Greater China Consumer:2Q17preview

Top Buys: Mengniu, Moutai, Feng Tay, Eclat and Qingdao Haier

    Most of the staples reported better-than-expected NP growth (except Tingyi).Some of the drivers are more sustainable (like Dali’s new products for CRB’spremiumization). Some will have a 6-12m benefit (like Want Want andHengan’s sales team restructuring), but the long-term macro challenges stillneed to be addressed. This week, the key focus will be on dairy (Mengniu, Yiliand Bright), liquor (Wuliangye) and white goods (Gree, Haier and Midea), andwhether the property boom in lower-tier cities will be the next growth driver.

    Shenzhou beats and staples saw better bottom lines

    Of the key companies (under coverage) that announced results last week,Shenzhou beat, thanks to the efficiency gain from Vietnam and the Flyknitcompensation. NP for staples was better than expected (except for Tingyi).This was due to various initiatives, as explained below.