Greatview Aseptic Packaging Neutral – But Appear To Be Priced In

Transcription

Company Update, 21 November 2014
Greatview Aseptic Packaging (468 HK)
Consumer Non-cyclical - Packaging
Market Cap: USD645m
Neutral (from Buy)
Target Price:
Price:
HKD3.89
HKD3.71
Macro
Risks
Mounting Concerns – But Appear To Be Priced In
Growth
Value
Relative to Hang Seng Index (RHS)
115
5.20
105
4.70
95
4.20
85
3.70
75
3.20
200
180
160
140
120
100
80
60
40
20
65
May-14
Oct-14
5.70
Jul-14
125
Mar-14
6.20
Jan-14
135
Nov-13
Vol m
Price Close
6.70
Avg Turnover (HKD/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (HKD)
Free float (%)
Share outstanding (m)
Shareholders (%)
14.6m/1.64m
34.0
4.8
3.49 - 6.15
73
1,348
Wellington management
Matthews International
Foxing Development Ltd.
0
0
.
2
0
0
We are concerned with the negative factors affecting Greatview, after .
0
3Q14 operating results reflected a sharp deterioration. Downgrade to 0
NEUTRAL, with a lower TP of HKD3.89 (4.8% upside). We believe its 0
sales and GPM could deteriorate further amid reduced demand and
lower prices from Mengniu and Yili. However, we believe these
negatives are priced in. The stock offers an attractive yield of 5.4%.



Source: Bloomberg
13.0
9.9
9.6
Share Performance (%)

Profit warning recap. Greatview Aseptic Packaging’s (Greatview) 9M14
net profit dropped 16% YoY and sales grew only 10% YoY. While FX
losses accounted for 75% of the net profit (NP) decline of CNY35m,
3Q14 results deteriorated sharply as sales fell 7% YoY vs a growth of
20% in 1H14. Greatview surprised investors when guided its sales in 4Q
to be similar to 3Q, thus implying a c.7% decline. We estimate its
reported EPS to drop c. 16% YoY, or by 8%, excluding FX losses.
Twin industry headwinds in dairy. Domestic milk price hikes after
channel restocking in 1Q14 by dairy processors such as Mengniu (2319
HK, NR) have led to waning demand. Additionally, the global milk glut
has encouraged retailers to import foreign ultra-high temperature
processing (UHT) milk products into China. These two factors put a
short- to medium-term dampener on UHT milk production, which in turn
affected demand for packaging.
Competitive pressure. Greatview’s top rival, ie Tetra Pak, defended its
market share by giving discounts, which led to a price war. To date, the
State Administration for Industry and Commerce’s (SAIC) anticompetitive investigation into Tetra Pak has made little progress, with
bundling of filling machines, servicing and packaging believed to be still
in practice. Moreover, recent price promotions by its major customers
like Mengniu and Yili (600887 CH, NR) to maintain their own margins
may pressure Greatview’s ASP, in our view. All these factors suggest
that Greatview’s gross profit margins (GPM) are vulnerable.
Downgrade to NEUTRAL (from Buy). We cut our recurring NP
forecasts by 22%, 31% and 35% for FY14-16 respectively. Our new TP
of HKD3.89 (from HKD7.05) is now based on a 13x FY15F P/E, about
0.5SD below the historical average forward P/E of 15x from its Dec 2010
IPO. We believe its lower P/E (from 16x previously) is justified by a
slower growth profile and a more competitive operating environment.
This marks the transfer of coverage to Robin Yuen.
