证券研究报告 2018年9月17日 | 7:36pm...
TRANSCRIPT
世界各国的调味品都有自身独到的口味,而中国调味品市场的独特之处在于不仅拥有
总计170亿美元的庞大规模,且在高端化、品类扩张和行业整合的推动下增速接近两
位数。此外,中国调味品行业从以下方面来看与许多其他消费品品类有所不同:
消费者对产品均价的敏感度较低,因购买频率低(普通消费者每月购买一次调味1.
品);品牌偏好更稳定(餐饮渠道调味品消费量占比为55%,且通常采购同一品
牌)。
准入门槛高、竞争格局明朗:中国传统调味品的本土特色较强,这为跨国企业设2.
置了准入门槛。尽管市场分散度仍较高,但海天味业是业界唯一业务覆盖全国的
绝对龙头。产能瓶颈和品牌价值为大型企业进一步拓展市场份额提供了天然优
势。
本报告中,我们对中国调味品行业的两大领军公司海天味业和中炬高新进行了直接比
较,涉及公司历史、产品线、经销网络以及品牌战略和管理水平。为了评估中国市场
潜力,我们将海天和中炬与全球同业进行了比较分析,并针对日本家喻户晓的调味品
品牌“万字”作出了案例研究。
我们对海天味业的首次评级为买入,12个月目标价格为人民币81元(上行空间
18%)。尽管海天已经是一家市值270亿美元的日用消费品公司(中国规模最大的日
用消费品公司,白酒企业除外)且对应34倍的预期市盈率,我们认为公司在市场整合
方面仍拥有充足空间,并将在未来3-5年实现稳定增长。我们对中炬高新的首次评级为
中性。
*全文翻译随后提供。
图表 1: 我们对海天味业/中炬高新的首次评级分别为买入/中性估值比较表(截至2018年9月17日)
Ticker Company name
Mkt cap (US$mn)
GS rating
Price Upside PE (2018E)
PE (2019E)
EPS CAGR
ROE (2018E)
603288.SS Haitian 27,001 Buy Rmb 81 68.5 18% 41.8 34.2 23% 35%600872.SS Jonjee 3,320 Neutral Rmb 31.1 28.7 8% 34.8 30.4 26% 17%
TP
资料来源:彭博、高盛全球投资研究
廖绪发, CFA (分析师)执业证书编号:S1420510120006+86(21)2401-8902 | [email protected]北京高华证券有限责任公司
中国 日常消费品
地道中国味:首次覆盖调味品股:对海天味业评级为买入,对中炬高新评级为中性 (摘要)
2018年9月17日 | 7:36PM CST证券研究报告
北京高华证券有限责任公司及其关联机构与其研究报告所分析的企业存在业务关系,并且继续寻求发展这些关系。因此,投资者应当考虑到本公司可能存在可能影响本报告客观性的利益冲突,不应视本报告为作出投资决策的唯一因素。 有关分析师的申明和其他重要信息,见信息披露附录,或请与您的投资代表联系。
Executive summary and key thesis in charts 3
INDUSTRY ANALYSIS 7
China condiments sector in growth stage 8
Case study: Japan condiments and Kikkoman 17
Haitian and Jonjee: Clear leader vs. premiumization beneficiary 21
Valuation methodology and M&A framework 33
COMPANY PROFILES 38
Haitian: Clear leadership to foster healthy industry growth; initiate at Buy 39
Jonjee: Riding the wave of premiumization; initiate at Neutral 46
APPENDICES 52
Appendix 1: Condiment industry snapshot 53
Appendix 2: China condiments in history 57
信息披露附录 59
2018年9月17日 2
全球投资研究 中国 日常消费品
目录
Executive summary and key thesis in charts
We believe China’s condiment sector has one of the most stable growth profiles and
clearest competitive landscapes to be found in the consumer category. China’s
condiment sector enjoys:
Stable demand: Unlike other FMCG or discretionary categories, condiments (soy1.
sauce, oyster sauce, chili sauce, etc.) are central to Chinese cooking and therefore
attract sticky and stable demand, no matter whether consumers are cooking at home
or eating out.
Low pricing elasticity on infrequent purchases and restaurant dependence: The2.
typical Chinese family purchases condiments once a month and spends Rmb10,
making consumers less price sensitive on condiments compared to other FMCG
products. Also, about 55% of condiments volume is used in the restaurant channel,
which tends to have stable brand preferences, resulting in relatively “sticky” prices
for condiments.
Over the next five years, we forecast the condiments market will post a CAGR of 9%,
driven by a combination of volume/ASP growth. Key drivers:
Foodservice strength: We expect foodservice (including online delivery) will continuen
to grow by the double digits yoy and outpace home cooking growth.
Diverse category: With the spread of local dishes (especially from Sichuan,n
Guangdong), consumer taste should diversify further, boosting growth potential for
smaller condiment categories like oyster sauce and bouillon.
Premiumization: China condiments ASP is 50% of Japan/Korea level, 45% of then
mass segment has an ASP of less than US$1/bottle. We see plenty of room for mid
and premium products to take up further market share.
Industry not yet competitive, Haitian leading in all aspects
We expect the overall condiments profit pool to double by 2023E and Haitian to take
39% profit share vs. 26% in 2017. Unlike China’s dairy or beer industries, where two to
three leaders have similar market share and compete on the regional level, the
condiments industry has only one clear leader with a national footprint and a
well-regarded brand, Haitian, followed by a few regional or niche players (such as
Jonjee). Also, the market structure remains fragmented (the top 5 players have 21%
market share) with unbranded or small brand products accounting for most of the
market. Hence, we expect the big players to expand distribution and take share from
non-brand players over the next three years.
Foshan Haitian: Haitian is the largest player with 13% market share and is twice as big
as the No. 2 player (Lee Kum Kee) in terms of revenue. It has established a national
brand with products in all condiment categories. Starting from the mass end, we expect
Haitian will further shift its portfolio toward the mid-end and premium segments, and
hence deliver 370bps of margin expansion by 2020E on the back of mix upgrades and
price hikes. We expect further penetration into lower-tier cities and county town areas
2018年9月17日 3
全球投资研究 中国 日常消费品
and expansion into diverse categories will fuel two-year CAGRs of 17% for sales and
21% for EPS. Given these positives and with our 12-month target price of Rmb81
(implying 18% upside), we initiate on Haitian at Buy.
Jonjee Hi-Tech: Jonjee is a premium soy sauce player from Guangdong province with its
Chubang and Meiweixian brands. We expect Jonjee will deliver above-market sales
growth and gradually improve margins. As Jonjee is still in the process of expanding
distributors and POS, and with its premium brand gaining popularity, we believe it can
deliver 14% condiment sales and a three-year EPS CAGR of 25%. However, with our
12-month target price of Rmb31.10 implying only 8% upside, we view the shares as
fairly valued and initiate coverage at Neutral.
Valuations look justified: Both stocks are trading at relatively high multiples vs. history
(34X/30X for Haitian/Jonjee in 2019E vs. 28X in history). However, we believe this
reflects the stable nature of the condiment industry and the companies’ less volatile
growth profile. Haitian’s superior return (32% CROCI) is among the highest in
consumer names. Hence, compared to Kikkoman’s P/E of 36X, EPS growth of 12%
yoy and 10% ROE, we believe Haitian’s multiple is not yet demanding.
图表 2: We expect the market to grow in the high single digits 图表 3: the China condiment profit pool to double by 2023...
67
114
195
0
50
100
150
200
250
2012 2017 2023E
RM
B b
n
Industry revenue
CAGR of 9.4%
0
5
10
15
20
25
0 50 100 150 200 250
China condiment profit pool Industry volume mn tons
Industry revenue pool (RMB bn)
2012 RMB 7bn
2017 RMB 15bn
2023E RMB 32bn
资料来源:Wind, NBS, Goldman Sachs Global Investment Research 资料来源:Wind, NBS, Goldman Sachs Global Investment Research
2018年9月17日 4
全球投资研究 中国 日常消费品
图表 4: ...with Haitian accounting for nearly 40% 图表 5: Haitian remains the only national player; other firmsare strong in certain regionsCompany revenue breakdown by region, 2017
20% 26% 39%
2% 4%
6%
59% 53% 38%
0%10%20%30%40%50%60%70%80%90%
100%
2012 2017 2023E
Condiment profit share breakdown
OtherShinhoJonjeeLaoganmaLee Kum KeeHaitian North
28%
South 22% South
44%
East 21%
East 25%
East 28%
Central 19%
Central 34%
Southwest 58%
0%10%20%30%40%50%60%70%80%90%
100%
Haitian Jonjee Jia Jia Qianhe
North South East Central West Overseas
资料来源:NBS, Company data, Goldman Sachs Global Investment Research Note: Overseas sales of Haitian is included in the southern China part
资料来源:Company data
图表 6: Exposure to high-growth channels: Channelbreakdown comparison, 2017
图表 7: We expect Haitian to post stronger sales growth andreturns in 2017-20EComparison of key metrics
70%
24%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Haitian
Lee Kum Kee
Donggu
Jonjee
Qianhe
Jia Jia
Restaurant as % of total sales
17%
22%
35%
15%
25%
19%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Sales 2017-20E CAGR Net income 2017-20ECAGR
2018E ROE
Haitian Jonjee
资料来源:Company data 资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 5
全球投资研究 中国 日常消费品
图表 8: Compared to US/Asian peers, China is still a less penetrated and less consolidated market Peer comparison of overall condiment consumption (as of 2017 unless specified)
China Japan Korea USA
Per capita consumption (kg) 12 26 22 21
Volume (K tonnes) 16,802.2 3,310.5 1,129.5 7,041.8
5.8% -0.7% 0.9% 0.6%
ASP (USD/kg) 2.6 7.5 6.7 6.4
3.2% 0.9% 1.2% 1.5%
CR5 (%)
Segment splitNote: segment with less than 3% of total volume does not show the data
Foodservice as % of total volume (%)
2012-17 CAGR
2012-17 CAGR
Vinegar 21% Bouillon
2% MSG 5% Pickled
Products 1%
Oyster Sauces
4%
Soy Sauces
60%
Chilli Sauces
2%
Others 3% Vinegar
3% Bouillon
3% Dry
Sauces 4%
Pasta Sauces
4% Pickled Products
21%
Mayonnaise 6%
Salad Dressing
s 5%
Soy Sauces
25%
Others 25%
Vinegar 11%
Bouillon 7%
Pasta Sauces
12% Pickled
Products 14%
Ketchup 9%
Mayonnaise 9%
Salad Dressing
s 7%
Soy Sauces
3%
Others 27%
Vinegar 12%
Bouillon 4%
MSG 3%
Pickled Products
27%
Ketchup 3%
Mayonnaise 3%
Soy Sauces
17%
Chilli Sauces
10%
Others 18%
12 26 22 21
21 32
80
25
55 38
81
28
Note: Euromonitor foodservice volume data is based on consumer perspective; food processing is not provided separately.
2018年9月17日 6
全球投资研究 中国 日常消费品
INDUSTRY ANALYSIS
2018年9月17日 7
全球投资研究 中国 日常消费品
China condiments sector in growth stage
Big and fast-growing market with rising ASPs and saucediversificationGiant to get bigger: China’s condiment market is already bigger than Japan and
Korea’s (retail and restaurants sales combined), and we believe China could surpass
the current US market size by 2023E. In China, per-capita soy sauce consumption is
already the highest vs. peers; however, overall condiment consumption still lags
significantly.
Also, condiments in China are priced at a large discount to peers, with soy sauce priced
40%/35% lower vs. Japan/Korea. In sum, we expect a smaller ASP gap vs. peers and
rising per-capita consumption. We forecast 4% ASP and 5% volume CAGR to drive the
market expansion in the next five years.
图表 9: China’s retail market for condiments is larger thanJapan’s; we expect it to reach US$45 bn by 2023E
图表 10: We expect higher per-capita consumption on furtherpenetration of light soy sauce and more dining out
6,710
24,116 28,201
40,112 44,691
05,000
10,00015,00020,00025,00030,00035,00040,00045,00050,000
Korea Japan China 2017 USA China 2023E
Total market size comparison (US$mn, 2017)
26.3
22.1 21.5
16.3
12.2
6.5 3.7
0.7
9.6 7.2
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Japan Korea USA China2023E
China2017
Per capita consumption comparison (kg)
CondimentSoy sauce
资料来源:Euromonitor, Goldman Sachs Global Investment Research 资料来源:Euromonitor, Goldman Sachs Global Investment Research
2018年9月17日 8
全球投资研究 中国 日常消费品
Doubling profit pool and acceleration of consolidation by 2023EChina’s condiment industry saw double-digit growth in 2012-2017 and reached
ex-factory total sales of Rmb114 bn in 2017. Looking ahead, we forecast industry sales
to reach Rmb195 bn with an annual CAGR of 9%, and industry profit to double again by
2023E.
The industry is still relatively fragmented: In 2017, No.1 player Haitian took only 13%
revenue share and 26% profit share. However, we forecast consolidation to accelerate
over the next five years with the top five players accounting for 36% of revenues and
62% of profits by 2023E vs. 28% and 47% in 2017.
图表 11: Smaller ASP gaps vs. peers from ASP hikes andpremiumization
图表 12: We forecast a 9% CAGR for 2017-2023E, equallydriven by volume and ASPGrowth of ASP and volume
0.01.02.03.04.05.06.07.08.09.0
10.0
Japan Korea USA China2023E
China2017E
Global retail ASP comparison (USD/kg)
CondimentSoy sauce
Category 2012-17E 2017-23ECondiments 6% 5%Bouillon 8% 6%Vinegar 7% 6%MSG -4% -3%Pickled Products 4% 3%Oyster Sauces 9% 7%Soy Sauces 6% 5%Chilli Sauces 5% 4%
Category 2012-17E 2017-23ECondiments 3% 4%Bouillon 3% 3%Vinegar 4% 4%MSG -1% 1%Pickled Products 3% 4%Oyster Sauces 4% 4%Soy Sauces 4% 4%Chilli Sauces 4% 3%
Volume CAGR
ASP CAGR
资料来源:Euromonitor, Goldman Sachs Global Investment Research 资料来源:Euromonitor, Goldman Sachs Global Investment Research
图表 13: We expect the condiment market to grow by thehigh single digits
图表 14: By 2023, we expect the profit pool to double...
67
114
195
0
50
100
150
200
250
2012 2017 2023E
RM
B b
n
Industry revenue
CAGR of 9.4%
0
5
10
15
20
25
0 50 100 150 200 250
China condiment profit pool Industry volume mn tons
Industry revenue pool (RMB bn)
2012 RMB 7bn
2017 RMB 15bn
2023E RMB 32bn
资料来源:Wind, NBS, Goldman Sachs Global Investment Research 资料来源:Wind, NBS, Goldman Sachs Global Investment Research
2018年9月17日 9
全球投资研究 中国 日常消费品
Driver #1: The rise of “eating out”Reshaping consumer dining habits: Alternatives to home cooking are being increasingly
welcomed by consumers. In a consumer survey conducted by iResearch in June 2018,
more than 50% of respondents said they dined in restaurants more often than they had
previously. About 300mn Chinese consumers placed food delivery orders online in 2017;
online delivery – no longer a niche segment in China – generated US$30bn of sales in
2017, up 21% yoy, according to iResearch.
More changes to come with rising number of younger workers and growing spending
power: According to iResearch, c.65% of middle-class Chinese born in the 1980s/90s
dine out at least three times per week. We believe this indicates a stronger preference
for convenience among young consumers. As more and more people born after 1995
join the labor force and spending power grows, we see further upside for foodservice
consumption.
Restaurant channel key for condiment consumption: As shown in Exhibit 17, more than
50% of soy sauce, oyster sauce, bouillon and MSG is consumed in restaurants, despite
the fact that most food is still consumed in the home. Why? As an example, a 500ml
bottle of soy sauce lasts for a table turnover of 4-5 times in hot pot/barbecue
restaurants, while it may take more than a month for a family to empty the same bottle.
图表 15: ...and consolidation in both the revenue pool... 图表 16: ...and the profit pool to accelerate by 2023E
11% 13% 19%
2% 3% 4%
74% 72% 64%
0%10%20%30%40%50%60%70%80%90%
100%
2012 2017 2023E
Condiment revenue share breakdown
OtherShinhoJonjeeLaoganmaLee Kum KeeHaitian
20% 26% 39%
2% 4%
6%
59% 53% 38%
0%10%20%30%40%50%60%70%80%90%
100%
2012 2017 2023E
Condiment profit share breakdown
OtherShinhoJonjeeLaoganmaLee Kum KeeHaitian
资料来源:NBS, Company data, Goldman Sachs Global Investment Research 资料来源:NBS, Company data, Goldman Sachs Global Investment Research
2018年9月17日 10
全球投资研究 中国 日常消费品
Driver #2: ASP upside from product upgrade and direct price hikesChina’s condiment industry is going through a robust premiumization trend. Using soy
sauce as an example, the industry began with blended to brewed soy sauce, then
moved from solid-state to liquid-state fermentation, which requires a longer
manufacturing time to bring out flavor (the amount of amino acid content determines the
degree of umami). The latest upgrades include specialized, first extracted, zero addictive
and organic products that are tailored to different dishes and satisfy consumers’ desire
for a healthier and more natural lifestyle.
