670
$4,175
$3,719
Rmb38.19
HK$44.05
29 Jun 12
29 Jun 12
36.9%
43.6%
2.51
2.15
Shares O/S
Market cap
Market cap
Price
Date Of Price
Free float (%)
3mth Avg daily
volume
3M - Average
daily Value
Average 3m Daily
Turnover
MSCI-Cnx
Exchange Rate
Fiscal Year End
92.26
100.49
$13.68
$7.64
5,329
6.37
Dec
5,329
7.76
Dec

JPM Q-Profile
Tsingtao Brewery Co. Ltd. (CHINA / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
38.90
12 Mth Forward EPS
50.00
2.00
45.00
1.80
40.00
1.60
35.00
1.40
30.00
1.20
25.00
1.00
20.00
1.69
0.80
15.00
0.60
10.00
0.40
5.00
6%
12Mth fwd EY
Current:
China BY
4%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.20
May/97
0.00
Current:
48.89%
1.00
Proxy
0.90
5%
0.80
0.70
4%
0.60
3%
0.50
0.40
2%
0.30
0.20
1%
PE (1Yr Forward)
Current:
23.0x
80.0x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
Price/Book Value
Current:
12.0x
70.0x
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.00
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.10
May/97
0%
PBV hist
4.5x
PBV Forward
10.0x
60.0x
8.0x
50.0x
40.0x
6.0x
30.0x
4.0x
20.0x
ROE (Trailing)
Current:
16.65
25.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
0.0x
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0x
May/97
2.0x
10.0x
Current:
0.69
3.0
2.5
20.00
2.0
15.00
1.5
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.5
0.00
May/97
1.0
5.00
Summary
Tsingtao Brewery Co. Ltd.
CHINA
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
8280.87
14.440856 SEDOL
6902854
Beverages
Latest
Min
22.96x
19.76
4.55x
2.01
0.69
0.00
16.65
2.84
48.9%
0.41
Max
75.00
10.05
2.85
19.12
0.86
Median
28.94
3.38
1.09
7.51
0.59
142
Average
32.87
3.85
1.11
8.82
0.60
2 S.D.+
58.46
6.84
2.46
19.28
0.83
2 S.D. 7.27
0.87
-0.23
-1.63
0.37
% to Min
-14%
-56%
-100%
-83%
-17%
As Of:
Local Price:
EPS:
% to Max
% to Med
227%
26%
121%
-26%
311%
57%
15%
-55%
76%
21%
22-Jun-12
38.90
1.69
% to Avg
43%
-15%
61%
-47%
23%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
JPM Q-Profile
Tsingtao Brewery Co. Ltd. (CHINA / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
46.60
12 Mth Forward EPS
60.00
2.00
50.00
1.50
40.00
1.00
30.00
0.50
20.00
Current:
1.59
0.00
10.00
-0.50

12%
12Mth fwd EY
Current:
China BY
4%
Current:
Dec/11
O ct/10
May/11
M ar/10
Jan/09
Aug/09
Jun/08
A pr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
O ct/03
May/04
M ar/03
Jan/02
Aug/02
Jun/01
A pr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
-1.00
May/97
D ec/11
Oct/10
M ay/11
Mar/10
Jan/09
A ug/09
Jun/08
Apr/07
N ov/07
S ep/06
Jul/05
Feb/06
D ec/04
Oct/03
M ay/04
Mar/03
Jan/02
A ug/02
Jun/01
Apr/00
N ov/00
S ep/99
Jul/98
Feb/99
D ec/97
M ay/97
0.00
51.05%
0.90
Proxy
0.80
10%
0.70
8%
0.60
0.50
6%
0.40
4%
0.30
2%
0.20
0.10
PE (1Yr Forward)
Current:
24.0x
70.0x
Price/Book Value
Dec/11
Oct/10
May/11
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.00
May/97
Dec/11
May/11
O ct/10
M ar/10
Aug/09
Jan/09
Jun/08
Nov/07
A pr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
O ct/03
M ar/03
Aug/02
Jan/02
Jun/01
Nov/00
A pr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0%
Current:
8.0x
PBV hist
4.6x
PBV Forward
7.0x
60.0x
6.0x
50.0x
5.0x
40.0x
4.0x
3.0x
30.0x
2.0x
1.0x
20.0x
0.0x
10.0x
-1.0x
0.0x
Dec/11
May/11
Oct/10
May/11
0.65
Dec/11
Mar/10
Oct/10
Mar/10
A ug/09
Jan/09
Jun/08
Nov/07
Apr/07
S ep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
A ug/02
Jan/02
Current:
Jun/01
Nov/00
Apr/00
S ep/99
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Feb/99
May/97
Dec/11
May/11
Oct/10
Mar/10
A ug/09
Jan/09
Jun/08
Nov/07
Apr/07
S ep/06
Feb/06
Jul/05
Dec/04
Oct/03
0.0
May/04
1.0
0.00
Mar/03
2.0
2.00
A ug/02
3.0
4.00
Jan/02
4.0
6.00
Jun/01
5.0
8.00
Nov/00
6.0
10.00
Apr/00
7.0
12.00
S ep/99
8.0
14.00
Feb/99
9.0
16.00
Jul/98
18.00
Dec/97
10.0
May/97
Dec/97
Jul/98
16.78
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Current:
20.00
Dec/97
ROE (Trailing)
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
-2.0x
Summary
Tsingtao Brewery Co. Ltd.
CHINA
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
8113.54
10.568254 SEDOL
6905808
Beverages
Latest
Min
23.98x
9.88
4.64x
0.26
0.65
0.00
16.78
1.74
51.1%
0.03
Max
59.82
7.02
8.72
18.82
0.83
Median
24.52
2.39
1.68
7.06
0.55
Average
25.38
2.77
2.09
8.97
0.54
2 S.D.+
41.93
6.35
5.50
19.87
0.81
2 S.D. 8.83
-0.80
-1.31
-1.92
0.26
As Of:
22-Jun-12
Local Price:
46.60
EPS:
1.59
% to Min % to Max % to Med % to Avg
-59%
149%
2%
6%
-94%
51%
-49%
-40%
-100%
1238%
158%
221%
-90%
12%
-58%
-47%
-95%
63%
7%
5%
143

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Tsingtao Brewery Co. Ltd. is engaged in

brewing and sales of beer, and other related
businesses. Its principal brand is Tsingtao and
secondary brands consist of Shanshui, Hans
and Laoshan. Together these made up 90% of
the company's revenues in FY11. As of 31
Dec 2011 Tsingtao had a market share of
14.2% by volume in China's brewery market,
making it one of the largest brewers in China.
Packaging costs
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
2.1%
2.4%
0.7%
0.8%
-7.7%
-8.8%

Barley cost per tonne
SG&A expenses as % of sales
Our Dec-12 PT of HK$33 is based on 1x PEG and 17.8% earnings

CAGR post 2012.

Other
brands
10%
Secondar
y brands
34%
Principal
brand
56%
-We assumed barley costs to be flat to mildly up in 2012. If barley

costs weaken this will present upside risks to our 2012 estimates and
PT.
-If the management spends more A&P on second tier brands this will
present downside risks to our 2012 estimates and PT.