YTD
1m
3m
6m
12m
Absolute
(19.0)
(29.3)
(37.6)
(21.6)
(25.8)
Forecasts and Valuations
Relative
(20.0)
(31.3)
(31.1)
(24.6)
(25.1)
Total turnover (CNYm)
Shariah compliant
Robin Yuen, CFA +852 2103 9202
robin.yuen@rhbgroup.com
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1,744
2,160
2,278
2,618
3,029
Reported net profit (CNYm)
315
317
268
318
359
Recurring net profit (CNYm)
310
310
284
318
359
Recurring net profit growth (%)
14.2
(0.0)
(8.4)
11.9
12.8
Recurring EPS (CNY)
0.23
0.23
0.21
0.24
0.27
DPS (CNY)
0.08
0.08
0.16
0.16
0.16
Recurring P/E (x)
12.6
12.6
13.9
12.4
11.0
P/B (x)
2.10
1.87
1.57
1.41
1.26
P/CF (x)
9.6
16.8
15.5
18.3
13.1
Dividend Yield (%)
2.7
2.7
5.4
5.4
5.4
8.22
7.38
8.87
7.53
6.51
18.0
16.0
11.6
12.0
12.1
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


2

.
2
0
.
2




Source: Company data, RHB
net cash net cash net cash net cash net cash
(4.8)
(15.6)
Powered by EFATM Platform
(19.2)
1
21 November 2014
Key Operating Factors
 Low volume resulted in a decline in
sales revenue
Core operations deteriorated. Greatview’s sales growth decreased sharply as
9M14 sales grew only 10% YoY. Since 1H14 sales saw a decent growth of 20% YoY,
this implies 3Q sales growth turned negative and decreased by c.7% YoY. The
magnitude of the drop is a surprise as FY11-13 and 1H14 sales were strong, growing
by 36%/11%/24% and 10% respectively. We believe most of the decrease is volumedriven, as management indicated that its ASPs are negotiated once a year, at the
beginning of the year.
 Price takers see their GPM squeezed
GPM should not have changed materially in 3Q14, since ASPs were stable.
Greatview announced a 9M14 GPM decline two weeks ago, most probably due to
factors like: i) an ASP decline in 1Q from price competition against Tetra Pak, and ii)
ASP pressure from its customers Mengniu and Yili, as they passed on GPM pressure
onto their raw material suppliers.
 FX loss was the main culprit
However, the main culprit was the FX loss as management indicated that there
was a downward swing of CNY27m in 9M14 vs 9M13 primarily due to the
depreciation of the EUR vs CNY, the bulk of which stemmed from the third-quarter
comparison. During 3Q13, the EUR appreciated and led to Greatview booking a FX
gain of CNY8m. However, in 3Q14, the depreciation of the EUR led to a FX loss of
CNY17m.
Low impact from government subsidies as the subsidy awarded in 9M14 was only
CNY2m lower than that in 9M13.
Net profit impact. 9M14 net profit was CNY35m lower than in 9M13, as per its
announcement – though the actual 3Q numbers were not provided.
 Domestic price hike deterred buyers
Domestic milk price hike in 1H14. Major dairy processors like Mengniu reportedly
raised prices in 1Q14 after restocking their inventory post Chinese New Year. The
price hike deterred consumers and led to high channel inventory during 2Q14, and
subsequent price promotions during the summer months to clear inventory.
 Cheap foreign milk alternatives due to global
Global milk glut. Another reason for the decline in packaging sales can be attributed
to the industry slowdown in liquid milk production volume. The Chinese milk market is
currently affected by a global glut of raw milk supply. This means global milk
processors are ramping up production of milk at lower costs and passing on the
savings to end-users. China retailers are importing cheaper foreign UHT milk from
New Zealand, Germany and Britain, among others, even after factoring transportation
costs. From our channel checks online (ie Yihaodian.com and JD.com), bulk
imported UHT milk sells at a 10-20% discount (as low as CNY8/litre) vs low-end
domestic milk from Mengniu and Yili (see Figure 1)
milk glut
Thus, we believe these two factors combined to lead to high channel inventories of
domestic UHT milk for retailers and reduced production volume in 3Q14 – which
resulted in lower demand for Greatview’s aseptic packaging.