Apart from premiumization, the condiment industry generally hikes prices every three
years to pass on the impact from inflation. ASPs for condiments in China are generally
lower than for peers (Korea, Japan and Taiwan) across categories from soy sauce and
oyster sauce to pickled products and bouillon.
We see two key characteristics of condiment consumption and procurement:
图表 17: Most condiments are primarily consumed inrestaurantsRestaurant volume percentage (2017)
图表 18: c.65% of middle-class Chinese born in the1980s/90s dine out at least three times per weekConsumer survey
55% 56%
72%
4%
61% 56%
12%
0%
20%
40%
60%
80%
Restaurant volume as % of total
<1 monthly Never3/4 times weekly
2018 frequency of foodservice purchasefor Chinese consumers
Overall Middle class born in 80s/90s> twice daily Once daily 5/6 times weekly
Once/twice weekly Twice/3 times monthly
100%
80%
60%
40%
20%
0%
64.6% >3/4 times per week
资料来源:Euromonitor Note: The study defines the middle class as individuals with more thanRmb100,000 in annual income. The survey was conducted in June 2018, witha sample size of 1,490.
资料来源:iResearch
图表 19: We expect foodservice condiment volume growth tocontinue to outpace the retail channel in most categoriesCategory growth by channel
图表 20: Frost & Sullivan expects restaurant sales to grow ata CAGR of 9.6% in 2017-2022Restaurant sales yoy
Category 2015-17 2017-23EBouillon 5.7% 4.8%
7.3% 6.6%Pickled Products 4.0% 2.7%
3.1% 2.1%Oyster Sauces 7.7% 6.4%
8.7% 7.4%Soy Sauces 4.8% 3.0%
5.8% 4.7%Chilli Sauces 4.8% 3.8%
4.7% 3.8%Retail volume Foodservice volume
3,964
6,280
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Restaurant sales (Rmb bn) YOY
资料来源:Euromonitor, Goldman Sachs Global Investment Research 资料来源:Frost & Sullivan Analysis
2018年9月17日 11
全球投资研究 中国 日常消费品
Characteristics of family consumption - low frequency, low ASP per item and taste1.
stickiness: Purchases for family consumption are typically infrequent (generally once
every 1-2 months), and spending on condiments is relatively minimal. On a
transaction basis, the average retail price of a 500ml bottle of soy sauce/oyster
sauce is less than Rmb8/Rmb11; from a consumer expenditure perspective,
condiments account for only c.1% of spending on food and beverage products for
Chinese.
Stable quality critical for restaurant procurement: As the consistency of cooking2.
quality plays an important role in attracting regular customers, chefs and restaurant
owners place a high value on stable flavor and quality, which makes them more
likely to stick with the same brands.
As a result, condiment consumption has been relatively inelastic; the degree of price
hikes have typically more than offset the rising cost pressure from raw materials and
packaging materials. We expect an ASP CAGR of 3%-4% across most categories
(except MSG) in 2017-2023E, benefiting from stable ASP hikes and continuous product
upgrades over time.
图表 21: Most categories have seen stable ASP growth in2012-2017E (except MSG)ASP growth
图表 22: China ASP: Mid-single-digit growth withpremiumizationASP trend for condiments in China
Category 2012-17 2017-23ECondiments 3% 4%Bouillon 3% 3%Vinegar 4% 4%MSG -1% 1%Pickled Products 3% 4%Oyster Sauces 4% 4%Soy Sauces 4% 4%Chilli Sauces 4% 3%
ASP CAGR
-1%0%1%2%3%4%5%6%7%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
ASP Yoy growthUUSUS$US$/US$/kUS$/kgUS$/kg
资料来源:Euromonitor, Goldman Sachs Global Investment Research 资料来源:Euromonitor, Goldman Sachs Global Investment Research
图表 23: China’s lower ASP relative to major peers… 图表 24: Companies generally hike prices every three yearsto match inflationASP hike history
0.02.04.06.08.0
10.012.014.016.0
Soy Sauces Oyster Sauces Pickled Products Bouillon
ASP comparison (USD/kg) China Korea Japan Taiwan
ASP hikes EventsHaitian 5% Jan 2017 2014Jonjee 6% Mar 2017 2014Hengshun Apr, Jun 2016Fuling Zhacai 15% Feb 2017Note: almost hike price every 3 years to match inflation
资料来源:Euromonitor 资料来源:Company data
2018年9月17日 12
全球投资研究 中国 日常消费品
Driver #3: Sauce diversification along with national expansion oflocal dishesUniquely China - soy sauce dominance: While the local cuisines of Japan and China rely
on soy sauce to add saltiness and enhance umami, there is a divergence in the overall
consumption of condiments: soy sauce represents only 25% of the condiments
consumed in Japan, which we attribute to the influence of western culture (see next
section for Japan case study), but it represents 60% of the condiments consumed in
China.
We attribute the popularity of soy sauce in China to a number of factors: 1) soy sauce
continues to be a substitute for salt in China; 2) the use of soy sauce is prevalent across
all types of Chinese cuisine from the south to the north of the country; 3) cuisines with a
high consumption of soy sauce (such as hot pot and Guangdong cuisine) have become
increasingly popular, as shown in the popularity heatmap of the two cuisines shown in
Exhibit 27.
We expect soy sauce to remain predominant among Chinese flavors, but we also expect
other flavors to gain share gradually due to the expansion of local dishes. Mainly, we
attribute this to the growth of migration and domestic travel/e-commerce as well as
policy support.
Migrant movement: Sichuan province has been one of the biggest sources of migrants
(c.12mn, 15% of total cross-province migrants in 2017). The top five destinations for
migrants are Guangdong, Zhejiang, Chongqing, Shanghai and Beijing. Correspondingly,
we see a rise of popularity for Sichuan food in these regions, first in the south, then the
Yangtze River Delta, and finally across the rest of the country.
Exposure to diverse cuisines through travel and e-commerce: Domestic travel continues
to see growth in the low teens, and the number of trips reached 5bn in 2017. In addition,
e-commerce allows consumers to taste non-local dishes without the need to travel far
away.
Favorable policy supports national expansion of local dishes: In 2015, the Yunnan
government launched a promotional campaign to publicize Yunnan cuisines nationally
and support the foodservice, agriculture and tourist businesses. In 2016, the Chengdu
government issued policies aimed at: 1) boosting the value of restaurant sales to
Rmb100 bn by 2020E; and 2) enhancing Chengdu’s role as the standard-setter and
center for the production and distribution for Sichuan food ingredients (e.g., spices, spicy
sauce, etc.).
As such, we expect stronger growth for smaller condiment categories that cater to
regional cuisines including vinegar, bouillon and oyster sauce in 2017-23E relative to
soy sauce.
2018年9月17日 13
全球投资研究 中国 日常消费品
图表 25: Soy sauce accounts for 60% of condiment volumeconsumed in China...China condiment breakdown (2017)
图表 26: ...but only accounts for 25% in JapanJapan condiment breakdown (2017)
Bouillon 3%
MSG 5%
Pickled Products
1%
Oyster Sauces 4%
Soy Sauces 60%
Chilli Sauces 2%
Others 3%
Vinegar 21%
China condiment breakdown
Bouillon 3%
Dry Sauces 4%
Pasta Sauces 4%
Pickled Products
21%
Ketchup 3%
Mayonnaise 6%
Salad Dressings
5%
Soy Sauces 25%
Others 25%
Vinegar 3%
Japan condiment breakdown
资料来源:Euromonitor, China Condiment Association Note: Soy sauce in Japan includes soy derivatives (e.g., Teriyaki, Sukiyaki,Yakitori).
资料来源:Euromonitor, Statistics Japan
图表 27: Popularity trend for hot pot, Guangdong food
Soy sauce is heavily used in hot pot and Guangdong food.
Strong Weak Popularity
Popularity of hot pot in China over time
2013 2014 2015 2016
Popularity Strong Weak
Popularity of Guangdong food in China over time 2013 2014 2015 2016
资料来源:Dianping.com
图表 28: Population migration, and the spread of local tastesnationwide, helps diversify condiment consumptionImmigrant workers (2016)
图表 29: We expect oyster sauce, vinegar and bouillon togrow faster than soy sauce in 2017-2023ECategory growth (2017-2023E CAGR)
0%
5%
10%
15%
20%
25%
30%
35%
40%
Guangdong Zhejiang Chongqing Shanghai Beijing
Destination breakdown of Sichuan immigrant workers
7%
6% 6% 5%
4%
3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
OysterSauces
Vinegar Bouillon Soy Sauces ChilliSauces
PickledProducts
Total volume
资料来源:Government of Sichuan Province 资料来源:Euromonitor, Goldman Sachs Global Investment Research
2018年9月17日 14
全球投资研究 中国 日常消费品
Driver #4: Leaders gain share from consumption upgrade, nationalexpansion and brand leverageWe see a number of factors as benefiting condiment leaders, particularly in the soy
sauce segment, driving further consolidation. Haitian, Jonjee and Lee Kum Kee – the
top three players in China – account for only 25% of the soy sauce segment,
significantly below the c.60% market share for the top three players in the US and
Japan.
Compared to the other condiment segments, soy sauce has characteristics that may
limit the entry of new players into the segment. Even though the soy sauce market
dominates condiment consumption in China, southern China is the most suitable region
for the production of liquid-state soy sauce (c.25% of all types of soy sauce; has superior
taste and stronger umami). As a result, Guangdong province produces the largest share
of the soy sauce consumed in China (at least 35% of national production).
Furthermore, as leading players move beyond the soy sauce segment, we expect they
will accelerate expansion in not only soy sauce but also other condiment categories over
the next five years. As they seek to do this, they will be able to employ their advantages
in product differentiation, national expansion capability and brand leverage to extend
their category portfolio.
图表 30: Low concentration but consolidating in ChinaMarket share for China’s top-five condiment players
图表 31: Haitian accounted for 16% of market share byvolume in 2017
17% 18%
19% 19%
20%
21% 21% 21% 21% 21%
15%
16%
17%
18%
19%
20%
21%
22%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
China top 5 market share
16%
4%
3%
10%12%14%16%18%20%22%24%
2014 2015 2016 2017
Soy sauce market share by volume Haitian Meiweixian Lee Kum Kee
资料来源:Euromonitor 资料来源:Company data, Euromonitor, NBS
2018年9月17日 15
全球投资研究 中国 日常消费品
图表 32: Soy sauce market in China is more fragmented thanin other countries (2017)Soy sauce top-three market share in China
图表 33: Guangdong province contributes more than 35% ofnational volume
25%
61% 67% 68%
88% 95%
0%
20%
40%
60%
80%
100%
China USA Japan Taiwan UK Korea
Soy sauce top 3 market share
0
2
4
6
8
10
12
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Mill
ions
tons
Soy sauce production volume breakdown Guangdong Other
资料来源:Company data, NBS, Euromonitor 资料来源:NBS
2018年9月17日 16
全球投资研究 中国 日常消费品
Case study: Japan condiments and Kikkoman
Industry dynamicsThree stages for Japan soy sauce in 1972-present: Japan has gone through three
development stages over time — consumption upgrade, maturing stage, and declining
stage.
Consumption upgrade (1972-1982): The average Japanese consumed more than 10
litres per year (12 litres at the peak level in 1973), and ASP more than doubled in 10
years. During this stage, ASP growth was highly correlated to income growth, which
more than doubled from ¥0.9mn in 1972 to ¥2.4mn in 1982.
Maturing stage (1982-2000): ASP was relatively stable (except for a 10% rise in 1991).
Consumers gradually switched from soy sauce to other sauces, which led to a decline in
per-capita consumption to c.8.5 litres by around 2000.
Declining stage (2000-present): ASP has suffered from deflationary pressure.
Furthermore, the decline of per-capita consumption in soy sauce accelerated; due to this
factor, combined with the shrinking population since 2008, industry volume dropped to
below 800K kl. In response to the industry downsizing, smaller players exited the market
(6K in 1955 vs. only 1.3K in 2015), and leaders grew through consolidation.
图表 34: Initially the industry continued to grow by upgrading productsASP and volume trend of soy sauce in Japan
050
100150200250300
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
CPI: soy sauce in JapanMaturing stage Declining stage Consumption
upgrade
4
6
8
10
12
0200400600800
100012001400
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
’000
kl
Production volume Consumption per cap (litre)
资料来源:Department of Agriculture, Forestry and Fisheries
2018年9月17日 17
全球投资研究 中国 日常消费品
Kikkoman case studyKikkoman has implemented three key strategies to support sustainable growth:
premiumization, globalization and diversification.
PremiumizationAlong with the strong income growth since 1960, consumers have increasingly moved
beyond the satisfaction of basic needs in search of rich flavors, health benefits, and
quality ingredients, and they have become more and more willing to pay a premium for
higher-quality products. Kikkoman, which began producing natural brewed soy sauce in
the 17th century, earned its premium reputation in the early 19th century. Post World
War II (during the late 1940s), chemically produced soy sauce became dominant, and
consumers increasingly opted for western food that did not use soy sauce. At this time,
Kikkoman promoted its key differentiation (natural brewing techniques), implemented
effective marketing activities (e.g., sponsorship of cooking programs on TV that paired
soy sauce with a variety of food, new and unique packaging, and free cooking classes
for Japanese housewives) and became a key beneficiary in the first round of product
upgrade - from chemically produced to naturally brewed soy sauce.
Facing the continued declining industrial trend, Kikkoman has introduced a number of
key SKUs since the 1960s to satisfy growing demand for premium products - lite soy
sauce (50% less salt), premium soy sauce, organic soy sauce and raw soy sauce
(unpasteurized). Lite soy sauce, for example, represented 13% of Kikkoman’s total soy
sauce production by 2014.
图表 35: In the later stages of industry development, amiddeflationary pressure and declining volume, major playersgrow through consolidationMarket share breakdown over time
图表 36: The number of soy sauce makers declined from9,000 in 1917 to 2,300 in 1989 and to 1,258 in 2015 Number of soy sauce manufacturers
Kikkoman Yamasa Higashimaru Shoda MarukinOthersMajor other brands
(%)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1955
1960
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Number of soy sauce manufacturers
资料来源:Company data 资料来源:Department of Agriculture, Forestry and Fisheries
2018年9月17日 18
全球投资研究 中国 日常消费品
GlobalizationWe identify a number of factors that have contributed to Kikkoman’s successful
globalization of soy sauce.
Firstly, instead of expanding to other Asian countries, Kikkoman decided to prioritize the
US market where no established brands or preferred local tastes of soy sauce existed.
At that time (in the 1950s), the soy sauce market in the US was dominated by two major
players selling chemically produced soy sauce. Thus, Kikkoman was able to differentiate
itself by developing a higher standard of soy sauce. In addition, higher income levels
made consumers more willing to try new things.
Secondly, rather than limiting itself to Asian dishes, which at that time were not
considered to be mainstream cuisine in the US, Kikkoman popularized the use of soy
sauce with local food (such as steak). In addition, it developed tailored soy sauce/soy
sauce derivatives for western dishes to strengthen competitiveness vs. local sauces
(e.g., Teriyaki for barbecue, sweet and sour sauce, steak sauce, etc.).
Lastly, Kikkoman maintained its premium positioning and did not join the price war
initiated by two other players (La Choy and Chun King). Instead, it emphasized the
quality of its products through the 15% ASP premium relative to peers and obtained the
profitability needed to fund consumer education and brand building. Kikkoman employed
a diverse range of promotional campaigns, including: offering free recipes to
housewives, staging in-store demonstrations where consumers could sample foods
flavored with Kikkoman sauces, introducing products to chefs and food critics, and
running advertisements that promoted the use of soy sauce with steaks.
DiversificationBeyond soy sauce, Kikkoman also diversified into segments by leveraging its strength in
marketing, technology and know-how.
图表 37: Product upgrade: From a focus on health to betterraw materials to new tastesKikkoman product upgrade
图表 38: Soy sauce with less salt contributed 13% of sales in2014, vs. only 7% in 2004.
TypeLite soy sauce
Premium soy sauce
Organic soy sauce
Raw soy sauce
Chacteristics 50% less salt
Premium soybean Organic Unpasteuriz
ed
Year of launch 1965 1990 1998 2010
Mix upgrade from product innovations
7%
13%
0%
2%
4%
6%
8%
10%
12%
14%
2004 2014
Lite soy sauce sales volume as % of total
资料来源:Company data 资料来源:Company data
2018年9月17日 19
全球投资研究 中国 日常消费品
Marketing expertise: In 1962, Kikkoman secured the Coca-Cola franchise in Japan and
formed a joint venture with Del Monte to obtain the perpetual marketing rights to sell Dell
Monte’s tomato ketchup and juices in Asia.
Technology development: In the 1990s, Kikkoman developed biotechnology (genetically
modified organisms) that made it possible to detect contaminating microorganisms in its
food processing line.
Fermentation know-how: Kikkoman launched Manns Wine in 1962 to produce and sell
western-style wine. At a time when domestic consumption of wine was low, the company
promoted wine as a healthy beverage with corresponding marketing campaigns such as
tasting booths; this helped boost home consumption from 0% to 20% of total wine
consumption in Japan.