J. P. Morgan
Consensus
FY12E
1.48
1.51
FY13E
1.75
1.79
FY14E
2.06
2.14
Figure 63: Peer comparison valuation

Company
China Beer Universe
Beijing Yanjing Brewery^
CRE
China Staples Universe
China Huiyuan
China Yurun
China Foods^
Huabao International*
Tingyi
Ticker
Rating
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
2011
P/E
2012E
2013E
2013E
000729 CH
291 HK
NR
N
7.3
23.0
24.50
2,898
7,102
21.6
29.1
18.1
23.0
15.1
18.9
~
1.4
~
1.4
1886 HK
1068 HK
506 HK
336 HK
1044 HK
322 HK
N
UW
OW
N
UW
N
2.8
6.8
7.6
3.8
75.0
19.8
5.00
7.60
8.40
3.70
53.00
16.50
526
1,586
2,742
1,540
11,876
14,289
22.8
11.5
32.9
6.8
34.7
37.5
13.1
9.2
23.8
6.5
25.3
32.7
~
7.1
18.5
5.9
21.3
24.9
0.5
0.7
2.9
1.6
6.8
5.9
~
0.7
2.7
1.3
6.1
5.2
Source: J.P. Morgan estimates, Bloomberg. ^ Consensus estimates used for the company. *Next yr estimates taken since FY ends in Jan-May. Prices as of June 29, 2012.
144
P/B
2012E
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Tsingtao Brewery: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
Cash flow statement

PBT
Tax
Other
FY10 FY11
19,898 23,158
10.4% 16.4%
7,000 7,717
13.0% 10.2%
35.2% 33.3%
2,562 2,816
13.4%
9.9%
12.9% 12.2%
2,003 2,118
17.1%
5.7%
10.1%
9.2%
-5
36
10
4
2,123 2,455
22.1% 15.6%
-539
-657
25.4% 26.8%
-64
-60
115
333
1,520 1,738
21.6% 14.3%
1,520 1,738
21.6% 14.3%
1.13
1.29
18.4% 14.3%
1.13
1.29
18.4% 14.3%
FY12E
26,508
14.5%
9,021
16.9%
34.0%
3,376
19.9%
12.7%
2,553
20.5%
9.6%
43
10
2,797
13.9%
-713
25.5%
-83
234
2,000
15.1%
2,000
15.1%
1.48
15.1%
1.48
15.1%
FY13E
30,235
14.1%
10,402
15.3%
34.4%
3,940
16.7%
13.0%
3,055
19.7%
10.1%
41
10
3,307
18.2%
-843
25.5%
-99
242
2,365
18.2%
2,365
18.2%
1.75
18.2%
1.75
18.2%
FY14E
34,452
14.0%
11,911
14.5%
34.6%
4,541
15.3%
13.2%
3,609
18.1%
10.5%
52
10
3,883
17.4%
-990
25.5%
-116
265
2,777
17.4%
2,777
17.4%
2.06
17.4%
2.06
17.4%
FY10 FY11
7,598 6,108
90
88
1,942 2,718
264
670
9,895 9,583
1,442 3,460
153
152
5,797 7,832
491
606
17,777 21,634
FY12E
5,638
101
2,928
670
9,337
3,334
252
10,119
606
23,647
FY13E
5,890
115
3,335
670
10,011
3,207
352
11,844
606
26,019
FY14E
6,533
131
3,808
670
11,142
3,080
452
13,521
606
28,801
165
5,405
2,078
7,649
1,789
1,412
10,850
166
15,003
11.11
Net debt to equity

Sales/assets
165 Assets/equity
5,710 ROE
2,078 ROCE
7,954
1,789
1,412
11,155
166
17,480
12.94
Liabilities
Short-term loans
214
165
3,853 4,913
Others
1,948 2,078
6,016 7,156
Long-term debt
1,275 1,789
Others
766 1,412
Total Liabilities
8,057 10,357
Minorities
117
166
9,603 11,110
BVPS
7.11
8.22
165
5,142
2,078
7,385
1,789
1,412
10,586
166
12,894
9.54

2,123 2,455 2,797 3,307 3,883
559 698 824 884 933
958 -782
6 -159 -183
-356 -499 -806 -936 -1,083
3,284 1,872 2,821 3,097 3,550
Capex
-1,103 -2,442 -3,000 -2,500 -2,500
Sale of assets
17
37
0
0
0
Acquisition of subsidiaries/intangibles -174
0 -100 -100 -100
Other
496 -1,532
0
0
0
-765 -3,937 -3,100 -2,600 -2,600
Dividends paid
Other
0
-0
-216
-44
-261
0
359
-243
-61
55
0
0
-300
109
-191
0
0
-355
109
-245
0
0
-417
109
-307
Net change in cash

FX gain/(loss)
Ending cash
DPS
2,259 -2,010 -469 252 643

-3
-3
0
0
0
7,563 5,550 5,081 5,333 5,976
0.16 0.18 0.22 0.26 0.31
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Sales growth
Net profit growth
EPS growth
FY10
35.2%
12.9%
10.1%
7.6%
7.6%
10.4%
21.6%
21.6%
18.4%

33.3% 34.0% 34.4% 34.6%
12.2% 12.7% 13.0% 13.2%
9.2% 9.6% 10.1% 10.5%
7.5% 7.6% 7.8% 8.1%
7.5% 7.6% 7.8% 8.1%
16.4% 14.5% 14.1% 14.0%
14.3% 15.1% 18.2% 17.4%
14.3% 15.1% 18.2% 17.4%
14.3% 15.1% 18.2% 17.4%
-63.6% -37.4% -28.6% -26.2% -26.2%

1.22 1.18 1.17 1.22 1.26
1.85 1.95 1.83 1.73 1.65
17.1% 16.8% 16.7% 17.0% 17.1%
19.3% 17.5% 18.3% 19.2% 19.8%
145

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Trinity Limited
Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Trinity Limited (Reuters: 0891.HK, Bloomberg: 891 HK)

FY10A
FY11A
Revenue (HK$ mn)
2,011
2,607
Net Profit (HK$ mn)
341
513
EPS (HK$)
0.21
0.29
DPS (HK$)
0.15
0.23
Revenue growth (%)
22.3%
29.6%
81.4%
50.5%
EPS growth (%)
41.4%
40.5%
ROE
16.0%
18.6%
P/E (x)
23.2
16.5
P/BV (x)
3.5
2.6
EV/EBITDA (x)
16.5
10.6
Dividend Yield
3.0%
4.6%
1,714
8,348
1,076
4.87
29 Jun 12
54.8%
3,617,361.00
21.78
2.81
19,441
7.76
Dec
FY12E
3,101
579
0.33
0.23
18.9%
12.9%
12.9%
17.3%
14.6
2.5
9.5
4.8%
FY13E
3,792
731
0.42
0.29
22.3%
26.2%
26.2%
20.7%
11.6
2.3
7.5
6.0%
FY14E
4,600
908
0.52
0.37
21.3%
24.2%
24.2%
24.0%
9.3
2.2
6.1
7.5%
JPM Q-Profile
Trinity Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
5.68
12 Mth Forward EPS
10.00
0.50
9.00
0.45
8.00
0.40
7.00
0.35
6.00
0.30
5.00
0.25
4.00
0.15
2.00
0.10
1.00
12%
12Mth fwd EY
Current:
Hong Kong BY
7%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.05
-7.98%
0.90
0.80
Proxy
10%
0.70
0.60
8%
0.50
6%
0.40
4%
0.20
0.10
0.30
2%
0.00
PE (1Yr Forward)
Current:
14.6x
7.0x
35.0x
6.0x
Dec/11
May/11
Oct/10
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Feb/06
Sep/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Price/Book Value
40.0x
30.0x
Dec/97
-0.20
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.10
May/97
Current:
PBV hist
3.0x
PBV Forward
5.0x
25.0x
4.0x
20.0x
ROE (Trailing)
Current:
18.64
25.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
0.0x
Jul/98
1.0x
0.0x
Dec/97
2.0x
5.0x
May/97
10.0x
Dec/97
3.0x
15.0x
May/97
0%
0.39
0.20
3.00
0.00
Current:
Current:
3.75
4.5
4.0
20.00
3.5
3.0
15.00
2.5
2.0
10.00
1.5
1.0
5.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
0.0
May/97
0.5
0.00
Summary
Trinity Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
1219.70
3.395979 SEDOL
B5497Y0
Latest
Min
Max
14.64x
14.15
32.88
2.98x
0.00
5.95
3.75
1.27
4.11
18.64
9.42
19.70
-8.0%
-0.08
0.61
Median
24.14
3.94
2.14
15.98
0.45
146
Average
23.13
4.04
2.39
15.21
0.34
2 S.D.+
34.28
6.57
4.07
23.11
0.79
2 S.D. 11.99
1.50
0.71
7.31
-0.11
% to Min
-3%
-100%
-66%
-49%
0%
As Of:
Local Price:
EPS:
% to Max
% to Med
125%
65%
100%
32%
10%
-43%
6%
-14%
865%
663%
22-Jun-12
5.68
0.39
% to Avg
58%
35%
-36%
-18%
528%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Trinity retails high-to-luxury end menswear and