Figure 1: Comparison of domestic vs foreign milk prices
Imported Foreign Milk
Brand
Devondale
Oldenburger
Oldenburger
Meadow Fresh
Harvey Fresh
Devondale
Lactel
Lactel
Oldenburger
La Irlandesa
Anchor
Organic Valley
Devondale
Lactel
Anchor
Average
Product
Price (CNY) Volume (L)
1L Pack, 10x
138.0
10.0
1L Pack, 12x
188.0
12.0
1L Pack, 1x
10.9
1.0
1L Pack, 1x
9.9
1.0
1L Pack, 6x
99.0
6.0
1L Pack, 6x
75.0
6.0
1L Pack, 6x
100.0
12.0
1L Pack, 6x
59.1
6.0
1L Pack, 6x
119.0
6.0
1L Pack, 6x
49.9
6.0
1L Pack, 6x
117.6
6.0
1L Pack, 6x
156.0
6.0
200mL, 24x
109.0
4.8
200mL, 24x
118.0
4.8
250mL, 10x
49.9
2.5
Domestic Milk
Brand
Product
Mengniu - Reg Pure Milk 250mL, 16x
Mengniu - Milk Deluxe
250mL, 12x
Yili
240mL, 16x
Mengniu - Reg Pure Milk 1L Pack, 6x
Mengniu - Future Star Kids190ml,
Milk 12x
Average
Price (CNY) Volume (L)
46.0
4.0
62.5
3.0
45.0
3.8
69.0
6.0
59.0
2.3
CNY/L
13.8
15.7
10.9
9.9
16.5
12.5
8.3
9.9
19.8
8.3
19.6
26.0
22.7
24.6
20.0
15.9
Origin
Australia
Germany
Germany
New Zealand
Australia
Australia
France
France
Germany
Ireland
New Zealand
USA
Australia
France
New Zealand
CNY/L
11.5
20.8
11.7
11.5
25.9
16.3
Origin
China
China
China
China
China
Source: Yihaodian.com, JD.com, RHB. Data as of November 14, 2014.
2
21 November 2014
 Structural reasons why Greatview may not be
able to replace Tetra Pak despite c.10%
discounting
We recently spoke with a Mengniu executive to learn about the company’s usage of
Greatview’s packaging. First, while Greatview’s prices are c.10-20% lower, he
believes Tetra Pak continues to request minimum order quantities of packaging
materials, in conjunction with the purchase and maintenance of their filling machines
(aka bundling). We note that there have so far been no updates on SAIC’s
investigation into Tetra Pak’s anti-competitive practices, and this case has dragged
for longer than a year.
Second, he believes certain Tetra Pak machines may require packaging materials of
a specific technical requirement and that Greatview may not yet have duplicated
those technical specifications that would allow substitution to be possible.
Based on these observations and from Greatview’s comment that its market share
has remained at the 13% level since 2012, we believe growth above industry
production volume (+c.20%) would be difficult to sustain going forward, especially
since it is unable to take market share from Tetra Pak.
 Price war is eroding Greatview’s only edge
Furthermore, Greatview’s greatest edge, ie low pricing, is disappearing. Greatview’s
management indicated that the price war with Tetra Pak is intensifying. Previously,
Greatview entered the China market in 2003 with a 30% price discount vs Tetra Pak,
but the current differential has narrowed to only 8% (estimated by its management).
We believe Tetra Pak has greater ability and appetite to defend its market share, as it
can cut prices easily for an extended period of time, especially as a private company.
Slashing forecasts. While we acknowledge FX losses are one-off in nature and noncore, we grow increasingly concerned over Greatview’s growth prospects due to the
factors mentioned earlier.
We cut our FY14 sales forecast by 12% to CNY2,278m from CNY2,585m, implying
that sales growth could cool down to only +5.5% (vs +c.20% we previously
forecasted). This also assumes that 4Q14 sales would be the same as 3Q levels – in
line with management’s comments made during the analyst briefing. We also cut our
sales forecasts for FY15 and FY16 by 17% and 19% respectively on reduced ASP
due to price competition and a squeeze on volume as a result of industry headwinds.
We highlight that China milk processors, such as Mengniu, are recently deriving their
revenue gain from product mix upgrades rather than volume increases (1H14 volume
increased only by low single-digits).