图表 39: In the US market, Kikkoman has developed new soy sauce derivative products over timeto tailor to local tastes and the latest health trendsDiversification to soy sauce derivatives
Retail condiment product listSoy sauce
Lite Soy Sauce
TeriyakiLite TeriyakiRoasted Garlic TeriyakiTeriyaki Baste & Glaze Steak Sauce
Sukiyaki SauceTempura Sauce
Quick & Easy: Seasoning Mix:
Teriyaki Baste & Glaze with Honey & Pineapple
Chow Mein, Fried Rice, Stir-Fry Mix, Sweet & Sour, Teriyaki Mix, Meat Marinade, Broccoli Beef
Stir-FrySweet & SourSweet & Sour Dipping SauceMemmiKotterin MirinTonkatsu Sauce
Toasted Sesame, Roasted Garlic & Herb, Honey & Mustard
1983: Responded to people’s desire of healthy diet
After 1970: introduced soy sauce derivative products
1961: Introduced Teriyaki, accustomed to American market to grab share from barbecue sauce
资料来源:Company data
图表 40: Diversification relying on existing strengths in marketing, technology and know-howDiversification
OthersSoy sauce Food products
Beverages Liquor and Wine
Foods-wholesaleSoy sauce Del Monte
- Asia & OceaniaOther Foods- North America
Biochemical business, chemical, logistics and other business
Sales of oriental food products in Japan and overseas
Foods-Manufacturing and sales (overseas)
Foods-Manufacturing and sales
- North America- Europe- Asia & Oceania
资料来源:Company data
2018年9月17日 20
全球投资研究 中国 日常消费品
Haitian and Jonjee: Clear leader vs. premiumization beneficiary
China’s condiment industry is characterized by having one clear leader, a focus on the
soy sauce segment, and increasing brand segmentation.
One industry leader: Haitian sales are significantly larger than those of peers. Based on
ex-factory sales, Haitian is almost four times as big as Jonjee and almost eight times as
big as Jia Jia. In comparison, we normally see more than two comparably big players in
a sector in China, such as Yili and Mengniu in the dairy sector, and ABI China, CR Beer
and Tsingtao in the beer sector.
Clear priority of soy sauce segment: Both Haitian and Jonjee generate most of their
sales from soy sauce, at 61% and 65%, respectively, in 2017. At an industrial level, 60%
of condiment sales are derived from soy sauce products. We expect the dominance of
soy sauce to persist in China as: 1) soy sauce continues to be a substitute for salt; 2) the
use of soy sauce in China is prevalent in all types of cuisine from the south to the north
of the country; 3) cuisines with a high consumption of soy sauce (such as hot pot and
Guangdong cuisine) are becoming increasingly popular in China.
Differentiating segmentation: Comparing by pricing strategy, Haitian and Jia Jia have big
exposure to the mass to mid end while Jonjee, Qianhe and Shinho remain in the
premium/super-premium segment. This difference in target consumers, signaled by the
different pricing strategies, has allowed many of these companies to enjoy double-digit
growth over the past few years.
图表 41: Haitian is China’s clear leader in condiment salesSize of major players (2017)
图表 42: Soy sauce represents most of Haitian’s sales, andcondiments account for 90% (2017)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Haitian Jonjee Jia Jia Hengshun Fuling Zhacai
Sales size (RMB mn)
Soy sauce 61% Oyster sauce
16%
Other Sauce 14%
Others 10%
Haitian sales breakdown
资料来源:Company data 资料来源:Company data
2018年9月17日 21
全球投资研究 中国 日常消费品
Historical background: Why is Haitian the clear leader?A few key factors have supported Haitian’s growth:
Developed into a profit-oriented company: In 1994, Haitian became the first condiment
company in China to transit from being a state-owned company to a corporation with
shares primarily owned by employees. Later, it used a stock ownership program to help
retain talent - key employees were given shares options/stock placements but had to sell
them back at book value if they left the company. In 2007, Haitian changed from being a
collectively owned LLC to a private enterprise, laying the foundation for strong incentives
that align interests and unlock growth potential.
Started with brand building and then diversified to leverage brand power: Haitian’s
strategy is to build big SKUs and become No.1 in a segment before spending huge
resources to cultivate other products. This concentration of resources has helped Haitian
maintain its position as China’s biggest soy sauce maker since 1994; it has also
helped to cement Haitian’s association with quality soy sauce in the minds of
consumers. Leveraging its strong brand image and reputation, Haitian has diversified
into new sub-categories, e.g. soybean sauce and sauce for rice. By 2013, these two
SKUs already reached sales of Rmb1 bn and Rmb100 mn, respectively.
From a regional to a national distribution network: Twenty years ago, a number of
leading companies were well-known for the quality of their soy sauce; however,
industrial dynamics began to change after Haitian began recruiting college graduates to
fill national sales roles in 1997, and Haitian quickly rose to the No.1 position in Hubei
province the following year. With strong execution, Haitian is now a national player with
29% of sales from the central/west and 28% from north China. Haitian continued to
expand globally and now sells to more than 60 countries.
Becoming the lowest-cost player in the industry: Haitian expanded capacity by 1mn tons,
1.5mn tons and 2.2mn tons in 2005, 2010 and 2017, respectively. This leadership has
ensured that Haitian enjoys the lowest costs due to economies of scale.
图表 43: Over 90% of Jonjee’s revenue comes fromcondiments (2017)
图表 44: Jonjee has a higher ASP than both Haitian and JiaJiaASP comparison (Rmb/ton)
Soy sauce 65%
Chicken essence
11%
Other sauces 11%
Others 4%
Jonjee sales breakdown
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
2012 2013 2014 2015 2016 2017
Haitian Jia Jia JonjeeRMB K/ton
资料来源:Company data 资料来源:Company data
2018年9月17日 22
全球投资研究 中国 日常消费品
图表 45: We identify four key factors that have supported Haitian’s growth: 1) management incentives are properly aligned with company; 2) leverage of established brandreputation; 3) depth of distribution; and 4) economies of scaleHaitian in history
1994 1997 1998 2002 2005 2006 2007 2011 2013 2014 2017
2006: "China Time-honored Brand",
Expanded to oyster, vinegar, etc.
2007: Introduction of
Soybean Sauce
2011: Introduction of Sauce for Rice
2014: IPO to support capacity expansion plan
2017: launch 2.2mn ton capacity
expansion plan
2005: 1mn ton plant - biggest worldwide 2010: launch 1.5mn ton capacity expansion plan
Turning to a market-oriented profit-maximizing organization
Going international and Continuing nationalization: from south to north, then coastal to central
2007: LLC to private enterprise, share repurchase at Rmb 19.532/stock
Regional to national
Economies of scale: lowest cost player
2005: Soy sauce export +50% yoy
Corporate 2002-2006: Stock option and employee stock placement at Rmb 2.18/stock; If leaving the
company, compulsory to sell at Rmb 1.0
1994: SOE to LLC, 70% owned by employees (749
employees), purchase price Rmb 1/stock
Incentive alignment Retaining talents
Diversification to leverage brand reputation
Product
Distribution
Scale
1997: Recruit college graduates for S&D nationally
1998: No.1 in Hubei
1994: Biggest soy sauce producer in China
Building brand recognition
2013: Introduction of premium soy sauce line "Time Honor", Soybean sauce and sauce for rice to reach
Rmb1bn and Rmb100mn sales respectively
North 26%
South 28%
East 25%
Center 15%
West 6%
2009 Sales by geography
North 28%
South 22%
East 21%
Center 19%
West 10%
2017 Sales by geography
资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17⽇ 23
全球投资研究 中国 ⽇常消费品
Haitian maintains leadership while Jonjee rises with premiumizationIn this section, we take a deep dive into Haitian and Jonjee across a number of
dimensions - products, cost differentials, branding, distribution and employee incentives.
The analysis addresses two key questions: 1) Why have Haitian/Jonjee seen their share
prices more than triple/double over the past five years? 2) How much further upside
potential could we see over the next five years?
图表 46: Share price vs. sales vs. OPM trend for Haitian and Jonjee
335
100
256
0
50
100
150
200
250
300
350 Share price performance
HaitianJonjee
Haitian: initial public offerings
Haitian: launched 2.2mn tons condiment expansion project
Haitian: slower sales yoy at 7% only for 1Q16
Haitian: launched 1.5mn tons condiment expansion project
Haitian: launched Signature Sauce for Rice, reaching RMB 100mn sales in 2013
Haitian: introduced premium soy sauce "Time Honor", Soybean sauce to reach Rmb1bn sales
Jonjee: Qianhai Life became biggest shareholder Jonjee: capacity expansion in Yangxi
Jonjee: branding ad "basking for 180 days"
Jonjee: 650K tons Yangxi capacity expansion project
5,516 6,091 7,070
8,402 9,817
11,294 12,459
14,584
17,072
1,278 1,735 1,754 2,318 2,642 2,759 3,158 3,609 4,322
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
2010 2011 2012 2013 2014 2015 2016 2017 2018E
Sales (RMB mn)
HaitianJonjee
4.3X
4.0X
17% 19% 21% 22% 24% 25% 26% 27% 28%
9% 9% 8% 12% 13% 12%
15% 16% 18%
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014 2015 2016 2017 2018E
Operating profit margin
HaitianJonjee
0%
5%
10%
15%
20%
25%
30%
35%
2010 2011 2012 2013 2014 2015 2016 2017 2018E
ROIC
HaitianJonjee
资料来源:Datastream, Company data, Goldman Sachs Global Investment Research
2018年9月17日 24
全球投资研究 中国 日常消费品
#1 Product differentiation: Haitian dominates mass and mid-end while Jonjeespecializes in the high-end segment Haitian - affordable and comprehensive offerings: Haitian has three soy sauce SKUs
with Rmb1 bn in sales - Gold label soy sauce (金标), mushroom-flavored dark soy sauce
(草菇老抽) and premium soy sauce (味极鲜), priced at Rmb10/500ml, Rmb9/500ml and
Rmb9.9/380ml, respectively. This is consistent with Haitian’s strategy of offering
affordable products to mass-market consumers. Haitian has also developed soy sauce
derivatives that have been well received by consumers (e.g., sauce for rice and soybean
sauce), and it has diversified into other sub-categories as well, with meaningful sales
contribution from oyster sauce. In total, Haitian offers more than 200 SKUs (160 SKUs in
Tmall) to its consumers nationally.
Jonjee - stay premium: In comparison, 90% of Jonjee’s sales come from products with
amino acid content higher than the industrial standard of premium quality (0.8%), and
the biggest sales contribution for Jonjee is its signature soy sauce, which is priced at
Rmb 9.5/410ml. This clearly shows Jonjee’s differentiation and more premium
positioning relative to industrial leader Haitian.
图表 47: ASP differences are due to various niche market needs and premium product offeringsSoy sauce brand mapping
Soy sauce500ml/bottleVolume market share
Sales breakdown: 20%Premium (>Rmb 10)
Organic soy sauce Organic soy sauce Organic soy sauce41.6 37.0 68.0Natural brewed sauce Natural brewed sauce Natural brewed sauce Natural brewed sauce Natural brewed sauce23.8 18 11.2 21.4 29.8First extracted soy sauce Signature soy sauce First extracted sauce26.9 10.4 15.8Chili soy sauce Natural children’s sauce Sweet soy sauce Sashimi soy sauce16.7 35.0 23.9 39.0Premium soy sauce Premium soy sauce Premium soy sauce Seasoned soy sauce11.2 11.5 12.9 19.9
Sales breakdown:35%Gold label soy sauce Gold label soy sauce Premium light soy sauce Salt reduced light sauce10.0 9.1 10.0 9.8Yi Pin Xian Gold label soy sauce Gold label soy sauce Seasoned soy sauce9.9 9.1 9.8 8.8Mushroom flavored dark Mushroom flavored dark9.0 9.1
Sales breakdown: 45%Seasoned soy sauce Meiweixian gold label Light soy sauce Gold Label sauce6.9 6.8 6.0 7.9Superior soy sauce Meiweixian dark Mushroom flavored dark Mushroom flavored dark5.5 6.2 5.8 7.8Superior dark Meiweixian traditional Kum chun soy sauce5.5 3.5 6.0
30% 80%
10%55%
10%15%
Haday (Haitian) Chubang (Jonjee) Lee Kum Kee
1) Organic
2) Zero addictive
16% 4% 3%2%
KikkomanMaster (Kraft Heinz)
0.1%
3) First extraction
4) Specialized
Note: 1) Typically, there are two ways of fermentation for soy sauce. Liquid-state: natural brewed soy sauce requires 3-6 months of fermentation process for soybean / wheat. Solid-state: it requires only 15-45 days of fermentation for wheat skin and soybean. At higher costs, the liquid-state method produces higher content of amino acids, which translates into better tastes.2) After the fermentation process, saline water is used to extract the amino acids. The first extraction contains more amino acids and as a result is more premium than the second and third extractions.3) Zero addictive means no sweetening agent, essence, pigment or preservative.4) dark sauce is adding caramel coloring into light soy sauce.
5) Umami
Mid-end (Rmb 8-10)
Mass (<Rmb 8)
资料来源:Tmall.com, Goldman Sachs Global Investment Research
2018年9月17日 25
全球投资研究 中国 日常消费品
#2 Distribution: Haitian’s strength is in the relatively “sticky” restaurantchannel and national distribution; Jonjee is an established regional playerskewed to family consumptionHaitian has an extensive national distribution network. Haitian’s sales are more evenly
distributed than for other major players, with the eastern/northern /southern regions each
contributing 20+% of revenue. Western sales ratio as a percentage of the total has also
grown steadily. This is supported by the company’s extensive distribution network, with
3,500 first-tier distributors, about 1mn POS, and penetration to the county level in China.
In addition, Haitian plans to grow the size of its distributors in line with sales growth
every year in order to drive further penetration. Haitian also has significant exposure to
the restaurant channel (c.70%). The sticky demand from restaurants, which tend to favor
products that have high and stable quality, should help Haitian enjoy stronger channel
growth vs. retail along with the rise of dining out and delivery service.
We believe Jonjee, which is established in private consumption in the south and east,
has the potential to become the second national condiment player. Southern and
eastern China accounted for 44% and 25% of the company’s sales, respectively, in
2017. Outside of the southern part of the country, Jonjee still operates mostly at the
prefecture level, selling to 250K POS through 700+ first-tier distributors. It aims to
increase its first-tier distributors 10% every year to reach 1,000 by 2020E. The company
maintains good and stable relationships with distributors, and offers 5%-10% net margin
for its distributors; this is higher than for Haitian but similar to the industry average.
Besides, the majority of Jonjee’s sales come from family purchases through the retail
图表 48: Haitian’s diversification within soy sauce/soy sauce derivativesDerivatives of soy sauce
Examples XO sauce Seafood sauce Soybean sauce Abalone sauce Signature sauce for rice
Soy sauce derivatives
Ingredients Soybean oil, scallop, shrimp, etc.
Sugar, soybean, wheat, salt, garlic, vinegar, etc.
Soybean, sugar, salt, garlic, vinegar, etc.
Soy sauce, sugar, salt, abalone, wine, etc.
Soybean oil, mushroom, chili, salt, etc.
Balanced flavor
资料来源:Company data, Goldman Sachs Global Investment Research
图表 49: Haitian has the most comprehensive offerings of productsCategory diversification
(RMB mn) Tmall SKUs Soy sauce Soybean sauce Oyster sauce Chicken powder Cooking wine Vinegar Chili sauceSales 8,836 1,000 2,040 NA NA NA NA
160
Sales 2,348 100 100 414 50 80 NA
118
Haitian
Jonjee
资料来源:Company data, Goldman Sachs Global Investment Research, Tmall.com
2018年9月17日 26
全球投资研究 中国 日常消费品
channel, and only 24% of its sales are generated through the restaurant channel. Jonjee
is working on expanding its restaurant channel through chef clubs and sponsorship of
chef competitions.
Strong bargaining power against distributors: Both Haitian and Jonjee have adopted
cash before delivery as a core element of their distributor policies. This has resulted in
significantly lower accounts receivable days compared to other industries in the
consumer space. It may also suggest there is limited competition in the industry
currently and significant upside for condiment penetration.