accessories under six brands: Kent & Curwen,
Cerruti 1881, Durban, Gieves & Hawkes,
Intermezzo, and Altea. It also has JVs in the retail
apparel and accessories segments under the
Salvatore Ferragamo brand in South Korea and
various countries in Southeast Asia. As of Dec 2011, the group operated 374 retail stores in
Mainland China, 41 retail stores in Hong Kong and
Macau, 43 retail stores in Taiwan, one flagship
store in UK and on in France. The Group also has
41 stores in Southeast Asia and South Korea
under the Salvatore Ferragamo joint ventures.
SSS growth in HK
Europe
Retail
1%
EPS FY12 E
impact (%)
-0.5%
-0.6%
-1.2%
-1.3%
-3.2%
-3.5%

SSS growth in PRC
Following the revision to FY12 earnings estimates we lower our Dec12 PT to HK$8 due to the earnings revision in 2012 and changes in
CAGR post 2012. Our PT is based on 1x PEG and 2-yr earnings
CAGR of c25%. After a sharp correction YTD Trinity now trades at
13x 1-yr forward P/E. With its high-end menswear brands that have
plenty of penetration potential in China we believe Trinity offers
multiple years of growth opportunity and the current slowdown is
more than priced in.

Taiwan
Retail
8%
EBITDA FY12 E
impact (%)
Europe
Licensin
g
3%
HK &
Macau
(Retail)
32%
China
Retail
56%
HK &
Macau
(Wholes
ale)
0%

J. P. Morgan
Consensus
FY12E
0.33
0.36
FY13E
0.42
0.43
FY14E
0.52
0.51
Main downside risk is the abrupt decline in SSS growth and

higher than expected operating expenses. Worse than
expected macro economy will cause downside risks to our
SSSG assumptions in HK and China which suggests potential
operating deleverage. This could lead to downside risks to
our 2012 earnings estimates and PT.
Slower than expected sales through will lead to higher
inventory and potential downside risks to our gross margins
projections. This will also pose downside risks to our 2012
earnings estimates and PT.
Peer Valuation Table

Company
China retailers
Belle International
Parkson Retail
China Dongxiang
Li Ning
Anta
Xtep
Golden Eagle
Ports Design
Sector average
Ticker
1880 HK
3368 HK
3818 HK
2331 HK
2020 HK
1368 HK
3308 HK
589 HK
Rating
OW
N
NR
UW
UW
UW
OW
UW
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
13.1
6.9
0.7
4.3
4.7
2.7
15.7
8.1
15.50
7.50
14,266
2,486
500
591
1,505
758
3,940
587
4.50
4.00
2.20
22.50
7.00
2011
P/E
2012E
2013E
21.3
14.1
31.5
9.7
5.5
5.0
21.0
8.7
14.6
19.3
13.7
8.1
13.9
6.6
5.7
18.8
8.2
11.8
15.7
12.0
7.4
9.2
7.6
7.7
15.1
7.3
10.2
P/B
2012E
4.0
2.7
0.4
1.0
1.4
1.1
4.8
1.8
2.2
2013E
3.5
2.4
0.4
0.9
1.3
1.0
4.1
1.6
1.9
Source: J.P. Morgan estimates, Bloomberg. Prices as of Jun 29, 2012.

147

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Trinity Limited: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
LT Investments
Other assets
Total Assets
FY10
2,011
22.3%
1,552
28.2%
77.1%
509
54.2%
25.3%
408
57.9%
20.3%
-5
36
461
74.9%
-120
26.0%
341
81.4%
341
85.0%
0.21
41.4%
0.21
41.0%
FY11
2,607
29.6%
2,104
35.6%
80.7%
750
47.3%
28.8%
609
49.3%
23.4%
1
62
677
46.9%
-164
24.2%
513
50.5%
513
50.5%
0.29
40.5%
0.29
40.5%
FY12E
3,101
18.9%
2,455
16.7%
79.2%
854
13.9%
27.6%
712
16.9%
23.0%
-4
64
772
14.1%
-193
25.0%
579
12.9%
579
12.9%
0.33
12.9%
0.33
12.9%
FY13E
3,792
22.3%
3,017
22.9%
79.6%
1,078
26.2%
28.4%
925
29.8%
24.4%
-2
65
988
27.9%
-257
26.0%
731
26.2%
731
26.2%
0.42
26.2%
0.42
26.2%
FY14E
4,600
21.3%
3,683
22.1%
80.1%
1,329
23.3%
28.9%
1,163
25.7%
25.3%
-2
67
1,227
24.2%
-319
26.0%
908
24.2%
908
24.2%
0.52
24.2%
0.52
24.2%
Cash flow statement

PBT
Tax
Other
148

677
772
988 1,227
141
142
154
166
162
-69
-163
-183
-164
-193
-257
-319
-364
-60
-63
-65
452
592
658
827
Capex
Other
-69
-131
1
-199
-83
-390
44
-429
-72
-319
7
-384
-125
0
9
-116
-137
0
9
-128
Dividends paid
Other
11
-135
-189
-4
-317
751
-200
-295
-4
252
0
0
-405
-11
-416
0
0
-512
-11
-523
0
0
-636
-11
-647
Net change in cash

Ending Cash
DPS
-3
515
0.15
276
790
0.23
-208
583
0.23
19
602
0.29
52
654
0.37
FY10
77.1%
25.3%
21.4%
17.0%
17.0%
22.3%
81.4%
85.0%
41.4%
FY11
80.7%
28.8%
23.5%
19.7%
19.7%
29.6%
50.5%
50.5%
40.5%
FY12E
79.2%
27.6%
23.0%
18.7%
18.7%
18.9%
12.9%
12.9%
12.9%
FY13E
79.6%
28.4%
24.4%
19.3%
19.3%
22.3%
26.2%
26.2%
26.2%
FY14E
80.1%
28.9%
25.3%
19.7%
19.7%
21.3%
24.2%
24.2%
24.2%
Ratio Analysis
790
583
602
654 Gross margin
233
267
326
395 EBITDA margin
605
658
790
65
65
65
65 Net margin
2,312 2,625 2,619 2,613 Sales growth
312
248
226
275
339
404
94
94
94
94 EPS growth
4,686 4,877 5,125 5,428
Net debt to equity
Liabilities
Sales/assets
Short-term loans
360
380
380
380
380 Assets/equity
431
653
670
699
730 ROE
Others
58
112
112
112
112 ROCE
848 1,146 1,163 1,191 1,222
Long-term debt
220
0
0
0
0
Others
150
285
285
285
285
Total Liabilities
1,218 1,431 1,448 1,476 1,507
2,251 3,255 3,429 3,649 3,921
BVPS
1.39 1.87
1.97
2.10
2.25
FY10
515
215
421
200
1,351
1,629
182
248
60
3,469
FY10
461
101
-3
-60
14
513
2.9% -12.6% -5.9% -6.1% -7.0%

0.61
0.64
0.65
0.76
0.87
1.54
1.44
1.42
1.40
1.38
16.0% 18.6% 17.3% 20.7% 24.0%
14.7% 18.8% 19.1% 23.6% 27.9%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Uni-President China Holdings Ltd

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Uni-President China Holdings Ltd (Reuters: 0220.HK, Bloomberg: 220 HK)

FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
12,591
16,932
21,931
26,974
Net Profit (Rmb mn)
519.1
311.9
629.8
836.4
EPS (Rmb)
0.14
0.09
0.18
0.23
DPS (Rmb)
0.04
0.03
0.05
0.07
Revenue growth (%)
38.2%
34.5%
29.5%
23.0%
EPS growth (%)
-26.4%
-39.9%
101.9%
32.8%
ROCE
8.4%
3.1%
6.0%
6.9%
ROE
7.9%
4.6%
9.0%
11.1%
P/E (x)
41.0
68.1
33.7
25.4
P/BV (x)
3.2
3.1
2.9
2.7
EV/EBITDA (x)
15.2
22.2
14.2
10.5
Dividend Yield
0.7%
0.4%
0.9%
1.2%
3,599
21,259
3,340
7.20
29 Jun 12
26.5%
8.70
57.08
7.40
19,025
7.76
Dec
FY14E
32,641
1,038.5
0.29
0.09
21.0%
24.1%
8.2%
12.7%
20.5
2.5
7.7
1.5%
JPM Q-Profile
Uni-President China Holdings Ltd. (CHINA / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
6.85
8.00
12 Mth Forward EPS
Current:
0.23
0.30
7.00
0.25
6.00
5.00
0.20
4.00
0.15
3.00
0.10
2.00
1.00
14%
12Mth fwd EY
Current:
China BY
4%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
51.19%
1.00
Proxy
12%
0.80
10%
0.60
0.40
8%
0.20
6%
0.00
4%
-0.20
2%
PE (1Yr Forward)
Current:
24.0x
35.0x
Price/Book Value
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
-0.60
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-0.40
May/97
0%
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.05
May/97
0.00
Current:
4.5x
PBV hist
3.0x
PBV Forward
4.0x
30.0x
3.5x
25.0x
3.0x
20.0x
2.5x
15.0x
2.0x
1.5x
10.0x
1.0x
5.0x
ROE (Trailing)
Current:
4.63
14.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.5x
May/97
0.0x
Current:
0.46
1.8
1.6
12.00
1.4
10.00
1.2
8.00
1.0
6.00
0.8
0.6
4.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.2
0.00
May/97
0.4
2.00
Summary
Uni-President China Holdings Ltd.
CHINA
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
3149.78
6.135231 SEDOL
B29MKF5
Food Products
Latest
Min
24.05x
7.73
2.97x
0.93
0.46
0.00
4.63
4.63
51.2%
-0.43
Max
28.67
3.91
1.62
11.56
0.59
Median
18.25
2.16
0.96
8.69
0.35
Average
18.01
2.16
0.85
8.23
0.30
2 S.D.+
26.86
3.26
1.94
12.81
0.79
2 S.D. 9.15
1.07
-0.25
3.64
-0.19
% to Min
-68%
-69%
-100%
0%
-184%
As Of:
Local Price:
EPS:
% to Max
19%
32%
250%
150%
15%
% to Med
-24%
-27%
107%
88%
-32%
22-Jun-12
6.85
0.23
% to Avg
-25%
-27%
83%
78%
-41%
149

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Originally from Taiwan and established in

China in 1992, UPC is a leading manufacture
of RTD tea, juice and instant noodle products
in China. According to ACNielsen, UPCs
market share was 28.6% for RTD tea (No.2),
18.7% for juice (No.2) and 14.1% (No.2) for
instant noodles in volume terms as of March
2012.
PET price
EBIT
impact (%)
EPS
impact (%)
4.0%
3.5%
-16.0%
-13.9%

A&P as % of sales
Impact of each 0.5% increase
Our new Dec-12 target price of HK$5.0 is based on a 0.9x PEG with a
two-year (2012E-14E) EPS CAGR of 28%. We base our PT on 0.9x
PEG which is a discount to 1.0x for the other China consumer staples to
reflect its smaller market share in the competitive noodle and beverage
market. We are using PEG in order to capture earnings growth
prospects.
Instant
noodles
35%
Others
2%
Target PEG
Beverage
63%
0.9
2012-14E EPS CAGR
28.4%
25.6
EPS Dec-12 (Rmb)
0.175
Target price (HK$)
5.0
Source: Company.

HK$
FY12E
J.P. Morgan
0.175
Consensus
0.211
FY13E
0.232
0.267
FY14E
0.289
0.328
Key upside risk to our TP would be lower than expected PET prices,
which would lead to higher gross margin expansion, and lower A&P
spending. We had expected PET to drop 4% y/y in 2012 and assumed
A&P to be 12% of sales in 2012. Our sensitivity analysis suggests that
if PET price drop by 1ppt more, UPCs earnings would increase by
3.5%. If A&P as % of sales increase/decrease by 0.5ppt, our UPC
earnings estimate would decrease/increase by 13.9%.
Source: Bloomberg, JPMorgan estimates

Company
Uni-president China
China Mengniu Dairy
Tingyi
Want Want
Tsingtao Brewery
Sector average
Ticker
220 HK
2319 HK
322 HK
151 HK
168 HK
Rating
UW
OW
N
N
UW
Price
(HK$)
7.2
20.4
19.8
9.5
44.1
PT
(HK$)
5.0
25.0
16.5
7.6
33.0
Mkt Cap
(US$m)
3,341
4,638
14,289
16,201
7,902
Source: Bloomberg, J.P. Morgan estimates. Share prices are as of close of 29 Jun 2012.
150
2011
68.1
17.0
37.5
38.6
28.1
37.8
P/E (x)
2012E
33.7
16.3
32.7
28.4
24.4
27.1
2013E
25.4
13.8
24.9
23.3
20.6
21.6
EV/EBITDA
2012E
16.1
7.6
12.9
19.1
13.5
13.8
ROE
2012E
9.0
13.0
23.5
39.6
16.7
20.4
P/B (x)
2012E
2.9
2.3
5.9
10.5
3.8
5.1
Yld (%)
2012E
0.9%
1.2%
1.9%
2.2%
0.6%
1.3%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Uni-President China Holdings Ltd: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBITDA Margin
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income
Recurring Net income
No. of shares o/s
EPS (reported)
Recurring EPS
Balance sheet
Trade & other receivable
Inventories
Others
Total current assets
Net fixed assets
Others non current assets
Total Assets
FY10
12,591
38.2%
4,043
922
-13.7%
558
NM
7.3%
4.4%
55
682
-23.9%
-163
23.9%
519.1
483
3,599
0.14
0.13
FY11
16,932
34.5%
4,943
765
-17.0%
261
NM
4.5%
1.5%
95
396
-41.9%
-84
21.3%
311.9
312
3,599
0.09
0.09
FY12E
21,931
29.5%
6,986
1,366
78.6%
684
161.7%
6.2%
3.1%
64
807
103.7%
-178
22.0%
629.8
630
3,599
0.18
0.17
FY13E
26,974
23.0%
8,642
2,107
54.2%
978
43.1%
7.8%
3.6%
30
1,086
34.5%
-250
23.0%
836.4
836
3,599
0.23
0.23
FY14E
32,641
21.0%
10,473
2,827
34.2%
1,300
32.9%
8.7%
4.0%
-27
1,366
25.8%
-328
24.0%
1,038.5
1,038
3,599
0.29
0.29

2,427 2,428 2,470 1,729 2,024
401
513
665
818
990
1,139 1,274 1,568 1,832 2,172
434
401
404
433
471
4,402 4,617 5,107 4,811 5,658
3,121 5,579 8,897 12,769 13,742
2,058 3,541 3,612 3,684 3,758
9,581 13,737 17,616 21,264 23,158
Cash flow statement

EBIT
Depreciation & amortization
Others
FY10
558
364
-198
621

261
684
978 1,300
504
682 1,128 1,527
601
496
504
500
1,338 1,841 2,463 3,049
Capex
-1,412
-4,162
-4,000 -5,000 -2,500
Disposal of fixed assets

Cashflow from investing
Free cash flow
-1,363
-794
-4,144
-2,826
-4,041 -5,033 -2,527