We reduce our GPM projection due to: i) a lower utilisation ratio in China factories
due to slackened demand, ii) greater ASP reduction from increasing price pressure
from its top customers, and iii) price competition vs Tetra Pak. GPMs for FY14-16 are
now at 25%/24%/24%, from 26%/26%/26% previously.
We leave the dollar value of opex unchanged, but given the operating de-leverage,
EBIT margins would be reduced to 15%/15%/15% from 18%/19%/18%.
As such, our recurring net profit estimates are reduced by 22%/31%/35% for FY1416 respectively.
Valuation. Our new TP of HKD3.89 is based on a 13x FY15F P/E, which is about
0.5SD below the historical average forward P/E of 15x (since its IPO in Dec 2010).
We downgrade the stock to NEUTRAL (from Buy). We gather from management that
the company plans to pay a dividend of HKD0.10 per half year going forward, which
implies that the stock offers an attractive dividend yield of 5.4%. This report also
marks the transfer of coverage to Robin Yuen.
3
21 November 2014
Figure 2: Changes to key assumptions
New Estimates
Dec-14F
Previous Estimates
Dec-14F
Dec-15F
Dec-16F
Difference
Dec-14F
Dec-15F
Dec-16F
3,153
3,747
-12%
-17%
-19%
13,092
16,130
19,365
-12%
-15%
-17%
0.197
0.195
0.194
0%
-2%
-3%
Previous Estimates
Dec-14F
Dec-15F
Dec-16F
Difference
Dec-14F
Dec-15F
Dec-16F
-12%
-17%
-19%
-15%
-22%
-25%
-1%
-2%
-2%
-
-
-
1%
2%
2%
-26%
-31%
-35%
-3%
-3%
-3%
Dec-15F
Dec-16F
2,278
2,618
3,029
2,585
11,537
13,667
16,138
0.197
0.192
0.188
Dec-15F
Dec-16F
2,277.9
2,617.6
3,028.9
2,584.9
3,152.9
3,747.4
5.5%
14.9%
15.7%
19.7%
22.0%
18.9%
Cost of sales
(1,718.0)
(1,981.3)
(2,298.4)
(1,925.8)
(2,334.7)
(2,778.6)
Gross profit
559.9
636.3
730.5
659.1
818.2
968.9
-3.3%
13.7%
14.8%
13.8%
24.1%
18.4%
Sales Revenue
Sales volume (m packs)
ASP (CNY/pack)
Source: RHB
Figure 3: Changes to our P&L forecasts
(CNYm)
Revenue
% change YoY
% change YoY
GPM
New Estimates
Dec-14F
24.6%
24.3%
24.1%
25.5%
26.0%
25.9%
Distribution costs
(126.3)
(153.4)
(186.4)
(126.3)
(153.4)
(186.4)
% change YoY
20.0%
21.5%
21.5%
20.0%
21.5%
21.5%
(130.6)
(158.7)
(192.8)
(130.6)
(158.7)
(192.8)
Administrative expenses
% change YoY
Operating Expenses
% change YoY
Opex as % of Sales
Other income - net
15.0%
21.5%
21.5%
15.0%
21.5%
21.5%
(256.9)
(312.1)
(379.2)
(256.9)
(312.1)
(379.2)
17.4%
21.5%
21.5%
17.4%
21.5%
21.5%
11.3%
11.9%
12.5%
9.9%
9.9%
10.1%
101.1
