35826 - China Children’s Product Industry - 03jul2012.pdf

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1、IndustryUpdateChina:Food&StaplesRetailing3July,2012ToprecommendationsWhat’snew?Industryoutlook►GoodbabyInternational(1086HK;►WeinitiateonGoodbaby►ThethirdgenerationofbabyBUY)–TPHK$2.8(24.4%upside).InternationalandBiostimeboomersareenteringtheirInternationalwithBUYratings.primechildb

2、earingyears,which►BiostimeInternational(1112HK;►WefavorcompanieswithshouldleadtoanewbabyBUY)–TPHK$23.5(16.3%upside).strongR&Dcapabilitiesandboom,subsequentlydrivingbrandnames,aswellasdemandforchildren’sexposuretotheexpandingproducts.Chinamarket.ChinaChildren’sProductIndustryPrimaryA

3、nalyst:Chia-WenYehRidingonthewaveofthenextbabyboom+886235187922cw.yeh@yuanta.comKoromLiuWearepositiveonthechildren’sproductindustryinChinaandexpect+862161873824koromliu@yuanta.comthemarkettogrowata16.3%CAGRfrom2010-14F,with13.8%and17.2%CAGRsforthedurablejuvenileproductandinfantformu

4、lasectorsrespectivelyoverthesameperiod.Inourviewgrowthwillbedrivenby:1)Figure1:Companiesmentionedthethirdwaveofbabyboomersenteringtheirprimechildbearingyears,CompanyTickerRatingTP(HK$)leadingtoanewbabyboomstartingfromthisyear,withthoseborninGoodbabyInternational1086HKBUY2.8the1980sb

5、ecomingnewparentswithhighlevelsofdisposableincome;BiostimeInternational1112HKBUY23.5and2)householdexpenditureonchildren’sproductsincreasing;Source:YuantaResearchestimatesspendinginChinaisstillbelowlevelsintheUSandEurope.Weadviseinvestorstofocusonchildren’sproductsthataremostlyconsum

6、edduringthefirstthreeyears(theprimaryspendingstage),andrecommendcompanieswithstrongbrandnamesandchannelexpansion.Followingrecenthigh-profileincidents,wefavorcompanieswithstrongcorporategovernance:►GoodbabyInternational(1086HK;BUY)isourtoppick:WelikeGoodbabyforitsstrongR&Dcapabilitie

7、s,enablingittostrengthenitsstrategicpartnershipswithglobalbrands.Inaddition,expandingcoverageareasofmaternityandspecialtystoresinChinashouldleadtorisingrevenuecontributionfromtheChinamarket,withexpandingmargins.WeforecastanearningsCAGRof26.6%for2011-13F.►WealsolikeBiostimeInternatio

8、nal(1112HK;BUY)fori