-2,159 -2,537
549
Dividends paid
Other
Cashflow from financing
Net change in cash
166
-352
0
-187
-929
2,930
-156
34
2,809
3
2,383
-141
-0
2,242
42
2,048
-220
0
1,829
-742
54
-281
0
-227
296
DPS
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Recurring profit margin
Sales growth
Net profit growth
EPS growth
Recurring EPS growth
0.04
0.03
0.05
0.07
0.09
FY10
FY11 FY12E FY13E
32.1% 29.2% 31.9% 32.0%
7.3%
4.5%
6.2% 7.8%
4.4%
1.5%
3.1% 3.6%
4.1%
1.8%
2.9% 3.1%
3.8%
1.8%
2.9% 3.1%
38.2% 34.5% 29.5% 23.0%
-26.4% -39.9% 101.9% 32.8%
(26.4%) (39.9%) 101.9% 32.8%
(30.5%) (35.4%) 101.9% 32.8%
FY14E
32.1%
8.7%
4.0%
3.2%
3.2%
21.0%
24.2%
24.1%
24.2%
Liabilities
Short-term loans
166 1,584 2,863 3,887 3,887 Interest coverage (x)
2,676 3,440 4,367 5,263 6,242 Net debt to equity
Others
63
62
191
308
442 Sales/assets
2,904 5,087 7,421 9,458 10,571 Assets/equity
Long-term debt
0 1,512 2,733 3,709 3,709 ROE
Total Liabilities
2,921 6,926 10,364 13,427 14,594 ROCE
6,660 6,811 7,252 7,837 8,564
Capital employed
6,825 9,907 12,848 15,433 16,160
BVPS
1.85
1.89
2.01
2.18
2.38
-34.0%
1.42
1.29
7.9%
8.4%
9.8%
1.45
1.35
4.6%
3.1%
- 103.85
43.1% 74.9% 65.1%
1.40
1.39
1.47
2.43
2.71
2.70
9.0% 11.1% 12.7%
6.0% 6.9% 8.2%
151

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Want Want China Holdings Ltd

Company Data
Shares O/S (mn)
Market cap ($ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
mn)
($ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
Want Want China Holdings Ltd (Reuters: 0151.HK, Bloomberg: 151 HK)
FY10A
FY11A
FY12E
FY13E
Revenue ($ mn)
2,244
2,947
3,592
4,273
Net Profit ($ mn)
358.4
419.5
569.4
695.9
EPS ($)
0.03
0.03
0.04
0.05
DPS ($)
0.02
0.02
0.03
0.03
Revenue growth (%)
31.2%
31.3%
21.9%
19.0%
EPS growth (%)
14.4%
17.0%
36.0%
22.0%
ROE
34.8%
34.9%
39.6%
41.4%
ROA
17.7%
15.5%
17.3%
19.1%
P/E (x)
45.2
38.6
28.4
23.3
P/BV (x)
15.1
12.2
10.5
8.9
EV/EBITDA (x)
251.6
211.4
151.8
121.6
Dividend Yield
1.8%
1.6%
2.2%
2.7%
13,228
16,196
16,196
9.50
29 Jun 12
51.0%
13,660,360.00
125.36
16.16
5,329
7.76
Dec
FY14E
5,031
854.6
0.06
0.04
17.7%
22.8%
43.2%
21.0%
19.0
7.6
99.8
3.3%
JPM Q-Profile
Want Want China Holdings Ltd. (CHINA / Consumer Staples)
As Of: 22-Jun-2012
Local Share Price
Current:
9.81
12 Mth Forward EPS
12.00
0.06
10.00
0.05
8.00
0.04
6.00
0.03
4.00
9%
12Mth fwd EY
Current:
China BY
4%
Current:
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
56.37%
0.80
Proxy
8%
0.70
7%
0.60
6%
0.50
5%
PE (1Yr Forward)
Current:
26.9x
16.0x
30.0x
14.0x
Current:
PBV hist
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Price/Book Value
35.0x
12.6x
PBV Forward
12.0x
25.0x
10.0x
20.0x
8.0x
15.0x
6.0x
10.0x
4.0x
5.0x
ROE (Trailing)
Current:
34.91
45.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0x
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
2.0x
May/97
0.0x
Jul/98
0.00
Dec/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
0.10
Jul/98
0.20
1%
Dec/97
0.30
2%
May/97
3%
May/97
0.40
4%
Current:
1.71
6.0
40.00
5.0
35.00
4.0
30.00
25.00
3.0
20.00
2.0
15.00
10.00
1.0
5.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
May/97
0.00
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
May/97
0.01
0%
0.05
0.02
2.00
0.00
Current:
Summary
Want Want China Holdings Ltd.
CHINA
Consumer Staples
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
16577.27
16.67369 SEDOL
B2Q14Z3
Food Products
Latest
Min
26.90x
13.11
12.57x
5.31
1.71
1.60
34.91
18.92
56.4%
0.06
Max
28.32
12.79
4.95
38.54
0.60
152
Median
22.58
9.58
2.82
28.73
0.47
Average
21.97
9.28
2.94
28.77
0.45
2 S.D.+
29.99
13.71
4.65
41.97
0.70
2 S.D. 13.95
4.86
1.24
15.57
0.19
% to Min
-51%
-58%
-7%
-46%
-89%
As Of:
Local Price:
EPS:
% to Max
5%
2%
189%
10%
6%
% to Med
-16%
-24%
65%
-18%
-17%
22-Jun-12
9.81
0.05
% to Avg
-18%
-26%
72%
-18%
-21%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Want Want was No.1 in terms of market share

(2.5%) in the impulse snack foods market in
China in 2006 (according to Euro Monitor).
The company has a commanding market share
in rice crackers, flavored milk, soft candy and
extruded pellets.
A&P as % of sales
EBITDA
impact (%)
EPS
impact (%)
-5.2%
-5.1%
-5.2%
-5.1%
-0.2%
-0.2%
-0.2%
-0.2%

Transportation as % of sales
YoY change in milk price
YoY change in packaging material price
Our new Dec-12 target price of HK$7.6 (previously HK$7.0) is based

on 1x PEG and a two-year (2012E-14E) EPS CAGR of 22.5%.
- Snack - Rice
foods crackers
24%
30%
- Dairy & beverages
Target PEG
46%
2012-14E EPS CAGR
22.5%
Implied target PE (x)
22.5
2012E EPS (US$)
0.043
Target price (HK$)
7.6
Source: Company.

US$
FY12E
J.P. Morgan
0.043
Consensus
0.041
FY13E
0.053
0.051
FY14E
0.065
0.062
Key upside risk would be a greater-than-expected decline in raw material costs

and key downside risk would be slower-than-expected sales if the new
distribution initiatives resulted in turnover in distributors. We would be holding
the share until the result, which is likely to surprise the market on the upside
due to lower milk powder costs.

Want Want
CRE
Tsingtao Brewery
China Mengniu Dairy
China Foods
Uni-president China
Sector average
Ticker
151 HK
291 HK
168 HK
2319 HK
506 HK
220 HK
Rating
N
N
UW
OW
OW
UW
Price
(lcl$)
9.5
23.0
44.1
20.4
7.6
7.2
PT
(HK$)
7.6
24.5
33.0
25.0
8.4
5.0
Mkt Cap
(US$m)
16,201
7,102
7,902
4,638
2,742
3,341
2011
38.6
29.1
28.1
17.0
32.9
68.1
35.6
P/E (x)
2012E
28.4
23.0
24.4
16.3
23.8
33.7
24.9
2013E
23.3
18.9
20.6
13.8
18.5
25.4
20.1
EV/EBITDA
2012E
19.1
6.3
13.5
7.6
11.1
16.1
12.3
ROE
2012E
39.6
8.8
16.7
13.0
12.8
9.0
16.6
P/B (x)
2012E
10.5
1.4
3.8
2.3
2.9
2.9
4.0
Yld (%)
2012E
2.2%
2.4%
0.6%
1.2%
1.5%
0.9%
1.5%
Source: Bloomberg, Share prices are as of close of 29 June 2012.
153