41.1
79.0
101.1
61.9
79.0
Operating profit
344.1
403.3
452.4
464.1
585.2
690.8
% change YoY
-17.5%
17.2%
12.2%
11.3%
26.1%
18.1%
OPM
Finance cost
Pretax profit
Pretax margin
% change YoY
Taxation
Tax Rate
15.1%
(0.5)
15.4%
14.9%
18.0%
18.6%
18.4%
1.9
4.4
3.4
5.2
11.2
343.6
405.1
456.8
467.5
590.4
702.0
-26%
-31%
-35%
15.1%
15.5%
15.1%
18.1%
18.7%
18.7%
-3%
-3%
-4%
-17.6%
17.9%
12.8%
12.2%
26.3%
18.9%
(75.6)
(87.1)
(98.2)
(102.8)
(126.9)
(150.9)
22.0%
21.5%
21.5%
22.0%
21.5%
21.5%
-
-
-
-26%
-31%
-35%
14.7%
-2%
-3%
-3%
-22%
-31%
-35%
-27%
-32%
-35%
-23%
-32%
-35%
Reported net profit
268.0
318.0
358.6
364.6
463.5
551.0
% change YoY
-15.5%
18.7%
12.8%
14.9%
27.1%
18.9%
NP Margin -reported
11.8%
12.1%
11.8%
14.1%
14.7%
Recurring net profit
284.3
318.0
358.6
364.6
463.5
551.0
% change YoY
-8.4%
11.9%
12.8%
14.9%
27.1%
18.9%
NP Margin -recurring
12.5%
12.1%
11.8%
14.1%
14.7%
14.7%
426.9
493.6
547.8
547.0
675.5
786.2
No. of shares (weighted average m)
1,346
1,346
1,346
1,336
1,336
1,336
No. of shares (diluted m)
1,346
1,346
1,346
1,337
1,337
1,337
Basic EPS (CNY)
0.199
0.236
0.267
0.273
0.347
0.412
% change YoY
-16.1%
18.7%
12.8%
14.9%
27.1%
18.9%
EBITDA
EPS Calculation
Diluted EPS (CNY)
0.199
0.236
0.267
0.273
0.347
0.412
% change YoY
-16.1%
18.7%
12.8%
14.9%
27.1%
18.9%
Reccuring EPS
% change YoY
0.211
0.236
0.267
0.273
0.347
0.412
-9.1%
11.9%
12.8%
14.9%
27.1%
18.9%
Source: RHB
4
21 November 2014
Figure 4: China’s dairy production (YoY)
Figure 5: 1-year forward P/E band
25.0%
Title:
Source:
7.00
20.0%
+2SD @ 21.3x
6.00
Please fill in the values above to have
+1SD @them
18.1x entered in y
15.0%
5.00
Share Price (HK$)
10.0%
5.0%
0.0%
Mean @14.9x
4.00
-1SD @ 11.7x
3.00
-2SD@ 8.5x
-5.0%
2.00
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
-10.0%
1.00
0.00
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Industrial Production: Dairy Products (China)
Source: National Bureau of Statistics, RHB
Source: Bloomberg, RHB
5
21 November 2014
Figure 6: Peer comparison I
Company
Greatview Asepti
Price
468 HK
Mkt cap
(USDm)
3-mth
avg t/o
610 (US$m)
1.7
3.51
HSI
23,373
HSCEI
10,381
CSI300
2,537
P/E Hist
PER
P/E EPS FY1 EPS FY2
(x) FY1 (x) FY2 (x)
YoY%
YoY%
(15.6)
18.7
3-Yr
EPS
Cagr
4.6
10.8
10.1
(6.9)
7.6
3.2
3.34
3.8
3.7
1.31
1.29
7.2
7.1
6.6
1.6
7.7
6.4
1.11
4.2
4.5
1.09
1.05
11.0
10.3
8.9
6.7
15.2
12.4
0.83
2.3
2.9
1.58
1.48
25.3
16.9
15.9
6.0
12.3