#3 Branding: Haitian’s 10X spending to educate consumersThree-hundred-year history of sauce brewing: Both Haitian and Jonjee have built their
reputations locally over time. Looking back to 300 years ago, Haitian was already a
famous large-scale brewing store, with multiple SKUs selling to western and northern
图表 50: Haitian remains the only national player; other firmsare strong in particular regionsCompany revenue breakdown by region, 2017
图表 51: Exposure to high-growth channels: Channelbreakdown comparison (2017)
North 28%
South 22% South
44%
East 21%
East 25%
East 28%
Central 19%
Central 34%
Southwest 58%
0%10%20%30%40%50%60%70%80%90%
100%
Haitian Jonjee Jia Jia Qianhe
North South East Central West Overseas
70%
24%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Haitian
Lee Kum Kee
Donggu
Jonjee
Qianhe
Jia Jia
Restaurant as % of total sales
Note: Overseas sales of Haitian is included in the southern China part
资料来源:Company data
资料来源:Company data
图表 52: Haitian has penetrated down to the county levelwhile Jonjee operates mostly at the prefecture level outsideof south ChinaNumber of distributors and POS
图表 53: Haitian has strong bargaining power withdistributors, and Jonjee provides higher margin tocompensate for volume differenceDistribution policy
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
0
500
1000
1500
2000
2500
3000
3500
4000
Haitian Jonjee
Number of first-tier distributors POS (RHS)Haitian Jonjee
Distributor relationship Strict requirement Stable
Margin GPM 10% NM 5-10%, similar to industry avg
Order policy
A/R days 0.5 11.4
Cash before delivery
资料来源:Company data 资料来源:Company data
2018年9月17日 27
全球投资研究 中国 日常消费品
Guangdong. In 2006, it was designated as the “China Time-Honored Brand” by the
Department of Commerce.
Jonjee, established in 1934, was the first company to market dark soy sauce and
became popular through its product differentiation.
Haitian’s 10X marketing budget to educate market on new products: In terms of
absolute A&P spending, Haitian’s budget is 10 times the size of Jia Jia/Jonjee’s. We
attribute this to two key factors: 1) Being the only national condiment player, Haitian
markets its brand on a national scale rather than at a regional level; the entertainment
programs it sponsors are popular, allowing Haitian to reach a large audience. 2) As an
industrial leader, Haitian educates consumers on how to use newly developed sauces.
As a result, most of its budget focuses on certain SKUs, e.g. seasoned soy sauce
(higher amino-acid content, stronger umami than normal soy sauce), oyster sauce, and
soybean sauce.
Jonjee using efficient spending to tackle its weakness: In comparison, Jonjee has not yet
become a national player, with more than 40% of its sales from southern China. Only
20% of its sales come from the restaurant channel. Consequently, Jonjee’s spending
focuses on: 1) building up the restaurant channel; and 2) enhancing brand awareness.
As a result, its campaigns have included the sponsorship of chef competitions and
product placements for its entire brand rather than single SKUs.
图表 54: Haitian leads in terms of brand investment toeducate the national marketA&P spending, 2017
图表 55: Campaign comparison: Haitian focuses on SKUswhile Jonjee focuses on brandHaitian and Jonjee campaigns
848
56 74
6%
2%
4%
0%
1%
2%
3%
4%
5%
6%
7%
0
100
200
300
400
500
600
700
800
900
Haitian Jonjee Jia Jia
Advertising spending (RMB mn) Advertising as % of sales Year 2016 2017 2018Soy sauce The next Who’s still standing Go fighting
I am the future Crossover singerFamiliar taste
Avg rating 1.7 0.9 1.1Oyster sauce Fighting man The brainAvg rating 0.9 1.1Soybean sauce Push the button If you are the one
Four big helpers The brainAvg rating 0.9 1.4Brand Familiar taste
Chinese restaurantAvg rating 0.9
Year 2017Soy sauce Star chefAvg rating 0.5Brand Hailing island marathon
Top chef clubAvg rating -
Haitian
Jonjee
资料来源:Company data 资料来源:Company data, tvtv.hk
2018年9月17日 28
全球投资研究 中国 日常消费品
#4 Incentive plans: Haitian aligns incentives to motivate and retain talent; Jonjeeis transforming into a more market-oriented companyHaitian - aligned incentives to reach short-term and long-term performance targets:
Cash incentives for Haitian’s management and average employees are the highest
among the major listed condiment players, which helps ensure that annual performance
targets are met. The 74% owned by management and employees and the restricted
stock unit awards with a four-year vesting period ensure that key talent focus on the
company’s long-term growth and seek to remain with the company. As a result,
Haitian’s workforce has the largest number of college graduates and above.
Nevertheless, the individual requirements to unlock the awards are challenging to some
extent. Only 38% of the eligible employees unlocked 90% of the first batch and 12%
unlocked less than 50%.
Jonjee - transforming into a more market-oriented company: On September 7, the 25%
held by Qian Hai Life Insurance company was entirely transferred to Zhongshan Runtian
Investment Co., which has become the biggest shareholder for Jonjee subsequently.
Zhongshan Torch Gaojishu Industry Development Zone Administration Committee owns
11%, and the public owns 64%. As an SOE company, incentive plans are not as flexible
as a private company like Haitian, and the cash incentives are generally in line with
peers. Management does not own shares in Jonjee, and stock options/RSUs are not a
图表 56: Haitian Premium Soy Sauce (海天味极鲜) SKUsponsored top entertainment show Crossover Singer (III)
图表 57: Product placement in food entertainment showChinese Restaurant by Haitian (海天) Sponsorship of entertainment show
资料来源:Company data 资料来源:Company data
图表 58: Product placement in food entertainment show XianChu Dang Dao by Jonjee’s Chubang (厨邦) Brand
图表 59: Jonjee’s Chubang (厨邦) brand sponsorship ofchef competition
资料来源:company data 资料来源:Company data
2018年9月17日 29
全球投资研究 中国 日常消费品
typical method to retain talent. However, Jonjee has also started to have an incentive
plan with a mixture of short-term and long-term targets (on revenue, net income and
ROE). Through this incentive plan, a total of Rmb23 mn has been rewarded to 210
employees.
图表 60: Management and employees are Haitian’s majorshareholders Shareholding structure (as of 1H18)
图表 61: Jonjee’s biggest shareholders are Jushenghuaand Zhongshan Torch Gaojishu Industry Development ZoneAdministration Committee Shareholding structure (Sept 7, 2018)
Mgmt and employees
100%Guangdong
Haitian GroupTop 12 mgmt
direct ownership Public
58% 16% 26%
Foshan Haitian (603288.SS)
Shenzhen Jushenghua
Co. Ltd.
Zhongshan Torch Gaojishu Industry
Development Zone Administration
Committee100% 100%
Zhongshan Runtian Investment Co.
Zhongshan Torch Group Public
25% 11% 64%
100% 79%Guangdong Meiweixian
Condiment Co.
Zhonghui Hechuang Real Estate Co.
80% 100%Guangdong
Chubang Food Co.Yangxi Meiweixian
Food Co.
Jonjee Hi-tech (600872.SS)
资料来源:Company data 资料来源:Company data
图表 62: Cash incentives for management (2017)Incentives for management
图表 63: Cash incentives for front-line employees (2017,Rmb/k)
74%
0%
42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0.00.51.01.52.02.53.03.54.04.55.0
Haitian Jonjee Jia Jia
CEO compensation (Rmb mn) Management ownership (RHS)
153
95 85
0
2040
60
80
100
120140160180
Haitian Jonjee Jia Jia
Average compensation (RMB/K)
Note: 74% shareholding of Haitian is owned by management and employees.
资料来源:Company data
资料来源:Company data
2018年9月17日 30
全球投资研究 中国 日常消费品
#5 Cost differential: Haitian has the lowest cost in the industry due to scalebenefits and a higher level of automationThe aggressive expansion plan (1mn ton expansion in 2005, 1.5mn ton expansion in
2010 and 2.2mn ton in 2017) has made Haitian a clear leader in the condiment sector. In
2017, Haitian’s production volume was five times the size of the second-biggest
player, creating significant operating leverage. In addition, if we compare the value and
volume produced by each manufacturing employee, Haitian is more than twice as big as
other listed players. On top of this, Haitian has been very efficient in terms of spending;
for example, its other admin costs, equivalent to 0.6% of its sales, are the lowest among
listed players. Economies of scale, a high level of automation, and leading efficiency
have made Haitian the lowest-cost player in the industry.
Benchmarking Haitian, we expect Jonjee to deliver margin improvement over time with
its scale expansion plan and upgrade to more automated factories.
图表 64: Stock incentives in Haitian to keep talentsHaitian incentive plan
图表 65: Haitian has the highest portion of employees withundergraduate degrees and aboveEmployees by education
Haitian# employees
Positions
RSUs granted30%, vesting after 20 months30%, vesting after 32 months40% vesting aafter 44 months
Grant datePerformance requirement1. Corporate revenue growth and net income growth
85
2. Individual performance review of 4 semi-annual review reached "pass" (unlock ratio less than 100%) or "good"
Batches
6.6mn
Nov-14
Research, marketing, manufacturing, engineering, management roles
52 49 7
2711
1472 389
0%10%20%30%40%50%60%70%80%90%
100%
Haitian Jonjee Jia Jia
Postgraduates / doctor Junior college / undergraduates Others
资料来源:Company data 资料来源:Company data
图表 66: Economies of scale (2017) 图表 67: Different level of automation (2017)Comparison of value and volume per manufacturing employee
9.4
2.0 1.9 1.7 1
0.01.02.03.04.05.06.07.08.09.0
10.0
Haitian Lee Kum Kee Jonjee Dong Gu Jia Jia
Volume index of the biggest players
0.01.02.03.04.05.06.07.08.09.0
Haitian Jia Jia Jonjee Hengshun
Value per manufacturing employee (RMB mn)Vol per manufacturing employee (K tons)
资料来源:Company data 资料来源:Company data
2018年9月17日 31
全球投资研究 中国 日常消费品
图表 68: Different practices in cost controlFinancial comparison (as of 2017)
Haitian Jonjee Jia JiaFinancial
ASP per ton 5,587 7,239 4,969COGS per ton 2,956 4,348 3,176
Raw material 2,624 3,696 2738Labor 76 327 143Depreciation 175 185 177Manufacturing & other 81 140 118
Selling expense ratio 13.4% 11.8% 8.9%A&P 5.8% 4.0% 3.9%Transport 4.3% 2.1% 1.2%Personnel 2.3% 3.0% 2.5%
Admin cost ratio 4.2% 9.6% 6.1%Personnel 0.8% 4.5% 1.4%R&D 2.8% 3.0% 1.3%Other 0.6% 2.2% 3.3%
OPM 26.2% 15.8% 15.6%
资料来源:Company data
2018年9月17日 32
全球投资研究 中国 日常消费品
Valuation methodology and M&A framework
Valuation methodologyAs China’s condiment industry is still in its growth stage, we believe it is important to
factor in the long-term trends of both companies. Given the stronger visibility and lower
volatility of future earnings for both Haitian and Jonjee, we use a five-year earnings
outlook and 2023E P/E methodology to value both companies (in line with our white
spirits coverage). For Haitian, we use a 2023E P/E of 26X and discount it back to arrive
at our 12-month target price of Rmb81. For Jonjee, we adopt the SOTP method to
separate the value of profit from primarily the condiment segment (Rmb29.5, based on a
2023E P/E of 21X) and the discounted NAV of undeveloped properties (Rmb 1.6) to
obtain our 12-month target price of Rmb 31.1. Key assumptions for the property
valuation are shown in Exhibit 70.
Within our Chinese staples coverage, we expect Haitian to deliver top-tier sales growth
(a 2017-19E CAGR of 17%), best-in-class cash returns (33% in 2018-19E) and
above-average earnings growth (2017-19E CAGR of 23%), despite the fact that it is
already the biggest condiment player in China, with sales four times bigger than Jonjee.
We believe Jonjee also has the potential to grow its sales and earnings by 16% and
26%, respectively, which would be among the fastest in the sector; however, its cash
return is still lagging behind Haitian’s, at 18%. We believe Haitian, with its strong
growth and best cash returns, deserves a premium relative to Jonjee and other staples
companies. Our target price implies 2019 P/Es of 41X and 31X for Haitian and Jonjee,
respectively. Currently, Haitian and Jonjee are trading at 12-month forward P/Es of 37X
and 33X, respectively, vs. Kikkoman, a global condiment leader, at 41X (historical avg.
of 32X).
图表 69: We set a 12-month target price of Rmb81.0 for Haitian
Haitian 2018E 2019E 2020E 2021E 2022E 2023EEPS 1.62 1.98 2.39 2.89 3.47 4.16 Target PE 26 Target price 81.0 86.7 93.9 101.7 110.1 Current price A share (RMB) 68.0 Potential share price upside 19.1%Implied 2019E PE 41
Cost of Equity 8.3%
资料来源:Goldman Sachs Global Investment Research
2018年9月17日 33
全球投资研究 中国 日常消费品
图表 70: We set a 12-month target price of Rmb31.1 for Jonjee
Jonjee 2019ESOTP value 31.1Current price 29.0Upside 7%
Condiment and other 2017 2018E 2019E 2020E 2021E 2022E 2023EEPS 0.64 0.83 1.01 1.22 1.44 1.71 2.01PE 21Target value per share 29.5 32.3 35.3 38.5 42.1
30.9 Cost of equity 9.3%
NAV of undeveloped property Jonjee Hechuang AssumptionsAverage selling price (RMB/sqm) 10,000 10,000 SG&A ratio 4.0%Unsold land bank (sqm) 450,225 1,150,575 Business tax 5.5%Revenue (RMB mn) 4,502 11,506 Income tax 25%Land cost (RMB/sqm) 780 690 WACC 8.4%Construction unit cost (RMB/sqm) 3,500 3,500 Discount to NAV 40%SG&A (RMB mn) 180 460LTA (RMB mn) 638 1,631Income tax (RMB mn) 627 1,603 NAV 2,058Total cash flow 1,310.7 3,450.6 NAV/share 2.6Cash flow attributed to Jonjee 1,310.7 2,726.0 Target value/share 1.6
资料来源:Goldman Sachs Global Investment Research
图表 71: Comparison of key metrics 图表 72: Haitian is trading at 37XForward 12m P/E for Haitian
Ticker Company nameSales CAGR
2017-19ECROCI
2018-19EEPS CAGR 2017-19E
603288.SS Haitian Flavouring 17% 33% 23%1112.HK H&H 23% 20% 19%
600887.SS Inner Mongolia Yili 15% 28% 16%600872.SS Jonjee Hi-tech 16% 18% 26%3799.HK Dali Foods 11% 24% 15%2319.HK Mengniu Dairy 12% 10% 27%0291.HK China Resources Beer 9% 8% 39%0322.HK Tingyi 6% 13% 38%0220.HK UPC 6% 11% 21%0151.HK Want Want 6% 18% 1%1458.HK Zhou Hei Ya 4% 16% -8%0288.HK WH Group 4% 15% 8%
600597.SS Bright Dairy 3% 14% 5%0168.HK Tsingtao Brewery (H) 2% 9% 16%1117.HK China Modern Dairy -2% 8% 0%
36.7
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Feb-
14
Aug-
14
Feb-
15
Aug-
15
Feb-
16
Aug-
16
Feb-
17
Aug-
17
Feb-
18
Aug-
18
Haitian Fwd 12m P/E
Hist. avg 28X
+ 1 STDV
+ 2 STDV
- 1 STDV
- 2 STDV
Note: Dark blue means the company ranks in the first quartile for the criteria,light blue second quartile, light grey third quartile and dark grey fourth quartile.
资料来源:Company data, Goldman Sachs Global Investment Research
资料来源:Bloomberg
2018年9月17日 34
全球投资研究 中国 日常消费品
M&A frameworkAcross our global coverage, we examine stocks using an M&A framework, considering
both qualitative and quantitative factors (which may vary across sectors and regions) to
incorporate the potential that certain companies could be acquired. We then assign an
M&A rank as a means of scoring companies under our rated coverage from 1 to 3, with
1 representing high probability (30%-50%) of the company becoming an acquisition
target, 2 representing medium probability (15%-30%) and 3 representing low probability
(0%-15%). For companies ranked 1 or 2, in line with our standard departmental
guidelines we incorporate an M&A component into our target price. An M&A rank of 3 is
considered immaterial and therefore does not factor into our target price, and may or
may not be discussed in research.