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Want Want China Holdings Ltd: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
Other income/(exp)
% change Y/Y
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Intangible assets
Net fixed assets
Other assets
Total Assets
FY10
2,244
31.2%
845
22.0%
37.6%
498
22.6%
22.2%
439
23.4%
19.6%
4
0
443
23.0%
-84
19.0%
3
45
358.4
14.6%
359
14.7%
0.03
14.4%
0.03
14.6%
FY11
2,947
31.3%
1,025
21.3%
34.8%
592
18.8%
20.1%
522
18.9%
17.7%
16
0
538
21.6%
-119
22.1%
3
77
419.5
17.0%
419
16.9%
0.03
17.0%
0.03
16.9%
FY12E
3,592
21.9%
1,381
34.8%
38.5%
825
39.3%
23.0%
730
39.9%
20.3%
19
0
749
39.2%
-180
24.0%
3
89
569.4
35.7%
569
35.9%
0.04
36.0%
0.04
35.7%
FY13E
4,273
19.0%
1,690
22.3%
39.5%
1,029
24.7%
24.1%
910
24.7%
21.3%
18
0
928
23.8%
-232
25.0%
3
98
695.9
22.2%
696
22.2%
0.05
22.0%
0.05
22.2%
FY14E
5,031
17.7%
1,998
18.3%
39.7%
1,252
21.6%
24.9%
1,118
22.8%
22.2%
22
0
1,140
22.8%
-285
25.0%
3
114
854.6
22.8%
855
22.8%
0.06
22.8%
0.06
22.8%
Cash flow statement

PBT
Tax
Other

538
749
928 1,140
70
95
119
134
78
-76
-108
-138
-92
-119
-180
-232
-16
0
0
0
579
650
759
904
Capex
Sale of assets
Other
-171
13
-158
-224
1
-222
-409
-3
-412
-200
-3
-203
-220
-3
-223
Dividends paid
Other
287
-288
-39
-40
381
-299
41
123
5
-305
-0
-300
6
-391
0
-385
6
-479
0
-472
Net change in cash

FX gain/(loss)
Ending cash
DPS
201
24
906
0.02
531
51
1,437
0.02
-62
0
1,375
0.03
171
0
1,546
0.03
208
0
1,754
0.04
FY11 FY12E
34.8% 38.5%
20.1% 23.0%
17.7% 20.3%
14.2% 15.9%
14.2% 15.9%
31.3% 21.9%
17.0% 35.7%
17.0% 36.0%
FY13E
39.5%
24.1%
21.3%
16.3%
16.3%
19.0%
22.2%
22.0%
FY14E
39.7%
24.9%
22.2%
17.0%
17.0%
17.7%
22.8%
22.8%
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E $ in millions, year end Dec
906 1,437 1,375 1,546 1,754 Gross margin
101
160
195
232
273 EBITDA margin
339
410
500
595
108
96
55
50
56 Net margin
0
0
0 Sales growth
- Net profit growth
758
891 1,205 1,286 1,372 Recurring net profit growth
78
129
132
134
137 EPS growth
2,290 3,123 3,461 3,843 4,293
Net debt to equity
Liabilities
Sales/assets
Short-term loans
294
775
775
775
775 Assets/equity
184
211
258
306
361 ROE
Others
378
531
600
660
723 ROCE
856 1,517 1,632 1,741 1,858
Long-term debt
350
250
250
250
250
Others
8
24
29
35
41
Total Liabilities
1,214 1,791 1,911 2,026 2,149
Minorities
3
3
3
3
3
1,073 1,330 1,547 1,814 2,141
BVPS
0.08 0.10
0.12
0.14
0.16
154
FY10
443
59
-53
-72
-4
374
FY10
37.6%
22.2%
19.6%
16.0%
16.0%
31.2%
14.6%
14.4%
-24.4% -31.0% -22.6% -28.7% -34.1%

1.11
1.09
1.09
1.17
1.24
2.13
2.35
2.24
2.12
2.01
34.8% 34.9% 39.6% 41.4% 43.2%
28.7% 25.6% 29.6% 33.7% 37.2%

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Xtep International Holdings Limited

Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
(HK$ mn)
($ mn)
HSI
Exchange Rate
Fiscal Year End
Xtep International Holdings Limited (Reuters: 1368.HK,

FY10A
FY11A
Revenue (Rmb mn)
4,457
5,540
Net Profit (Rmb mn)
814
965
EPS (Rmb)
0.37
0.44
Recurring EPS (Rmb)
0.37
0.44
DPS (Rmb)
0.19
0.21
Revenue growth (%)
25.7%
24.3%
25.7%
18.6%
25.7%
18.6%
EPS growth (%)
25.6%
18.6%
ROE
25.7%
26.6%
ROA
20.5%
19.7%
P/BV (x)
1.4
1.2
P/E (x)
5.9
5.0
EV/EBITDA (x)
2.7
2.9
Dividend Yield
8.5%
9.3%
2,176
4,814
757
2.70
29 Jun 12
39.3%
1,954,713.00
6.40
0.83
19,441
7.76
Dec
Bloomberg: 1368 HK)

FY12E
FY13E
5,653
5,909
848
627
0.39
0.29
0.39
0.29
0.18
0.13
2.0%
4.5%
-12.2%
-26.0%
-12.2%
-26.0%
-12.2%
-26.0%
20.5%
13.9%
14.5%
10.0%
1.1
1.0
5.7
7.7
3.1
3.7
8.2%
6.1%
FY14E
6,202
482
0.22
0.22
0.10
5.0%
-23.1%
-23.1%
-23.1%
10.0%
7.3%
1.0
10.0
4.4
4.7%

JPM Q-Profile
Xtep International Holdings Ltd. (HONG KONG / Consumer Discretionary)
As Of: 22-Jun-2012
Local Share Price
Current:
3.14
8.00
12 Mth Forward EPS
Current:
0.42
0.60
7.00
0.50
6.00
5.00
0.40
4.00
0.30
3.00
0.20
2.00
1.00
40%
12Mth fwd EY
Current:
Hong Kong BY
16%
Dec/11
Oct/10
Current:
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
-159.48%
1.50
Proxy
1.00
35%
0.50
30%
0.00
25%
-0.50
20%
-1.00
-1.50
15%
-2.00
10%
-2.50
5%
-3.00
PE (1Yr Forward)
Current:
6.1x
Price/Book Value
18.0x
5.0x
16.0x
4.5x
14.0x
4.0x
12.0x
3.5x
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Feb/99
Sep/99
Jul/98
Dec/97
May/97
-4.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
-3.50
May/97
Current:
PBV hist
1.4x
PBV Forward
3.0x
10.0x
2.5x
8.0x
2.0x
6.0x
1.5x
4.0x
ROE (Trailing)
Current:
26.62
100.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Feb/99
Sep/99
Jul/98
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0x
May/97
0.5x
0.0x
Dec/97
1.0x
2.0x
May/97
0%
Dec/97
0.00
May/97
Dec/11
Oct/10
May/11
Mar/10
Jan/09
Aug/09
Jun/08
Apr/07
Nov/07
Sep/06
Jul/05
Feb/06
Dec/04
Oct/03
May/04
Mar/03
Jan/02
Aug/02
Jun/01
Apr/00
Nov/00
Sep/99
Jul/98
Feb/99
Dec/97
0.10
May/97
0.00
Current:
8.72
12.0
90.00
10.0
80.00
70.00
8.0
60.00
6.0
50.00
40.00
4.0
30.00
20.00
2.0
10.00
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
May/97
Dec/11
May/11
Oct/10
Mar/10
Aug/09
Jan/09
Jun/08
Nov/07
Apr/07
Sep/06
Feb/06
Jul/05
Dec/04
May/04
Oct/03
Mar/03
Aug/02
Jan/02
Jun/01
Nov/00
Apr/00
Sep/99
Feb/99
Jul/98
Dec/97
0.0
May/97
0.00
Summary
Xtep International Holdings Ltd.
HONG KONG
12mth Forward PE
P/BV (Trailing)
ROE (Trailing)
889.08
0.9613811 SEDOL
B2RJYH8
Latest
Min
Max
6.09x
2.76
15.33
1.43x
0.75
4.11
8.72
2.12
11.24
26.62
20.97
94.99
-159.5%
-3.53
0.17
Median
9.53
2.60
4.26
27.09
-0.40
Average
9.05
2.39
5.30
39.39
-0.82
2 S.D.+
15.65
4.34
10.44
92.27
0.92
2 S.D. 2.45
0.44
0.16
-13.48
-2.56
% to Min
-55%
-48%
-76%
-21%
-121%
As Of:
Local Price:
EPS:
% to Max
152%
187%
29%
257%
110%
% to Med
57%
82%
-51%
2%
75%
22-Jun-12
3.14
0.42
% to Avg
49%
67%
-39%
48%
49%
155