图表 73: Jonjee is trading at 33.1X Forward 12m P/E for Jonjee
图表 74: Kikkoman is trading at 41XFwd 12m P/E for Kikkoman
33.1
18.0
23.0
28.0
33.0
38.0
Mar
-13
Sep-
13
Mar
-14
Sep-
14
Mar
-15
Sep-
15
Mar
-16
Sep-
16
Mar
-17
Sep-
17
Mar
-18
Jonjee Fwd 12m P/E
Hist. avg 28X
+ 1 STDV
+ 2 STDV
- 1 STDV
- 2 STDV
41.3
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Mar
-13
Jun-
13Se
p-13
Dec
-13
Mar
-14
Jun-
14Se
p-14
Dec
-14
Mar
-15
Jun-
15Se
p-15
Dec
-15
Mar
-16
Jun-
16Se
p-16
Dec
-16
Mar
-17
Jun-
17Se
p-17
Dec
-17
Mar
-18
Jun-
18
Kikkoman Fwd 12m P/E
Hist. avg 32X
+ 1 STDV
+ 2 STDV
- 1 STDV
- 2 STDV
资料来源:Bloomberg 资料来源:Bloomberg
图表 75: Condiment comp sheet (price as of Sep 14, 2018)
BBG Ticker Name Mkt Cap Last GS EPS 17-19E PE PE PEG EV/EBITDA EV/EBITDA Div Yield ROEClose Rating 6M Chg CAGR CY18E CY19E 2Yr CY18E CY19E CY18E CY18E
US$m Price % % (X) (X) CAGR (X) (X) % %China Condiment
603288 CH Haitian 27,000.7 68.5 Buy 15.4 23.2 42.2 34.5 2.3 33.7 27.4 1.4 34.6 600872 CH Jonjee 3,319.6 28.7 Neutral 13.6 26.2 36.2 31.7 1.9 24.7 21.3 0.9 17.1 002507 CH Fuling Zhacai 2,596.8 22.7 NC 35.1 36.6 29.5 23.3 1.2 na na 0.8 25.9 600305 CH Hengshun Vinegar 1,072.1 9.4 NC 17.4 5.2 25.6 23.7 5.0 na na 1.0 14.0 Average 8,497 23.0 38.0 31.5 2.3 26.6 21.7 1.4 29.9
Global leadersKHC US Kraft Heinz 71,894.6 59.0 Neutral (9.8) 4.0 15.8 15.4 4.1 13.3 12.8 4.4 6.9 MKC US McCormick 17,355.4 132.3 Neutral 22.7 12.3 26.6 24.6 2.5 19.5 17.9 1.6 25.4 CAG US ConAgra 14,980.4 38.3 NR 4.5 14.6 17.7 17.1 1.5 12.6 12.5 2.3 21.9 2801 JP Kikkoman 10,768.4 6,220 Neutral 43.5 12.9 44.6 39.6 3.9 14.9 21.8 0.7 9.6 2802 JP Ajinomoto 9,600.0 1,880 Neutral (3.9) 12.4 17.8 16.2 1.6 9.8 8.6 1.7 8.6 2809 JP Kewpie 3,493.2 2,608 Buy (13.6) 9.8 19.8 17.9 2.2 8.5 7.7 1.5 7.1 Average 16,768 10.1 24.9 22.4 1.3 12.3 12.5 1.7 11.1
China Staples600887 CH Yili 20,560.4 23 Buy (25.0) 16.2 21.5 17.4 1.5 15.4 12.4 3.3 24.9 291 HK CR Beer 12,360.4 30 Buy* (11.3) 39.1 34.7 26.2 1.3 18.8 11.9 0.9 9.5 2319 HK Mengniu Dairy 11,185.3 22 Neutral (10.5) 26.5 29.8 23.0 1.4 16.8 13.6 0.9 10.3 322 HK Tingyi 9,506.5 13 Buy (15.3) 37.7 27.1 21.6 1.1 10.8 9.4 2.1 11.8 1112 HK H&H International 3,583.9 44 Buy (18.4) 18.3 19.0 16.6 1.3 10.7 8.9 0.5 24.3 Average 11,439 27.6 26.4 21.0 1.3 14.5 11.3 1.5 16.2
Price
资料来源:Bloomberg, Goldman Sachs Global Investment Research
2018年9月17日 35
全球投资研究 中国 日常消费品
We assign an overall M&A score of 3 for both Haitian and Jonjee, which denotes low
probability (0%-15%) of being acquired, which is consistent with our regional M&A
framework of “Can”, “Should” and “Would”:
Can
Size: Companies that are very large in market cap are less likely to be M&A targets.n
Ownership: Blocking stakes by MNC parents and family owners are a meaningfuln
barrier against M&A activity for many of our covered companies.
Regulatory risk: Dominant players, particularly in oligopolistic markets or industriesn
that are more state-controlled, such as tobacco, have higher regulatory risk.
Should
Growth potential: Companies with strong EBITDA growth are more attractive targets.n
Industry positioning: Dominant positioning makes a company more attractive as an
target, particularly in competitive markets where regulatory risk is relatively low.
Cost synergies: We rank cost structures based on the potential for improvement, byn
our assessments, with low representing low opportunity for cost improvement.
Valuation: We assess EV/EBITDA to evaluate asset attractiveness.n
Would
Strategic appeal: Some companies own assets (such as brands and distributionn
networks) that have strategic appeal for acquirers; we rank companies as low
(minimal or no strategic appeal), medium (some appeal) and high (high appeal).
Management stance: Given that many companies under our coverage are still familyn
businesses or subsidiaries of MNC parents, management’s stated and
demonstrated willingness to engage in M&A is an important barrier; we rank
companies based on our assessment of willingness, with low representing
unwillingness, medium representing open to consideration and high representing
willingness and/or demonstrated selling of a stake in the past.
Foshan Haitian M&A rankingCan: With a c.US$27bn market cap, Haitian is one of the biggest staples companies in
China. However, with a majority shareholding stake held by top management, we
believe there is very limited possibility of Haitian being acquired.
Should: Haitian is a clear leader in a relatively fragmented market, with only 16% market
share in 2017. It may also be able to generate some cost synergy by expanding its
product distribution area without significant costs.
Would: The controlling shareholders make up the top management of the company. The
CEO is also the chairman of the board, and together with another four top managers
within the company, acts in concert. This would suggest a low intention of being
acquired.
2018年9月17日 36
全球投资研究 中国 日常消费品
Jonjee Hi-Tech M&A rankingCan: Jonjee has a free float of 77%. However, given its SOE nature, we believe there is
limited possibility of Jonjee being acquired without permission from the government.
Should: We expect Jonjee to grow quickly over the next two years, and its brands are
well-established in Southern China. The industry remains relatively fragmented, and
Jonjee had only 4% market share in 2017. Besides, its current cost structure still has
room for improvement.
Would: Jonjee is still not a nationally recognized brand yet, and its distribution system is
still expanding rather than being well established nationally. Management has not shown
willingness to engage in M&A activities.
For complete details on our M&A framework, see our report, Asia Pacific: Consumer &
Retail: Introducing M&A Framework; 10 stocks highlighted), published on July 5, 2016
图表 76: We rank Foshan Haitian and Jonjee Hi-Tech at 3 (least likely) to be an M&A targetM&A framework
TOTAL
Ticker Company name Size RegulationScore (1-
3)Industry
positioningCost
synergiesScore (1-3)
Strategic appeal
Management stance
Score (1-3)
Score (1-3)
Market Cap ($mn) % Free Float
Risk of restrictions
1 = M&A likely
EBITDA CAGR (2017-19E) Yes/No
1 = M&A likely
1 = M&A likely
1 = M&A likely
Condiment603288.SS Foshan Haitian 26,819 15% Low 3 24% Top Tier, Competitive Low 3 Low Low 3 3600872.SS Jonjee Hi-tech 3,366 77% Low 3 22% Top Tier, Competitive Med 2 Low Low 3 3
Growth Potential
Company CAN SHOULD WOULD
Ownership
资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 37
全球投资研究 中国 日常消费品
COMPANY PROFILES
2018年9月17日 38
全球投资研究 中国 日常消费品
Haitian: Clear leadership to foster healthy industry growth; initiate atBuy
FinancialsFoshan Haitian is the clear leader of China’s condiment sector, with sales that are four
times bigger than Jonjee’s. Despite Haitian’s huge size, we forecast it will deliver a
growth rate slightly higher than that of peers, at a 2017-19E CAGR of 17%. In the
coming two years, we expect soy sauce will remain the biggest contributor of
incremental sales (Rmb3 bn). We attribute this to Haitian’s majority exposure to the
high-growth restaurant channel, national distribution, and significant brand investment.
In addition, we estimate liquid state soy sauce accounts for only 25% of the soy sauce
market, and given the relatively small ticket size, low purchase frequency, and relatively
strong benefits to enrich the flavor of dishes, we expect a continued consumption
upgrade in the soy sauce segment to benefit brands using liquid-state fermentation,
primarily Guangdong brands such as Haitian and Jonjee.
We estimate other sauces and oyster sauce will contribute another Rmb 0.6 bn and
Rmb 1 bn in incremental sales by 2019E compared to 2017, benefiting from the
leverage of the Haitian brand’s nationally established reputation.
Profitability to continue rising: We expect OPM to increase by 270bps by 2019E, thanks
to: 1) Haitian’s strong bargaining power, which allows it to hike ASPs in order to pass
on inflation (we expect the next hikes will be in 2019E); and 2) a gradual mix upgrade.
For this year, costs are relatively stable, with a favourable price trend for key raw
materials (e.g., sugar) and price locking of NGM soybeans early this year, delaying the
potential impact from any US trade frictions.
图表 77: Haitian snapshot
GS Forecast12/17 12/18E 12/19E 12/20E
Market cap: Rmb187.2bn / $27.3bn Revenue (Rmb mn) New 14,584.3 17,071.8 20,032.4 23,442.4Enterprise value: Rmb179.7bn / $26.2bn Revenue (Rmb mn) Old -- -- -- --
3m ADTV :Rmb270.0mn/ $40.2mn EBITDA (Rmb mn) 4,383.2 5,334.1 6,481.3 7,783.5
China EPS (Rmb) New 1.31 1.62 1.98 2.39EPS (Rmb) Old -- -- -- --
P/E (X) 30.9 42.7 34.9 29.0
P/B (X) 9.3 13.8 11.9 10.2
Dividend yield (%) 2.1 1.4 1.7 2.1
CROCI (%) 28.9 32.1 33.5 34.1
6/18 9/18E 12/18E 3/19EEPS (Rmb) 0.38 0.33 0.47 0.54
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 14 Sep 2018 close.
12m Price Target: Rmb81 Price: Rmb69.31 Upside: 16.9%
Buy
China Consumer Products
603288.SS
资料来源:Company data, Goldman Sachs Global Investment Research, FactSet
2018年9月17日 39
全球投资研究 中国 日常消费品
图表 78: Haitian’s sales were four times bigger thanJonjee’s in 2017
图表 79: We expect Haitian to grow slightly faster than JonjeeSales growth yoy
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Haitian Jonjee Jia Jia Hengshun
Sales size (RMB mn)
-15%-10%-5%0%5%
10%15%20%25%30%
Haitian Hengshun Jonjee - condimentSales yoy
资料来源:Company data 资料来源:Company data, Goldman Sachs Global Investment Research
图表 80: We expect both Haitian and Jonjee will seeimproving margins in 2018-2020EOPM comparison
图表 81: We expect a steady ASP increase for Haitian fromboth direct price hikes and mix upgradeASP of Haitian sub-segments
0%
5%
10%
15%
20%
25%
30%
35%Haitian Hengshun JonjeeOPM
3
4
5
6
7
8
9
10
2010 2011 2012 2013 2014 2015 2016 2017 2018E2019E2020E
Soy sauce Oyster sauce Other saucesRMB K/ton
资料来源:Company data, Goldman Sachs Global Investment Research 资料来源:Company data, Goldman Sachs Global Investment Research
图表 82: Soy sauce remains the most important driver ofHaitian’s revenue growthIncremental sales by segment
图表 83: We expect improving margin for all segmentsOPM by segment
20.0
14.6
3.0 0.6 1.0
0.9
1213141516171819202122
2017 Sales Soy sauce Othersauce
Oystersauce
Others 2019ESales
Revenue contribution (RMB bn)
0%
5%
10%
15%
20%
25%
30%
35%
2014 2015 2016 2017 2018E 2019E 2020E
Soy sauce Other Sauce Oyster sauce Total
资料来源:Company data, Goldman Sachs Global Investment Research 资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 40
全球投资研究 中国 日常消费品
图表 84: Soybeans and sugar are the most important rawmaterials for HaitianCOGS breakdown (2017)
图表 85: Domestic NGM soybean price declined slightly yoy,but is up vs. early 2018NGM soybean price
Soybean, 18%
Sugar, 14%
PET, 12% Glass,
13% MSG, 8%
Pulp, 5%
Others, 31%
Haitian COGS breakdown
-40%-30%-20%-10%0%10%20%30%40%
2,500
3,000
3,500
4,000
4,500
5,000
5,500
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15Ju
l-15
Jan-
16Ju
l-16
Jan-
17Ju
l-17
Jan-
18Ju
l-18
NGM soybean % NGM soybean Rmb/ton
资料来源:Company data 资料来源:Wind
图表 86: Sugar price has declined by more than 20% recentlySugar price
-50%-40%-30%-20%-10%0%10%20%30%40%50%
4,0004,5005,0005,5006,0006,5007,0007,5008,000
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15Ju
l-15
Jan-
16Ju
l-16
Jan-
17Ju
l-17
Jan-
18Ju
l-18
Sugar % Sugar Rmb/ton
资料来源:Wind
2018年9月17日 41
全球投资研究 中国 日常消费品
图表 87: We expect soy sauce, other sauce and oyster sauce to deliver double-digit growth in 2017-19E Summary financials
Foshan Haitian (603288.SS)Rmb millionsDivisional P/L FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23E 17-’19E
2yr CAGRRevenuesSoy sauce 6,299 6,716 7,579 8,836 10,211 11,858 13,735 15,844 18,278 21,085 15.8%Other Sauce 1,533 1,813 1,814 2,040 2,289 2,595 2,912 3,267 3,665 4,075 12.8%Oyster sauce 1,338 1,777 1,863 2,266 2,697 3,236 3,867 4,602 5,430 6,407 19.5%Others 647 988 1,203 1,442 1,875 2,343 2,929 3,515 4,218 5,062 27.5%
9,817 11,294 12,459 14,584 17,072 20,032 23,442 27,228 31,591 36,630 17.2%
Gross ProfitSoy sauce 2,640 2,977 3,603 4,376 5,227 6,169 7,231 8,484 9,925 11,605 18.7%Other Sauce 625 799 811 926 1,065 1,241 1,407 1,594 1,801 2,018 15.8%Oyster sauce 471 656 712 887 1,103 1,356 1,646 2,013 2,435 2,943 23.6%Others 231 305 349 475 655 865 1,140 1,438 1,810 2,274 35.0%
3,967 4,737 5,475 6,664 8,050 9,631 11,424 13,529 15,972 18,840 20.2%
BreakdownRevenues (external only)Soy sauce 64% 59% 61% 61% 60% 59% 59% 58% 58% 58%Other Sauce 16% 16% 15% 14% 13% 13% 12% 12% 12% 11%Oyster sauce 14% 16% 15% 16% 16% 16% 16% 17% 17% 17%Others 7% 9% 10% 10% 11% 12% 12% 13% 13% 14%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
YoY Growth (%) FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23ERevenuesSoy sauce 13% 7% 13% 17% 16% 16% 16% 15% 15% 15%Other Sauce 32% 18% 0% 12% 12% 13% 12% 12% 12% 11%Oyster sauce 20% 33% 5% 22% 19% 20% 20% 19% 18% 18%Others 19% 53% 22% 20% 30% 25% 25% 20% 20% 20%
17% 15% 10.3% 17.1% 17.1% 17.3% 17.0% 16.1% 16.0% 15.9%
Margins FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23E pptGross ProfitSoy sauce 41.9% 44.3% 47.5% 49.5% 51.2% 52.0% 52.6% 53.5% 54.3% 55.0% 2.5%Other Sauce 40.8% 44.1% 44.7% 45.4% 46.5% 47.8% 48.3% 48.8% 49.1% 49.5% 2.5%Oyster sauce 35.2% 36.9% 38.2% 39.1% 40.9% 41.9% 42.6% 43.7% 44.8% 45.9% 2.8%Others 35.6% 30.8% 29.1% 32.9% 34.9% 36.9% 38.9% 40.9% 42.9% 44.9% 4.0%
40.4% 41.9% 43.9% 45.7% 47.2% 48.1% 48.7% 49.7% 50.6% 51.4% 2.4%
资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 42
全球投资研究 中国 日常消费品
Balance sheet and cash flowHaitian led the implementation of a cash for goods policy (zero A/R day), and other
players in the condiment industry gradually followed. As such, the company has
maintained zero long-term borrowing since 2010 and reached a net cash position of
Rmb5.6 bn in 2017. In 2018-2020E, we expect Haitian to achieve more than Rmb4 bn in
free cash flow, generate a cash return of more than 32%, and give back to investors with
a 60% dividend payout ratio.
图表 88: We expect Haitian to improve its OPM by 270bps and reach a two-year EPS CAGR of 23% by 2019E Summary financials
Consolidated P/L (Rmb mn) FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23E 17-’19E 2yr CAGR
Revenue 9,817 11,294 12,459 14,584 17,072 20,032 23,442 27,228 31,591 36,630 17.2%COGS -5,850 -6,557 -6,983 -7,921 -9,022 -10,401 -12,019 -13,699 -15,619 -17,790 GP 3,967 4,737 5,475 6,664 8,050 9,631 11,424 13,529 15,972 18,840 20.2%SG&A (excl. other rev/exp) (1,610) (1,867) (2,206) (2,722) (3,192) (3,679) (4,231) (4,838) (5,528) (6,328)
Selling Exp. (1,050) (1,227) (1,560) (1,957) (2,287) (2,623) (3,000) (3,416) (3,884) (4,431)Admin Exp. (487) (535) (520) (607) (719) (837) (975) (1,125) (1,298) (1,498)
OP 2,356 2,870 3,269 3,941 4,858 5,952 7,193 8,691 10,444 12,511 22.9%Other income/expenses 0 0 0 0 0 0 0 0 0 0EBIT (reported) 2,356 2,870 3,269 3,941 4,858 5,952 7,193 8,691 10,444 12,511 22.9%D&A (283) (354) (381) (442) (476) (529) (591) (657) (723) (789)EBITDA 2,639 3,223 3,650 4,383 5,334 6,481 7,784 9,348 11,167 13,300 21.6%
Net Finance Exp. 49 49 46 82 138 184 241 309 395 521Other Non-Op Income 87 93 98 192 239 261 284 310 339 370Profit Before Tax 2,492 3,011 3,413 4,215 5,235 6,397 7,718 9,311 11,178 13,402 23.2%Tax -402 -502 -570 -684 -849 -1038 -1252 -1510 -1813 -2174Minority Interest 0 0 0 0 0 0 0 0 0 0NPAT Attributable to S/holders 2,090 2,510 2,843 3,531 4,386 5,359 6,466 7,800 9,365 11,228 23.2%One-off’s after taxRecurring NPAT 2,090 2,510 2,843 3,531 4,386 5,359 6,466 7,800 9,365 11,228 23.2%
EPS - Basic (Rmb/Sh) 1.89 1.19 1.05 1.31 1.62 1.98 2.39 2.89 3.47 4.16 EPS - Diluted (Rmb/Sh) 1.39 0.93 1.05 1.31 1.62 1.98 2.39 2.89 3.47 4.16 23.2%
Growth Sales 17% 15% 10.3% 17.1% 17.1% 17.3% 17.0% 16.1% 16.0% 15.9%GP 20% 19% 16% 22% 21% 20% 19% 18% 18% 18%SG&A 14% 16% 18% 23% 17% 15% 15% 14% 14% 14%Operating profit (GP less SG&A) 25% 22% 14% 21% 23% 23% 21% 21% 20% 20%EBIT 25% 22% 14% 21% 23% 23% 21% 21% 20% 20%Reported NPAT 30% 20% 13% 24% 24% 22% 21% 21% 20% 20%Recurring NPAT 30% 20% 13% 24% 24% 22% 21% 21% 20% 20%
MarginsGP margin 40.4% 41.9% 43.9% 45.7% 47.2% 48.1% 48.7% 49.7% 50.6% 51.4% 2.4%Operating profit (GP less SG&A) 24.0% 25.4% 26.2% 27.0% 28.5% 29.7% 30.7% 31.9% 33.1% 34.2% 2.7%EBIT margin 24.0% 25.4% 26.2% 27.0% 28.5% 29.7% 30.7% 31.9% 33.1% 34.2% 2.7%Reported NPAT margin 21.3% 22.2% 22.8% 24.2% 25.7% 26.8% 27.6% 28.6% 29.6% 30.7% 2.5%
SG&A/Sales -16.4% -16.5% -17.7% -18.7% -18.7% -18.4% -18.0% -17.8% -17.5% -17.3% 0.3%Effective Tax Rate -16% -17% -17% -16% -16% -16% -16% -16% -16% -16%
资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 43
全球投资研究 中国 日常消费品
Key risks1. Deteriorating industrial environment if expansion plans proceed too quickly: Major
condiment players (including Haitian, Jonjee, and Master) have said they intend to
increase their capacity by 50% over the next three years. If these companies expand too
quickly, they may create over-supply in the price competition.
2. Unfavorable cost trend: An unexpected natural disaster or the imposition of tariffs on
global trade may lead to a rise in major raw materials.
3. Slower pace for ASP hikes if there is an economic slowdown: Even though condiment
demand is relatively inelastic, an economic slowdown may lead to the inability to raise
prices due to affordability issues.
4. Shareholding stake sell-down post the end of the lock-down period in 1Q2019.
图表 89: We expect Haitian to deliver above 32% cashreturns...Return on equity and CROCI
图表 90: ...and continue its above-60% dividend payout policygiven its strong free cash flowsFree cash flows and dividend payout
28%
31% 30%
32% 35% 37%
38%
23%
27% 29% 29%
32% 34% 34%
20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40%
2014 2015 2016 2017 2018E 2019E 2020E
Return on equity (%) CROCI
-
10%
20%
30%
40%
50%
60%
70%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2014 2015 2016 2017 2018E 2019E 2020E
Free cash flows Dividend payout ratio
资料来源:Company data, Goldman Sachs Global Investment Research 资料来源:Company data, Goldman Sachs Global Investment Research
图表 91: Haitian capacity expansion plans
Company HaitianYear 2017 2019 2021 2023Unit: (K tons) Actual Guidance Guidance GuidanceSoy sauce 1,848 +600 +600 +300
Oyster sauce 45 - - -
Soy derivatives 302 +100 +100 +100
Others 307 Compound sauce +200
Compound sauce+100
Compound sauce +100
资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 44
全球投资研究 中国 日常消费品
图表 92: Haitian summary financials
Profit model (Rmb mn) 12/17 12/18E 12/19E 12/20E Balance sheet (Rmb mn) 12/17 12/18E 12/19E 12/20E
Total revenue 14,584.3 17,071.8 20,032.4 23,442.4 Cash & equivalents 5,612.9 7,494.8 9,803.7 12,576.0Cost of goods sold (7,920.7) (9,022.2) (10,401.2) (12,018.9) Accounts receivable 19.0 22.3 26.1 30.6SG&A (2,320.7) (2,721.7) (3,127.6) (3,585.0) Inventory 1,041.1 1,185.9 1,367.2 1,579.8R&D (401.7) (470.2) (551.7) (645.6) Other current assets 5,121.4 5,121.4 5,121.4 5,121.4
O Other operating profit/(expense) -- -- -- -- Total current assets 11,794.4 13,824.3 16,318.3 19,307.8EBITDA 4,383.2 5,334.1 6,481.3 7,783.5 Net PP&E 4,264.8 4,495.6 4,796.0 5,152.9
D Depreciation & amortization (441.9) (476.4) (529.4) (590.7) Net intangibles 181.8 210.8 244.9 284.9EBIT 3,941.2 4,857.7 5,951.9 7,192.9 Total investments 4.8 219.8 456.3 716.5Interest income 82.6 138.1 184.4 241.2 Other long-term assets 90.2 90.2 90.2 90.2Interest expense (0.6) 0.0 0.0 0.0 Total assets 16,336.0 18,840.7 21,905.7 25,552.1
I Income/(loss) from uncons. subs. -- -- -- --Others 192.1 239.0 260.5 284.2 Accounts payable 1,828.9 2,206.8 2,544.1 2,939.8Pretax profits 4,215.3 5,234.8 6,396.8 7,718.2 Short-term debt -- -- -- --Income tax (683.8) (849.2) (1,037.7) (1,252.1) Other current liabilities 2,685.3 3,020.6 3,604.7 4,268.9Minorities 0.0 0.0 0.0 0.0 Total current liabilities 4,514.2 5,227.4 6,148.8 7,208.7
Long-term debt -- -- -- --N Net income pre-preferred dividends 3,531.4 4,385.6 5,359.0 6,466.1 Other long-term liabilities 57.7 57.7 57.7 57.7
Preferred dividends -- -- -- -- Total long-term liabilities 57.7 57.7 57.7 57.7N Net income (pre-exceptionals) 3,531.4 4,385.6 5,359.0 6,466.1 Total liabilities 4,571.8 5,285.1 6,206.4 7,266.4
Post-tax exceptionals -- -- -- --Net income 3,531.4 4,385.6 5,359.0 6,466.1 Preferred shares -- -- -- --
Total common equity 11,753.3 13,544.7 15,688.3 18,274.8EPS (basic, pre-except) (Rmb) 1.31 1.62 1.98 2.39 Minority interest 10.8 10.9 10.9 11.0EPS (basic, post-except) (Rmb) 1.31 1.62 1.98 2.39
E EPS (diluted, post-except) (Rmb) 1.31 1.62 1.98 2.39 Total liabilities & equity 16,336.0 18,840.7 21,905.7 25,552.1DPS (Rmb) 0.85 0.97 1.19 1.44Dividend payout ratio (%) 65.0 60.0 60.0 60.0 BVPS (Rmb) 4.35 5.01 5.81 6.77Free cash flow yield (%) 4.1 2.4 2.8 3.4
Growth & margins (%) 12/17 12/18E 12/19E 12/20E Ratios 12/17 12/18E 12/19E 12/20ESales growth 17.1 17.1 17.3 17.0 CROCI (%) 28.9 32.1 33.5 34.1EBITDA growth 20.1 21.7 21.5 20.1 ROE (%) 32.4 34.7 36.7 38.1EBIT growth 20.6 23.3 22.5 20.9 ROA (%) 23.7 24.9 26.3 27.2Net income growth 24.2 24.2 22.2 20.7 ROACE (%) 63.1 69.9 87.1 108.0EPS growth 24.4 24.2 22.2 20.7 Inventory days 45.6 45.0 44.8 44.7Gross margin 45.7 47.2 48.1 48.7 Receivables days 0.3 0.4 0.4 0.4EBITDA margin 30.1 31.2 32.4 33.2 Payable days 78.8 81.6 83.4 83.3EBIT margin 27.0 28.5 29.7 30.7 Net debt/equity (%) (47.7) (55.3) (62.4) (68.8)
Interest cover - EBIT (X) NM NM NM NM
Cash flow statement (Rmb mn) 12/17 12/18E 12/19E 12/20E Valuation 12/17 12/18E 12/19E 12/20EN Net income pre-preferred dividends 3,531.4 4,385.6 5,359.0 6,466.1
D&A add-back 441.9 476.4 529.4 590.7 P/E (analyst) (X) 30.9 41.8 34.2 28.4M Minorities interests add-back 0.0 0.0 0.0 0.0 P/B (X) 9.3 13.5 11.7 10.0N Net (inc)/dec working capital 1,004.8 229.9 152.2 178.6 EV/EBITDA (X) 23.6 33.0 26.8 21.9
O Other operating cash flow (257.3) -- -- -- EV/GCI (X) 7.3 10.7 9.1 7.5C Cash flow from operations 4,721.0 5,091.9 6,040.6 7,235.4 Dividend yield (%) 2.1 1.4 1.8 2.1
Capital expenditures (262.0) (736.2) (863.9) (987.5)Acquisitions (23.3) -- -- --Divestitures -- -- -- --Others (2,174.2) (215.0) (236.5) (260.2)
C Cash flow from investments (2,459.5) (951.2) (1,100.4) (1,247.7)
D Dividends paid (common & pref) (1,839.4) (2,296.0) (2,631.3) (3,215.4)Inc/(dec) in debt (17.4) -- -- --
C Common stock issuance (repurchase) -- -- -- --O Other financing cash flows 11.7 37.2 -- --
Cash flow from financing (1,845.1) (2,258.9) (2,631.3) (3,215.4)Total cash flow 416.3 1,881.8 2,308.9 2,772.4 Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.
资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 45
全球投资研究 中国 日常消费品
Jonjee: Riding the wave of premiumization; initiate at Neutral
Condiment businessWe expect Jonjee will be a key beneficiary of premiumization. In southern China, it has
already become a well-recognized brand, selling premium soy sauce that contains 1.3g
of amino acids per 100ml and is fermented for 180 days. Jonjee has also expanded to
other categories such as oyster sauce, vinegar and cooking oil, which grew by c.30%
yoy in 1H18.
Looking ahead, we expect Jonjee to grow sales 16% in 2017-19E, primarily due to its
national expansion, which we expect will be driven by an increasing contribution from
the restaurant channel and steady growth in the size of Jonjee’s distributors.
At the same time, we expect Jonjee will benefit from improving profitability as result of
operating leverage and increased efficiency. In 2017-19E, we expect GPM to expand
130bps and OPM to expand 240bps on the back of: 1) labor, manufacturing and other
cost savings from plant upgrades; and 2) operating leverage on overhead costs, which
we estimate will reduce admin cost to 8.8% as a percentage of sales in 2019E vs. 9.6%
in 2017.
图表 93: Jonjee snapshot
GS Forecast12/17 12/18E 12/19E 12/20E
Market cap: Rmb22.1bn / $3.2bn Revenue (Rmb mn) New 3,609.4 4,321.8 4,830.0 5,552.8Enterprise value: Rmb22.9bn / $3.3bn Revenue (Rmb mn) Old -- -- -- --
3m ADTV :Rmb174.1mn/ $25.8mn EBITDA (Rmb mn) 700.6 930.4 1,073.6 1,299.9
China EPS (Rmb) New 0.57 0.79 0.91 1.11EPS (Rmb) Old -- -- -- --
P/E (X) 33.5 35.0 30.7 25.1
P/B (X) 4.8 6.2 5.4 4.7
Dividend yield (%) 0.9 0.9 1.0 1.3
CROCI (%) 16.1 18.3 18.2 19.1
6/18 9/18E 12/18E 3/19EEPS (Rmb) 0.21 0.22 0.14 0.24
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 14 Sep 2018 close.
12m Price Target: Rmb31.1 Price: Rmb27.8 Upside: 11.9%
Neutral
China Consumer Products
600872.SS
资料来源:Company data, Goldman Sachs Global Investment Research, FactSet
2018年9月17日 46
全球投资研究 中国 日常消费品
Real estate businessJonjee and its subsidiary Zhonghui Hechuang own a c.1,600K sqm residential land bank
in Zhongshan City. However, the company’s real estate development is subject to the
government’s plans for Qijiang New Town, which have not yet been finalized. As a
result, a clear timeline for relevant projects has not yet been set. In 2017, the company
began the construction of 90K sqm of residential apartments outside of the Qijiang New
Town.
Since the early 1990s, the company has also been the operator of the Zhongshan Torch
Gaojishu Industry Development Zone. It owns factories, dormitories, and other ancillary
facilities within the zone (c.250K sqm) and obtains stable rental returns from these
facilities.
图表 94: Jonjee still relies heavily on the south China marketCompany revenue breakdown by region, 2017
图表 95: We expect condiments to contribute most ofJonjee’s sales growthSales contribution
North 28%
South 22% South
44%
East 21%
East 25%
East 28%
Central 19%
Central 34%
Southwest 58%
0%10%20%30%40%50%60%70%80%90%
100%
Haitian Jonjee Jia Jia Qianhe
North South East Central West Overseas
11%
19%
15% 17%
15%
0%
5%
10%
15%
20%
25%
0
1,000
2,000
3,000
4,000
5,000
6,000
2015 2016 2017 2018E 2019E 2020E
Soy sauce Other condimentReal estate Condiment overall YOY
RMB mn
Note: Overseas sales of Haitian is included in the southern China part
资料来源:Company data
资料来源:Company data, Goldman Sachs Global Investment Research
图表 96: We expect Jonjee to grow its profitability over timeGPM and OPM trend
图表 97: Comparison of cost control practicesFinancial comparison (as of 2017)
34.5% 35.1% 36.7% 39.3% 39.8% 40.5% 41.0%
13.1% 12.2% 15.6% 16.5% 18.4% 18.9% 19.9%
0%5%
10%15%20%25%30%35%40%45%
2014 2015 2016 2017 2018E 2019E 2020E
GPM OPMHaitian Jonjee Jia Jia
FinancialASP per ton 5,587 7,239 4,969COGS per ton 2,956 4,348 3,176
Raw material 2,624 3,696 2738Labor 76 327 143Depreciation 175 185 177Manufacturing & other 81 140 118
Selling expense ratio 13.4% 11.8% 8.9%A&P 5.8% 4.0% 3.9%Transport 4.3% 2.1% 1.2%Personnel 2.3% 3.0% 2.5%
Admin cost ratio 4.2% 9.6% 6.1%Personnel 0.8% 4.5% 1.4%R&D 2.8% 3.0% 1.3%Other 0.6% 2.2% 3.3%
OPM 26.2% 15.8% 15.6%
资料来源:Company data, Goldman Sachs Global Investment Research 资料来源:Company data
2018年9月17日 47
全球投资研究 中国 日常消费品
图表 98: We expect Jonjee’s growth to come from its condiment business; we forecast its condiment revenues to post aCAGR of 16% in 2017-19ESummary financials
Jonjee (600872.SS)Rmb millionsDivisional P/L FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23E 17-’19E
2yr CAGRRevenuesCondiment 2,391 2,607 2,895 3,453 3,980 4,673 5,391 6,189 7,073 8,089 16.3%Real estate 53 44 130 49 235 50 55 55 55 58 0.5%Others 198 108 134 107 107 107 107 107 107 107 0.0%
2,642 2,759 3,158 3,609 4,322 4,830 5,553 6,351 7,235 8,254 15.7%
Gross ProfitCondiment 829 928 1,077 1,379 1,590 1,919 2,239 2,589 3,006 3,486 18.0%Real estate 10 3 28 6 96 7 7 7 7 8 2.4%Others 72 37 53 32 32 32 32 32 32 32 0.0%
911 967 1,159 1,417 1,718 1,958 2,279 2,629 3,046 3,526 17.5%
BreakdownRevenues (external only)Condiment 91% 95% 92% 96% 92% 97% 97% 97% 98% 98%Real estate 2% 2% 4% 1% 5% 1% 1% 1% 1% 1%Others 7% 4% 4% 3% 2% 2% 2% 2% 1% 1%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
YoY Growth (%) FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23ERevenuesCondiment 21% 9% 11% 19% 15% 17% 15% 15% 14% 14%Real estate -76% -18% 196% -62% 375% -79% 10% 0% 0% 5%Others 70% -45% 24% -20% 0% 0% 0% 0% 0% 0%
14% 4% 14.5% 14.3% 19.7% 11.8% 15.0% 14.4% 13.9% 14.1%
Margins FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23E pptGross ProfitCondiment 34.7% 35.6% 37.2% 39.9% 40.0% 41.1% 41.5% 41.8% 42.5% 43.1% 1.1%Real estate 18.9% 6.4% 21.6% 12.5% 40.9% 13.0% 13.0% 13.0% 13.0% 13.0% 0.5%Others 36.5% 34.1% 39.8% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2% 0.0%
34.5% 35.1% 36.7% 39.3% 39.8% 40.5% 41.0% 41.4% 42.1% 42.7% 1.3%
资料来源:Company data, Goldman Sachs Global Investment Research
2018年9月17日 48
全球投资研究 中国 日常消费品
Balance sheet and cash flowAs Jonjee has gradually established its brand in the condiment sector, it has followed
Haitian’s policy of insisting on a cash-for-goods policy with distributors. Its net
receivables amounted to c.11 days in 2017, mainly from its business in real estate and
other areas. In 2014, due to improving operating cash flows, the company reversed its
negative FCF position into a positive one for the first time, and it has grown its cash
returns steadily over the past four years. This has helped support the company’s
stable dividend payout policy at c.32% since 2012.