02 July 2012
Ebru Sener Kurumlu

(852) 2800-8521
Company Description
Xtep is engaged in the production, distribution

and branding of sports wear products. It was
founded in 1999 by Ding Shui Po, who is the
CEO of Xtep. It started as an OEM enterprise
and manufactured sports footwear and sports
apparel. In 2002, the company launched the
Xtep brand and shifted from an OEM
manufacturer to a branded sportswear player.
According to Euromonitor, by the end of 2007,
Xteps market share in Chinas sportswear
segment was 3.4% and it ranked No. 6
following Nike, adidas, Li Ning, Anta, and
Kappa. Xtep targets itself to be a fashionable
sportswear player in China. In addition to Xtep,
the company has introduced a new brand,
Koling, recently and also has a non-exclusive
license from Disney Shanghai for the Disney
Sport brand and is authorized to design and
distribute its products under this brand.
EBITDA FY12E
impact (%)
EPS FY12E
impact (%)
-4.7%
-5.0%
-4.7%
-5.0%
-5.3%
-5.6%
-1.0%
-1.0%

We have further cut our PT to HK$2.25 (from previous HK$2.6)

based on the present value of the long term target PE of 10x 2014
earnings, which are based on normalized margins. We have reduced
the target PE to 10x (pointing to c30% discount to the international
brands long term average of 15-16x on brand recognition) from 13x
as we become more cautious on local sportswear brands long term
prospects than earlier.
Accesso
ries
2%
Footwea
r
45%
Apparel
53%
Risks to our PT include lower than expected A&P expenses at the

expense of long term sustainability, and higher than expected trade
fair order growth at the expense of retail inventory level.

J. P. Morgan
Consensus
FY12E
0.39
0.41
FY13E
0.29
0.41
FY14E
0.22
0.43
Peer comparison valuation table

Company
China retailers
Belle International
Parkson Retail
China Dongxiang^
Li Ning
Anta
Golden Eagle
Ports Design
Sector average
Ticker
1880 HK
3368 HK
3818 HK
2331 HK
2020 HK
3308 HK
589 HK
Rating
OW
N
NR
UW
UW
OW
UW
Price
(HK$)
PT
(HK$)
Mkt Cap
(USD mn)
13.1
6.9
0.7
4.3
4.7
15.7
8.1
15.50
7.50
14,266
2,486
500
591
1,505
3,940
587
4.50
4.00
22.50
7.00
2011
P/E
2012E
2013E
21.3
14.1
31.5
9.7
5.5
21.0
8.7
16.0
19.3
13.7
8.1
13.9
6.6
18.8
8.2
12.7
15.7
12.0
7.4
9.2
7.6
15.1
7.3
10.6
Source: J.P. Morgan estimates, Bloomberg. Prices as Jun 29, 2012 close. ^Bloomberg consensus estimates used for the company.
156
P/B
2012E
4.0
2.7
0.4
1.0
1.4
4.8
1.8
2.3
2013E
3.5
2.4
0.4
0.9
1.3
4.1
1.6
2.0
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Xtep International Holdings Limited: Summary of Financials

Income Statement
FY10 FY11 FY12E
Revenues
4,457 5,540 5,653
% change Y/Y
25.7% 24.3%
2.0%
Gross Profit
1,812 2,258 2,284
% change Y/Y
30.6% 24.6%
1.2%
Gross margin
40.7% 40.8% 40.4%
EBITDA
999 1,248 1,155
% change Y/Y
39.3% 24.9% -7.4%
EBITDA Margin
22.4% 22.5% 20.4%
EBIT
978 1,219 1,107
% change Y/Y
39.4% 24.7%
NM
EBIT Margin
21.9% 22.0% 19.6%
Net Interest
9
-5
-20
Share of JVs
Earnings before tax
978 1,211 1,087
% change Y/Y
39.3% 23.8% -10.3%
Tax
-165 -246
-239
as % of EBT
16.8% 20.3% 22.0%
814 965
848
% change Y/Y
25.7% 18.6% -12.2%
814 965
848
% change Y/Y
25.7% 18.6% -12.2%
EPS (reported)
0.37 0.44
0.39
% change Y/Y
25.6% 18.6% (12.2%)
Recurring EPS
0.37 0.44
0.39
% change Y/Y
25.6% 18.6% (12.2%)
Balance sheet
FY10 FY11 FY12E
2,444 2,068 2,021
Accounts receivable
727 1,205 1,737
Inventories
463 672
621
Others
343 1,055 1,072
Current assets
3,977 5,000 5,451
Intangible assets
1
1
1
Net fixed assets
197 257
509
Other assets
110 237
237
Total Assets
4,284 5,495 6,197
Liabilities
Short-term loans
0 492
492
639 499
867
Others
253 409
409
892 1,400 1,768
Long-term debt
Others
40 184
69
Total Liabilities
932 1,584 1,837
3,352 3,907 4,360
BVPS
1.54 1.80
2.00
FY13E
5,909
4.5%
2,213
-3.1%
37.5%
887
-23.3%
15.0%
833
NM
14.1%
-18
815
-25.0%
-187
23.0%
627
-26.0%
627
-26.0%
0.29
(26.0%)
0.29
(26.0%)
FY14E
6,202
5.0%
2,233
0.9%
36.0%
717
-19.1%
11.6%
659
NM
10.6%
-16
643
-21.1%
-161
25.0%
482
-23.1%
482
-23.1%
0.22
(23.1%)
0.22
(23.1%)
Cash flow statement

PBT
Tax
Other
Capex
Other
Dividends paid
Other
Net change in cash
Ending Cash
DPS
Ratio Analysis
FY13E FY14E Rmb in millions, year end Dec
1,339 1,890 EBITDA margin
797
1,072 1,072 Net margin
1
1 Sales growth
515
237
6,297 6,901 EPS growth
Net debt to equity
492
492 Sales/assets
631
978 Assets/equity
409
409 ROE
1,533 1,879 ROCE
69
69
1,602 1,948
4,695 4,953
2.16
2.28
FY10
978
21
-466
-88
10
456

1,211 1,087
815
643
29
49
54
58
-955
-130
-14
-133
-124
-239
-187
-161
43
0
0
0
204
767
667
408
-25
-29
-54
-214
-413
-627
-300
-115
-415
-60
0
-60
-60
0
-60
0
-471
7
-465
492
-450
6
48
0
-395
-4
-399
0
-292
0
-292
0
-225
0
-225
-63
2,444
0.19
-375
2,068
0.21
-47
2,021
0.18
315
2,336
0.13
123
2,459
0.10
FY10
40.7%
22.4%
21.9%
18.3%
18.3%
25.7%
25.7%
25.7%
25.6%
-72.9%
1.12
1.23
25.7%
30.9%
FY11
40.8%
22.5%
22.0%
17.4%
17.4%
24.3%
18.6%
18.6%
18.6%
-40.3%
1.13
1.22
26.6%
31.5%
FY12E
40.4%
20.4%
19.6%
15.0%
15.0%
2.0%
-12.2%
-12.2%
(12.2%)
-35.1%
0.97
1.42
20.5%
23.9%
FY13E
37.5%
15.0%
14.1%
10.6%
10.6%
4.5%
-26.0%
-26.0%
(26.0%)
-39.3%
0.95
1.34
13.9%
16.6%
FY14E
36.0%
11.6%
10.6%
7.8%
7.8%
5.0%
-23.1%
-23.1%
(23.1%)
-39.7%
0.94
1.39
10.0%
12.4%
157
Ebru Sener Kurumlu