Jonjee is also investing in the expansion of capacity with construction starting at
end-2017 on another 200K tons of annual capacity for soy sauce and 30K for other
condiment sectors. We expect annual investment in fixed assets to total Rmb200
mn-Rmb400 mn every year in 2018E-2020E.
Jonjee had net debt of Rmb700 mn in 2017, implying a 20% net debt to equity ratio. We
assume long-term debt will remain at roughly Rmb900 mn over the next few years.
图表 99: We expect 240bps OPM margin expansion 2017-19ESummary financials
Consolidated P/L (Rmb mn) FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23E 17-’19E 2yr CAGR
Revenue 2,642 2,759 3,158 3,609 4,322 4,830 5,553 6,351 7,235 8,254 15.7%COGS -1,731 -1,791 -1,999 -2,192 -2,603 -2,872 -3,274 -3,722 -4,189 -4,728 GP 911 967 1,159 1,417 1,718 1,958 2,279 2,629 3,046 3,526 17.5%SG&A (excl. other rev/exp) (565) (631) (666) (823) (924) (1,045) (1,172) (1,324) (1,490) (1,692)
Selling Exp. (231) (270) (275) (426) (449) (550) (635) (739) (853) (981)Admin Exp. (288) (331) (349) (348) (411) (423) (454) (490) (530) (588)
OP 346 336 493 595 794 913 1,107 1,305 1,556 1,834 23.9%Other income/expenses (1) (3) (7) (23) 0 0 0 0 0 0EBIT (reported) 346 333 485 572 794 913 1,107 1,305 1,556 1,834 26.3%D&A (86) (120) (126) (129) (136) (161) (193) (223) (250) (280)EBITDA 432 453 611 701 930 1,074 1,300 1,527 1,806 2,114 23.8%
Net Finance Exp. -33 -61 -63 -60 -56 -54 -54 -50 -46 -40Other Non-Op Income 32 67 64 98 108 107 107 107 107 107Profit Before Tax 344 339 486 609 846 965 1,160 1,362 1,617 1,901 25.9%Tax -51 -65 -76 -98 -136 -155 -187 -219 -260 -306Minority Interest -6 -27 -48 -58 -78 -88 -92 -96 -107 -122NPAT 287 247 362 453 632 722 881 1,047 1,250 1,473 26.2%One-off’s after taxRecurring NPAT 287 247 362 453 632 722 881 1,047 1,250 1,473 26.2%
EPS - Basic (Rmb/Sh) 0.36 0.31 0.45 0.57 0.79 0.91 1.11 1.31 1.57 1.85 EPS - Diluted (Rmb/Sh) 0.36 0.31 0.45 0.57 0.79 0.91 1.11 1.31 1.57 1.85 26.2%
Growth Sales 14% 4% 14.5% 14.3% 19.7% 11.8% 15.0% 14.4% 13.9% 14.1%GP 26% 6% 20% 22% 21% 14% 16% 15% 16% 16%SG&A 26% 12% 6% 24% 12% 13% 12% 13% 13% 14%Operating profit (GP less SG&A) 25% -3% 47% 21% 34% 15% 21% 18% 19% 18%EBIT 25% -4% 46% 18% 39% 15% 21% 18% 19% 18%Reported NPAT 35% -14% 47% 25% 39% 14% 22% 19% 19% 18%Recurring NPAT 35% -14% 47% 25% 39% 14% 22% 19% 19% 18%
MarginsGP margin 34.5% 35.1% 36.7% 39.3% 39.8% 40.5% 41.0% 41.4% 42.1% 42.7% 1.3%Operating profit (GP less SG&A) 13.1% 12.2% 15.6% 16.5% 18.4% 18.9% 19.9% 20.5% 21.5% 22.2% 2.4%EBIT margin 13.1% 12.1% 15.4% 15.8% 18.4% 18.9% 19.9% 20.5% 21.5% 22.2% 3.0%Reported NPAT margin 10.9% 9.0% 11.5% 12.6% 14.6% 15.0% 15.9% 16.5% 17.3% 17.8% 2.4%
SG&A/Sales -21.4% -22.9% -21.1% -22.8% -21.4% -21.6% -21.1% -20.8% -20.6% -20.5% 1.2%Effective Tax Rate -15% -19% -16% -16% -16% -16% -16% -16% -16% -16%
资料来源:Company data, Goldman Sachs Global Investment Research
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Key risks1. Uncertainty on the corporate change: There is limited visibility on the company’s
timeline for board member re-election, and some degree of uncertainty remains on the
control of the company or a potential sell-down of shares from major shareholders. On
the positive side, if Jonjee introduces employee stock incentive plans (stock options or
grants), this may help to better align management and shareholder interests, thereby
enhancing Jonjee’s competitiveness in the longer term.
2. Premium positioning and economic slowdown: As 90% of Jonjee’s sales are
generated from mid to premium soy sauce (compared to 70% from the mass to mid-end
for Haitian), Jonjee is likely to be more sensitive to economic cycles, in our view.
3. Faster-than-expected margin improvement: We factor in 130bps GPM expansion and
240bps OPM expansion in 2017-19E; however, increased sales contribution from more
efficient plants (such as the plant in Yangxi, or a faster upgrade at the Zhongshan plant)
may support a faster improvement in margins.
4. Deteriorating industrial environment if expansion plans proceed too quickly: Major
condiment players (including Haitian, Jonjee, and Master) have said they plan to
图表 100: Jonjee has improved its cash return significantlyover the past four yearsReturn on equity and CROCI
图表 101: Over the past four years, Jonjee has improved itsfree cash flows and given back to investors through a stabledividend payout policyFCF and dividend payout
13%
10% 14%
15%
19% 19% 20%
11%
13%
15% 16% 18% 18%
19%
10%
12%
14%
16%
18%
20%
22%
2014 2015 2016 2017 2018E 2019E 2020E
Return on equity (%) CROCI
31% 32% 31% 31.6% 32% 32% 32%
(10%)
-
10%
20%
30%
40%
50%
(100)
-
100
200
300
400
500
600
2014 2015 2016 2017 2018E 2019E 2020E
FCF Dividend payoutRMB mn
资料来源:Company data, Goldman Sachs Global Investment Research 资料来源:Company data, Goldman Sachs Global Investment Research
图表 102: Jonjee capacity expansion plans
Company Jonjee Lee Kum KeeYear 2017 2020-2021Unit: (K tons) Actual GuidanceSoy sauce 400 2020: +200
Oyster sauce 2021: + 200
Soy derivatives n.a. n.a.
Others 110
2021: Oil: +300Vinegar: +100 Cooking wine: +50
资料来源:Company data, Goldman Sachs Global Investment Research.
2018年9月17日 50
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increase their capacity by 50% over the next three years. If these companies expand too
quickly, they may create over-supply in market that would lead to an increase in price
competition.
图表 103: Jonjee summary financials
Profit model (Rmb mn) 12/17 12/18E 12/19E 12/20E Balance sheet (Rmb mn) 12/17 12/18E 12/19E 12/20E
Total revenue 3,609.4 4,321.8 4,830.0 5,552.8 Cash & equivalents 240.8 510.7 660.8 914.5Cost of goods sold (2,191.9) (2,603.3) (2,872.3) (3,274.0) Accounts receivable 113.1 135.4 151.3 174.0SG&A (714.8) (790.9) (898.4) (1,003.4) Inventory 1,413.0 1,606.8 1,694.2 1,841.4R&D (107.8) (133.4) (146.6) (168.6) Other current assets 1,349.3 1,349.3 1,349.3 1,349.3
O Other operating profit/(expense) (22.8) -- -- -- Total current assets 3,116.1 3,602.2 3,855.6 4,279.2EBITDA 700.6 930.4 1,073.6 1,299.9 Net PP&E 1,481.2 1,498.7 1,760.3 2,017.7
D Depreciation & amortization (128.5) (136.2) (160.9) (193.1) Net intangibles 166.6 241.2 317.4 400.3EBIT 572.1 794.2 912.7 1,106.8 Total investments 418.3 499.1 579.1 659.1Interest income 1.6 1.2 2.6 3.3 Other long-term assets 122.6 142.3 164.3 189.6Interest expense (62.1) (57.4) (57.0) (57.0) Total assets 5,304.8 5,983.5 6,676.7 7,546.0
I Income/(loss) from uncons. subs. 1.7 0.8 -- --Others 95.9 106.8 106.8 106.8 Accounts payable 679.5 807.0 890.4 1,015.0Pretax profits 609.2 845.6 965.0 1,159.9 Short-term debt 15.0 -- -- --Income tax (97.8) (136.0) (155.3) (186.7) Other current liabilities 213.8 270.4 298.9 349.3Minorities (58.1) (77.7) (87.5) (91.8) Total current liabilities 908.3 1,077.4 1,189.4 1,364.3
Long-term debt 916.1 916.1 916.1 916.1N Net income pre-preferred dividends 453.3 631.9 722.2 881.4 Other long-term liabilities 30.2 30.2 30.2 30.2
Preferred dividends -- -- -- -- Total long-term liabilities 946.3 946.3 946.3 946.3N Net income (pre-exceptionals) 453.3 631.9 722.2 881.4 Total liabilities 1,854.6 2,023.7 2,135.6 2,310.5
Post-tax exceptionals -- -- -- --Net income 453.3 631.9 722.2 881.4 Preferred shares -- -- -- --
Total common equity 3,140.8 3,572.8 4,066.6 4,669.1EPS (basic, pre-except) (Rmb) 0.57 0.79 0.91 1.11 Minority interest 309.3 387.0 474.5 566.3EPS (basic, post-except) (Rmb) 0.57 0.79 0.91 1.11
E EPS (diluted, post-except) (Rmb) 0.57 0.79 0.91 1.11 Total liabilities & equity 5,304.8 5,983.5 6,676.7 7,546.0DPS (Rmb) 0.18 0.25 0.29 0.35Dividend payout ratio (%) 31.6 31.6 31.6 31.6 BVPS (Rmb) 3.94 4.48 5.10 5.86Free cash flow yield (%) 2.9 2.3 1.9 2.5
Growth & margins (%) 12/17 12/18E 12/19E 12/20E Ratios 12/17 12/18E 12/19E 12/20ESales growth 14.3 19.7 11.8 15.0 CROCI (%) 16.1 18.3 18.2 19.1EBITDA growth 14.6 32.8 15.4 21.1 ROE (%) 15.3 18.8 18.9 20.2EBIT growth 17.9 38.8 14.9 21.3 ROA (%) 8.9 11.2 11.4 12.4Net income growth 25.1 39.4 14.3 22.0 ROACE (%) 14.5 17.8 18.7 20.3EPS growth 25.1 39.4 14.3 22.0 Inventory days 229.4 211.7 209.7 197.1Gross margin 39.3 39.8 40.5 41.0 Receivables days 9.3 10.5 10.8 10.7EBITDA margin 19.4 21.5 22.2 23.4 Payable days 106.7 104.2 107.9 106.2EBIT margin 15.8 18.4 18.9 19.9 Net debt/equity (%) 20.0 10.2 5.6 0.0
Interest cover - EBIT (X) 9.5 14.1 16.8 20.6
Cash flow statement (Rmb mn) 12/17 12/18E 12/19E 12/20E Valuation 12/17 12/18E 12/19E 12/20EN Net income pre-preferred dividends 453.3 631.9 722.2 881.4
D&A add-back 128.5 136.2 160.9 193.1 P/E (analyst) (X) 33.5 34.8 30.4 24.9M Minorities interests add-back 58.1 77.7 87.5 91.8 P/B (X) 4.8 6.1 5.4 4.7N Net (inc)/dec working capital 2.3 (88.7) (19.9) (45.4) EV/EBITDA (X) 23.1 24.5 21.1 17.3
O Other operating cash flow 8.4 (0.8) -- -- EV/GCI (X) 4.0 4.9 4.2 3.6C Cash flow from operations 650.6 756.4 950.7 1,121.0 Dividend yield (%) 0.9 0.9 1.0 1.3
Capital expenditures (206.8) (248.0) (520.7) (558.8)Acquisitions -- -- -- --Divestitures 0.8 -- -- --Others (364.9) (80.0) (80.0) (80.0)
C Cash flow from investments (571.0) (328.0) (600.7) (638.8)
D Dividends paid (common & pref) (111.5) (143.4) (199.9) (228.5)Inc/(dec) in debt (73.7) (15.0) -- --
C Common stock issuance (repurchase) -- -- -- --O Other financing cash flows (95.0) -- -- --
Cash flow from financing (280.3) (158.4) (199.9) (228.5)Total cash flow (200.7) 270.0 150.1 253.7 Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.
资料来源:Company data, Goldman Sachs Global Investment Research
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APPENDICES
2018年9月17日 52
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Appendix 1: Condiment industry snapshot
Market overviewChinese consumption of condiments totaled only 12kg per capita in 2017, much lower
than the 21-26kg in the US or other Asian peers. In terms of share of throat, soy sauce
accounts for 60% of consumption among the Chinese, significantly higher than the 25%
in Japan and the 17% in Korea.
In the next five years, we expect soy sauce will remain the most important sub-segment
in the condiment market. At the same time, we expect consumers will increasingly look
for new flavors, which will drive higher volume growth for other sub-segments such as
vinegar, oyster sauce and bouillon.
We also expect the industry will continue to benefit from upgrades to products (richer
tastes and better ingredients), as well as direct price hikes that typically more than offset
cost inflation.
图表 104: We expect soy sauce to remain the most important condiment market, and vinegar, oyster and bouillon to seestronger volume growthChina’s condiment industry: Growth and size by key segment
Bouillon, $1.8bn -> $3.1bn
Soy sauce $14.7bn -> $24.8bn
Pickled products, $0.8bn -> $1.1bn
Oyster sauce, $1.4bn -> $2.7bn
Vinegar $3.7bn -> $6.5bn
0%
2%
4%
6%
0% 1% 2% 3% 4% 5% 6% 7% 8%
2017-23E ASP CAGR
2017-23E Total Volume CAGR
2017 2023E
Bubble is the market size of respective segment (USD bn)
资料来源:Euromonitor, Goldman Sachs Global Investment Research
2018年9月17日 53
全球投资研究 中国 日常消费品
图表 105: Compared to US/Asian peers, China is still a less penetrated and a less consolidated marketPeer comparison of overall condiment consumption (as of 2017 unless specified)
China Japan Korea USA
Per capita consumption (kg) 12 26 22 21
Volume (K tonnes) 16,802.2 3,310.5 1,129.5 7,041.8
5.8% -0.7% 0.9% 0.6%
ASP (USD/kg) 2.6 7.5 6.7 6.4
3.2% 0.9% 1.2% 1.5%
CR5 (%)
Segment splitNote: segment with less than 3% of total volume does not show the data
Foodservice as % of total volume (%)
2012-17 CAGR
2012-17 CAGR
Vinegar 21% Bouillon
2% MSG 5% Pickled
Products 1%
Oyster Sauces
4%
Soy Sauces
60%
Chilli Sauces
2%
Others 3% Vinegar
3% Bouillon
3% Dry
Sauces 4%
Pasta Sauces
4% Pickled Products
21%
Mayonnaise 6%
Salad Dressing
s 5%
Soy Sauces
25%
Others 25%
Vinegar 11%
Bouillon 7%
Pasta Sauces
12% Pickled
Products 14%
Ketchup 9%
Mayonnaise 9%
Salad Dressing
s 7%
Soy Sauces
3%
Others 27%
Vinegar 12%
Bouillon 4%
MSG 3%
Pickled Products
27%
Ketchup 3%
Mayonnaise 3%
Soy Sauces
17%
Chilli Sauces
10%
Others 18%
12 26 22 21
21 32
80
25
55 38
81
28
Note: Euromonitor foodservice volume data is based on consumer perspective; food processing is not provided separately.
资料来源:Euromonitor, China Condiment Association, Statistics Japan, Goldman Sachs Global Investment Research
2018年9月17⽇ 54
全球投资研究 中国 ⽇常消费品
图表 106: China condiment value chain (as of 2017 unless specified)
(1) Liquid state method (20%) (1) Grain based (80%)Soybean Wheat Other Sorghum / Rice Other
70% 20% 10% 95% 5%(2) Solid state method (80%) (2) Sugar based (15%)
Soybean Meal Bran Other Fruit Honey / Sugar Other70% 20% 10% 70% 20% 10%
(3) Alcohol based (5%)Alcohol Other
95% 5%
Ups
trea
m
Bouillon(US$ 1.8bn)
No.1 Nestle
55
Note: 1) Raw material also includes water for all types of sauces.2) Formulated vinegar composes of natural ferminated vinegar (at least 50%) and edible acetic acid.
Foodservice(50%)
Other(1%)
Traditional Trade(28%)
Modern Trade(71%)
Cha
nnel
Ret
ail
Oyster sauce(US$ 1.4bn)
No.1Lee Kum Kee
25
Pickled products
(US$ 0.8bn)
No.1 Fuling Zhacai
30
Food Processing(10%)
Home Dining(40%)
Con
dim
ent
Vinegar (US$ 4bn, volume share, 2016)Soy Sauce (US$ 15bn, volume share, 2017)
Haitian, 16 Meiweixia
n, 4 Lee Kum Kee, 3 Other, 77
Heng Shun, 9 Shui Ta, 8
Zi Lin, 3
Other, 79
资料来源:Euromonitor, China Condiment Association, Goldman Sachs Global Investment Research
2018年9月17⽇ 55
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Differences in soy sauceSoy sauce is usually broken down into two main types: chemically produced vs. naturally
brewed. Generally, we estimate that 50% of soy sauce consumed in China is naturally
brewed. About half of the naturally brewed soy sauce is made using the liquid-state
method. In Exhibits 107-108, we summarize a number of key difference between these
methods in terms of ingredients, fermentation, length of process, color, taste and smell.
Chemically produced soy sauce: Hydrochloric acid is added, it does not undergo any
form of fermentation, and it is generally manufactured within several weeks.
There are two main ways to ferment naturally brewed soy sauce:
Liquid-state: Natural brewed soy sauce requires a fermentation process for soybeann
and wheat that lasts 3-6 months.
Solid-state: Requires only 15-45 days of fermentation for bran and soybean.n
At higher costs, the liquid-state method produces a higher content of amino acids, which
translates into stronger umami and better taste.
图表 107: China still consumes solid-state soy sauce andchemically produced soy sauce, whereas Japan is mostlynaturally brewed soy sauceChina soy sauce vs. Japan soy sauce
图表 108: Comparison of naturally brewed soy sauce vs.chemically produced soy sauce
China Japan
Liquid-state as % of naturally brewed
IngredientsMostly soybean meal, bran
Mostly soybean meal, roasted wheat
Addictives allowed
MSG, caramel coloring etc. No
Length of process
Solid-state: 15-45 daysLiquid-state: 3-6 months Liquid-state: 6 months
Taste Salty and umami More balanced, umami, sweet and salty
Nat
ural
ly b
rew
ed
% of naturally brewed 50 85
50 95
Natural brewedLiquid-state Chemically produced
Ingredients Soybean (meal), wheat (flour/bran), salt Hydrochloric acid
Fermentation Yes No
Length of process Several months Several weeks
Color Clear reddish-brown Cloudy, dark
Taste Balanced flavor, umima, sweet, salty Unpleasant and strong
Smell Slightly sweet Strong, sour, chemical
资料来源:Goldman Sachs Global Investment Research 资料来源:Goldman Sachs Global Investment Research
2018年9月17日 56
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Appendix 2: China condiments in history
Over time, the Chinese have delineated seven major flavors by trying various ingredients and experimenting with different
cooking methods. These tastes are salty, sour, sweet, bitter, spicy, umami and astringent. While upper and middle class
consumers, with their strong purchasing power, have paid a lot of attention to the diversity and harmony of multiple flavors,
mass-market consumers are limited to satisfying their basic needs, and they rely heavily on pickled products and soybean
sauce.
Note: Prices in this report are as of the September 14, 2018 market close unless indicated otherwise.
图表 109: Historically, upper and middle class consumers have emphasized the diversity and harmony of multiple flavors (seven in total), whereas mass-market consumersseek to satisfy basic needs and rely heavily on pickled products and soybean sauceThe historical development of China’s condiment market
Salt Bouillon (c.1100BC)
Sauce (c.770BC~220BC)Light soy sauce (c.200BC~200AD)
Fermented soya bean(c. 400BC)Seasoned soy sauce (c. 600AD)
Soy sauce (c. 900AD) Pickled vegetables
Examples Ingredient Ingredient Ingredient Ingredient Ingredient
Examples Examples Examples Examples Examples
Plum or other sour fruit(c. 3000 years ago) Pickled vegetables
Examples Ingredient Ingredient Ingredient
Examples
Sweet Honey (c. 1046BC) Date, chestnut (c. 1046BC)
Cane juice and purified product (200BC) Licorice
Bitter Tea leaves Alcohol Animal bile (c. 200BC)
Spicy Pepper (c. 200BC) Ginger, onion, garlic(700BC~11BC)
Chili, imported through silk road
Umami
Astringent
Dehydrated meatSaltAlcohol
SoybeanSea saltLake saltWell salt
Fermented flour sauceBeef pastePrahoc
Plum Rice GrainHawthorn Vinegar AlcoholGrape Vegetables
VegetablesSalt
Sichuan ZhacaiSeasoned soy sauceSoy sauce
FlourSalt
Rice vinegarGrain vinegar
Salty
Sour
Pepper/Chili/Alcohol/etc.
Kimchee
GrainOther
Second most important flavor next to salty, with preservative effect
Vinegar (25AD~220AD)Sour sauce and sour food(770BC~11BC)
Soybean/Black soya bean
Soy sauce
SugarSalt
Most important flavor, taste focus changes from salt consumption to freshness enhancement over time
Persimmon, tea (green tea)
SugarSaltSoybean/Black soya bean
Soy sauce
Syrup made from rice and malt (c. 3000 years ago)
Taste from fish, shellfish, soy sauce (c. 1600AD)
资料来源:Zhao, R. (2014). The history of Chinese food culture. Shanghai: Shanghai People’s Publishing House.
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Additional DisclosureThird party brands used in this report are the property of their respective owners, and are used here for informational
purposes only. The use of such brands should not be viewed as an endorsement, affiliation or sponsorship by or for
Goldman Sachs or any of its products/services.
高华证券感谢高盛分析师孔令侃,CFA和李⾬晴在本报告中的贡献。
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信息披露附录
申明
本人,廖绪发, CFA,在此申明,本报告所表述的所有观点准确反映了本人对上述公司或其证券的个人看法。此外,本人薪金的任何部分不曾与,不与,也将不会与本报告中的具体推荐意见或观点直接或间接相关。
投资摘要投资摘要部分通过将一只股票的主要指标与其行业和市场相比较来评价该股的投资环境。所描述的四个主要指标包括增长、回报、估值倍数和波动性。增长、回报和估值倍数都是运用数种方法综合计算而成,以确定该股在地区研究行业内所处的百分位排名。
每项指标的准确计算方式可能随着财务年度、行业和所属地区的不同而有所变化,但标准方法如下:
增长是下一年预测与当前年度预测的综合比较,如每股盈利、EBITDA 和收入等。 回报是各项资本回报指标一年预测的加总,如CROCI、平均运用资本回报率和净资产回报率。 估值倍数根据一年预期估值比率综合计算,如市盈率、股息收益率、EV/FCF、EV/EBITDA、EV/DACF、市净率。 波动性根据12个月的历史波动性计算并经股息调整。
并购评分在我们的全球覆盖范围中,我们使用并购框架来分析股票,综合考虑定性和定量因素(各行业和地区可能会有所不同)以计入某些公司被收购的可能性。然后我们按照从1到3对公司进行并购评分,其中1分代表公司成为并购标的的概率较高(30%-50%),2分代表概率为中等(15%-30%),3分代表概率较低(0%-15%)。对于评分为1或2的公司,我们按照研究部统一标准将并购因素体现在我们的目标价格当中。并购评分为3被认为意义不大,因此不予体现在我们的目标价格当中,分析师在研究报告中可以予以讨论或不予讨论。
QuantumQuantum是提供具体财务报表数据历史、预测和比率的高盛专有数据库,它可以用于对单一公司的深入分析,或在不同行业和市场的公司之间进行比较。
GS SUSTAINGS SUSTAIN是一项侧重于通过发现优质行业领先企业而实现长期超额收益的全球投资策略。GS SUSTAIN 50关注名单列出了我们认为凭借出色的资本回报、具有可持续性的竞争优势和对ESG(环境、社会和企业治理)风险的有效管理而有望在长期内相对于全球同业表现出色的行业领军企业。候选企业主要基于对企业在这三方面表现的综合量化分析筛选而出。
相关的股票研究范围廖绪发, CFA:A股传媒、A股食品饮料。
A股食品饮料:Anhui Gujing Distillery Co.、Jiangsu King’s Luck Brewery、Jiangsu Yanghe、Kweichow Moutai、Luzhou Laojiao、Qinghai HuzhuBarley Wine Co.、Shanxi Xinghuacun Fen Wine、Sichuan Swellfun Co.、Tsingtao Brewery (A)、Wuliangye Yibin。
A股传媒:Alpha Group、Beijing Enlight Media Co.、Beijing Gehua CATV、Beijing Hualubaina Film & TV Co.、BlueFocus Communication、ChinaSouth Publishing & Media、Focus Media Information Tech、Guangdong Advertising、Huayi Brothers Media、IMAX China Holding、JiangsuPhoenix、Oriental Pearl、Ourpalm Co.、Wanda Film、Zhejiang Huace Film & TV。
信息披露与公司有关的法定披露以下信息披露了高盛高华证券有限责任公司(“高盛高华”)与北京高华证券有限责任公司(“高华证券”)投资研究部所研究的并在本研究报告中提及的公司之间的关系。
没有对下述公司的具体信息披露: Foshan Haitian Flavouring & Food (Rmb70.05)、Jonjee Hi-Tech Industrial Co. (Rmb28.99)
公司评级、研究行业及评级和相关定义买入、中性、卖出:分析师建议将评为买入或卖出的股票纳入地区投资名单。一只股票在投资名单中评为买入或卖出由其相对于所属研究行业的总体潜在回报决定。任何未获得买入或卖出评级且拥有活跃评级(即不属于暂停评级、暂无评级、暂停研究或没有研究的股票)的股票均被视为中性评级。每个地区投资评估委员会根据25-35%的股票评级为买入、10-15%的股票评级为卖出的全球指导原则来管理该地区的投资名单;但是,在某一特定分析师所覆盖行业中买入和卖出评级的分布可能根据地区投资评估委员会的决定而有所不同。此外,每个地区投资评估委员会管理着地区强力买入或卖出名单,该名单以总体潜在回报规模和/或实现回报的可能性为主要依据确立各自研究范围内的投资建议。将股票加入或移出此类强力买入或卖出名单并不意味着分析师对这些股票的投资评级发生了改变。
总体潜在回报:代表当前股价低于或高于一定时间范围内预测目标价格的幅度,包括所有已付或预期股息。分析师被要求对研究范围内的所有股票给出目标价格。总体潜在回报、目标价格及相关时间范围在每份加入投资名单或重申维持在投资名单的研究报告中都有注明。
研究行业及评级:每个行业研究的所有股票名单可登陆http://www.gs.com/research/hedge.html通过主要分析师、股票和行业进行查询。分析师给出下列评级中的其中一项代表其根据行业历史基本面及/或估值对研究对象的投资前景的看法。 具吸引力(A):未来12个月内投资前景优于研究范围的历史基本面及/或估值。 中性(N):未来12个月内投资前景相对研究范围的历史基本面及/或估值持平。 谨慎(C):未来12个月内投资前景劣于研究范围的历史基本面及/或估值。
暂无评级(NR):在高盛于涉及该公司的一项合并交易或战略性交易中担任咨询顾问时并在某些其他情况下,投资评级和目标价格已经根据高盛的政策予以除去。 暂停评级(RS):由于缺乏足够的基础去确定投资评级或价格目标,或在发表报告方面存在法律、监管或政策的限制,我们已经暂停对这种股票给予投资评级和价格目标。此前对这种股票作出的投资评级和价格目标(如有的话)将不再有效,因此投资者不应依赖该等资料。 暂停研究(CS):我们已经暂停对该公司的研究。 没有研究(NC):我们没有对该公司进行研究。 不存在或不适用(NA):此资料不存在或不适用。 无意义(NM):此资料无意义,因此不包括在报告内。
一般披露本报告在中国由高华证券分发。高华证券具备证券投资咨询业务资格。
本研究报告仅供我们的客户使用。除了与高盛相关的披露,本研究报告是基于我们认为可靠的目前已公开的信息,但我们不保证该信息的准确性和完整性,客户也不应该依赖该信息是准确和完整的。报告中的信息、观点、估算和预测均截至报告的发表日,且可能在不事先通知的情况下进行调整。我们会
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适时地更新我们的研究,但各种规定可能会阻止我们这样做。除了一些定期出版的行业报告之外,绝大多数报告是在分析师认为适当的时候不定期地出版。
高盛高华为高华证券的关联机构,从事投资银行业务。高华证券、高盛高华及它们的关联机构与本报告中涉及的大部分公司保持着投资银行业务和其它业务关系。
我们的销售人员、交易员和其它专业人员可能会向我们的客户及自营交易部提供与本研究报告中的观点截然相反的口头或书面市场评论或交易策略。我们的资产管理部门、自营交易部和投资业务部可能会做出与本报告的建议或表达的意见不一致的投资决策。
本报告中署名的分析师可能已经与包括高华证券销售人员和交易员在内的我们的客户讨论,或在本报告中讨论交易策略,其中提及可能会对本报告讨论的证券市场价格产生短期影响的推动因素或事件,该影响在方向上可能与分析师发布的股票目标价格相反。任何此类交易策略都区别于且不影响分析师对于该股的基本评级,此类评级反映了某只股票相对于报告中描述的研究范围内股票的回报潜力。
高华证券及其关联机构、高级职员、董事和雇员,不包括股票分析师和信贷分析师,将不时地根据适用的法律和法规对本研究报告所涉及的证券或衍生工具持有多头或空头头寸,担任上述证券或衍生工具的交易对手,或买卖上述证券或衍生工具。
在高盛组织的会议上的第三方演讲嘉宾(包括高华证券或高盛其它部门人员)的观点不一定反映全球投资研究部的观点,也并非高华证券或高盛的正式观点。
在任何要约出售股票或征求购买股票要约的行为为非法的地区,本报告不构成该等出售要约或征求购买要约。本报告不构成个人投资建议,也没有考虑到个别客户特殊的投资目标、财务状况或需求。客户应考虑本报告中的任何意见或建议是否符合其特定状况,以及(若有必要)寻求专家的意见,包括税务意见。本报告中提及的投资价格和价值以及这些投资带来的收入可能会波动。过去的表现并不代表未来的表现,未来的回报也无法保证,投资者可能会损失本金。
某些交易,包括牵涉期货、期权和其它衍生工具的交易,有很大的风险,因此并不适合所有投资者。外汇汇率波动有可能对某些投资的价值或价格或来自这一投资的收入产生不良影响。
投资者可以向高华销售代表取得或通过http://www.theocc.com/about/publications/character-risks.jsp取得当前的期权披露文件。对于包含多重期权买卖的期权策略结构产品,例如,期权差价结构产品,其交易成本可能较高。与交易相关的文件将根据要求提供。
全球投资研究部提供的不同服务层级:根据您对接收沟通信息的频率和方式的个人偏好、您的风险承受能力、投资重心和视角(例如整体市场、具体行业、长线、短线)、您与高华证券的整体客户关系的规模和范围、以及法律法规限制等各种因素,高华证券全球投资研究部向您提供的服务层级和类型可能与高华证券提供给内部和其他外部客户的服务层级和类型有所不同。例如,某些客户可能要求在关于某个证券的研究报告发表之时收到通知,某些客户可能要求我们将内部客户网上提供的分析师基本面分析背后的某些具体数据通过数据流或其它途径以电子方式发送给他们。分析师基本面研究观点(如股票评级、目标价格或盈利预测大幅调整)的改变,在被纳入研究报告、并通过电子形式发表在内部客户网上或通过其它必要方式向有权接收此类研究报告的所有客户大范围发布之前,不得向任何客户透露。
所有研究报告均以电子出版物的形式刊登在高华客户网上并向所有客户同步提供。高华未授权任何第三方整合者转发其研究报告。有关一个或多个证券、市场或资产类别(包括相关服务)的研究报告、模型或其它数据,请联络您的高华销售代表。
北京高华证券有限责任公司版权所有 © 2018年
未经北京高华证券有限责任公司事先书面同意,本材料的任何部分均不得(i)以任何方式制作任何形式的拷贝、复印件或复制品,或(ii)再次分发。
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