(852) 2800-8521

02 July 2012
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report.
Important Disclosures
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Chow Tai
Fook Jewellery Company Ltd., Dairy Farm International Holdings Limited, Lifestyle International Holdings, Parkson Retail Group Ltd,
Tibet 5100 Water Resources Holdings Ltd, Tsingtao Brewery - A, Tsingtao Brewery - H within the past 12 months.
Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of Parkson
Retail Group Ltd.
Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: China Mengniu Dairy Co.
Ltd., China Resources Enterprise, Chow Tai Fook Jewellery Company Ltd., Dairy Farm International Holdings Limited, Hengan
International Group Ltd, L'Occitane International SA, Li Ning Co Ltd, Lifestyle International Holdings, Parkson Retail Group Ltd, Tibet
5100 Water Resources Holdings Ltd, Tingyi (Cayman Islands) Holding Corp, Tsingtao Brewery - A, Tsingtao Brewery - H, Want Want
China Holdings Ltd, Xtep International Holdings Limited.
Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment
banking clients: Chow Tai Fook Jewellery Company Ltd., Dairy Farm International Holdings Limited, Lifestyle International Holdings,
Parkson Retail Group Ltd, Tibet 5100 Water Resources Holdings Ltd, Tsingtao Brewery - A, Tsingtao Brewery - H.
Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
company(ies) as clients, and the services provided were non-investment-banking, securities-related: Chow Tai Fook Jewellery Company
Ltd., L'Occitane International SA, Lifestyle International Holdings, Parkson Retail Group Ltd, Tingyi (Cayman Islands) Holding Corp,
Tsingtao Brewery - A, Tsingtao Brewery - H, Want Want China Holdings Ltd.
Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,
and the services provided were non-securities-related: Chow Tai Fook Jewellery Company Ltd., Parkson Retail Group Ltd.
Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Chow Tai
Fook Jewellery Company Ltd., Dairy Farm International Holdings Limited, Lifestyle International Holdings, Parkson Retail Group Ltd,
Tibet 5100 Water Resources Holdings Ltd, Tsingtao Brewery - A, Tsingtao Brewery - H.
Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from Chow Tai Fook Jewellery Company Ltd., Dairy Farm International Holdings Limited, Lifestyle
International Holdings, Parkson Retail Group Ltd, Tibet 5100 Water Resources Holdings Ltd, Tsingtao Brewery - A, Tsingtao Brewery H.
Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Chow Tai Fook Jewellery Company Ltd., L'Occitane International SA, Lifestyle International
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Coverage Universe: Sener, Kurumlu Ebru: Anta Sports Products Ltd. (2020.HK), Belle International Holdings Ltd. (1880.HK), Big C
Supercenter Pcl (BIGC.BK), CP All Pcl (CPALL.BK), Charoen Pokphand Foods (CPF.BK), China Lilang Ltd. (1234.HK), China
Resources Enterprise (0291.HK), Chow Tai Fook Jewellery Company Ltd. (1929.HK), Dairy Farm International Holdings Limited
(DAIR.SI), Esprit Holdings (0330.HK), Giordano (0709.HK), Golden Eagle Retail Group Ltd (3308.HK), Home Product Center Pcl
(HMPR.BK), I.T Ltd. (0999.HK), L'Occitane International SA (0973.HK), Li & Fung (0494.HK), Li Ning Co Ltd (2331.HK), Lifestyle
International Holdings (1212.HK), Major Cineplex Group Plc (MAJO.BK), New World Department Stores Ltd (0825.HK), Parkson
Retail Group Ltd (3368.HK), Ports Design (0589.HK), Robinson Department Store (ROBI.BK), Sa Sa International Holdings Limited
(0178.HK), Siam Makro (MAKR.BK), Texwinca (0321.HK), Thai Beverage Public Company Ltd. (TBEV.SI), Thai Union Frozen
Products (TUF.BK), Tingyi (Cayman Islands) Holding Corp (0322.HK), Trinity Limited (0891.HK), Tsingtao Brewery - A (600600.SS),
Tsingtao Brewery - H (0168.HK), Xtep International Holdings Limited (1368.HK), Yue Yuen Industrial (0551.HK)
Hong, Jessica Chien Han: Ajisen China Holdings Ltd (0538.HK), Cafe de Coral Holdings Ltd (0341.HK), China Foods Ltd (0506.HK),
China Huiyuan Juice Group Ltd (1886.HK), China Mengniu Dairy Co. Ltd. (2319.HK), China Yurun Food Group (1068.HK), Hengan
International Group Ltd (1044.HK), Huabao International Holdings Limited (0336.HK), Tibet 5100 Water Resources Holdings Ltd
(1115.HK), Uni-President China Holdings Ltd (0220.HK), Want Want China Holdings Ltd (0151.HK)
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J.P. Morgan Equity Research Ratings Distribution, as of April 3, 2012

J.P. Morgan Global Equity Research Coverage
IB clients*
JPMS Equity Research Coverage
IB clients*
Overweight
(buy)
45%
51%
43%
70%
Neutral
(hold)
43%
45%
48%
61%
Underweight
(sell)
12%
34%
9%
53%
*Percentage of investment banking clients in each rating category.

For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category.
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Asia Pacific Equity Research

China, Hong Kong, Singapore,

Retailers SSSG (excluding sportswear)

Following a weak 1Q and stable 2Q, retailers sales performance is

Source: J.P. Morgan estimates Company data.

Asia Pacific Equity Research

Ebru Sener Kurumlu

Equity Ratings and Price Targets

Table 1: Top picks and stocks to avoid

Ebru Sener Kurumlu

Asia Pacific Equity Research

Ebru Sener Kurumlu

Asia Pacific Equity Research

2H is not likely to show a major recovery

SSSG Retailers (ex sportswear)

Changes to our estimates

Ebru Sener Kurumlu

Asia Pacific Equity Research

Source: Company, J.P. Morgan estimates.

Staples: No significant across-the-board revisions

Source: Company, J.P. Morgan estimates.

Ebru Sener Kurumlu

Asia Pacific Equity Research

For discretionary we believe weak

Source: Company, J.P. Morgan estimates.

Source: Company, J.P. Morgan estimates, Bloomberg.

Ebru Sener Kurumlu

Asia Pacific Equity Research

Outlook from J.P. Morgan macro team

Long-term drivers for consumption still in

Asia Pacific Equity Research

Ebru Sener Kurumlu

Table 2: Urban household income distribution

Between 55-100K Rmb

Source: CEIC, J.P. Morgan.

Source: CEIC, J.P. Morgan

Figure 6: Nominal GDP vs retail sales growth

Figure 7: Urbanization rate trend

Figure 8: CNY to USD quarterly period-end rates

Source: Bloomberg, J.P. Morgan FX Research.

Ebru Sener Kurumlu

Asia Pacific Equity Research

Figure 9: Urban household consumption pattern by income levels (2010)

Lower Middle Income

Upper Middle Income

Household Facility, Article & Service

Medicine & Medical Service

Transport & Communication

Recreation, Educational & Cultural Service

Source: CEIC, J.P. Morgan.

Figure 10: Share of urban household by urban income class

Asia Pacific Equity Research

Ebru Sener Kurumlu

Figure 11: No. of millionaires

Figure 12: Breakdown of millionaires by regions (2011)

Table 4: Income tax calculation for 2011 (Threshold: 3,500)

Table 5: Income tax calculation for 2007 (Threshold: 2,000)

Whole month taxable income

Whole month taxable income

Table 6: Changes to our earnings estimates discretionary

Asia Pacific Equity Research

Ebru Sener Kurumlu