11.9
1.2
2.1
1.6
3.2
3.9
1.06
11.7
10.1
Adjusted sector avg*
13.9
11.7
PEG Div yld Div yld P/B Hist
(x)
Hist FY1 (%)
(x)
(%)
3.02
2.9
5.7
1.77
P/B FY1
(x)
1.48
Metal Packaging
Cpmc Holdings
906 HK
5.70
733
0.3
11.5
10.8
9.3
6.4
16.1
11.0
0.98
1.8
1.8
1.11
Ball Corp
BLL US
64.93
8,890
66.9
23.3
16.7
16.0
39.0
4.7
17.0
0.99
0.8
0.8
7.36
7.59
Crown Holdings I
CCK US
48.39
6,722
49.9
20.9
14.2
12.5
47.4
13.3
23.0
0.62
N/A
0.0
24.90
20.00
Rexam Plc
REX LN
442.50
4,889
748.0
3,687.5
12.2
12.0
202.5
1.4
49.5
0.25
17.3
0.0
2.35
2.13
Toyo Seikan Grp
5901 JP
1,433.00
2,655
9.1
21.1
23.3
29.7
(9.4)
(21.6)
N/A
N/A
1.0
1.0
0.48
N/A
Daeryuk Can
004780 KS
5,090.00
73
0.4
39.8
N/A
N/A
N/A
N/A
N/A
N/A
1.0
N/A
1.32
N/A
Silgan Holdings
SLGN US
49.56
3,132
10.0
17.1
15.7
14.7
8.9
6.8
7.2
2.18
1.2
1.2
4.01
3.78
Greif Inc-Cl A
GEF US
42.93
2,184
8.6
13.8
19.9
15.4
(30.5)
29.4
1.8
11.30
3.9
3.9
1.63
1.44
Great China Met
9905 TT
29.80
294
0.2
10.3
11.0
10.4
(5.9)
5.4
N/A
N/A
6.7
6.0
1.32
N/A
Amcor Ltd
AMC AU
12.14
12,658
57.2
25.9
18.4
17.1
41.2
7.7
17.2
1.07
3.5
3.9
6.79
6.01
Sealed Air Corp
SEE US
38.64
8,159
81.3
60.4
22.2
19.0
171.9
16.7
53.9
0.41
1.3
1.3
6.17
5.74
Packaging Corp
PKG US
73.60
7,241
75.1
16.3
15.8
14.0
3.0
12.6
8.3
1.91
2.2
2.2
4.67
4.50
Aptargroup Inc
ATR US
64.99
4,207
19.8
25.0
22.7
20.6
10.3
10.1
10.1
2.25
1.7
1.7
2.98
2.95
Shenzhen Beaut-A
002243 CH
8.14
486
8.6
42.8
77.5
62.6
(44.7)
23.8
N/A
N/A
0.4
N/A
2.00
N/A
Other packaging
Source: RHB, Bloomberg
Figure 7: Peer comparison II
Company
Greatview Asepti
Rev Hist NP Hist
(USDm) (USDm)
353
52
EV/
EV/
Ebitda Ebitda
Hist Cur Yr
(29.3)
(37.5)
13.0
11.9
1.2
(7.2)
HSCEI
15.2
14.9
0.8
(6.1)
CSI300
14.4
14.4
3.4
7.2
9.8
12.2
20.7
2.1
0.1
9.7
8.9
9.2
0.0
96.7
0.0
Unlev Gross
Net
ROIC
ROE
ROE
Sh px
Sh px
beta margin margin Hist (%) Hist (%) FY1 (%) 1-mth % 3-mth %
Hist (%) Hist (%)
HSI
Adjusted sector avg*
7.4
Net
Net
gearing gearing
Hist (%) FY1 (%)
0.67
26.8
14.7
145.4
0.5
17.5
5.1
14.0
16.3
11.6
Metal Packaging
Cpmc Holdings
858
63
9.1
7.5
27.8
35.2
0.13
17.9
7.3
5.5
10.2
10.1
(7.1)
(10.8)
Ball Corp
8,468
407
10.4
10.0
229.2
237.4
0.29
18.8
4.8
14.5
44.2
44.5
(2.2)
2.0
Crown Holdings I
8,656
324
12.3
10.2
1,091.0
940.7
0.10
17.1
3.7
14.5
N/A
201.1
4.2
4.0
Rexam Plc
2,520
61
7.3
7.7
82.8
78.3
0.56
N/A
2.4
10.6
12.1
15.7
(3.6)
(9.9)
Toyo Seikan Grp
6,618
116
5.8
5.7
1.4
N/A
N.A
14.1
1.8
N/A
2.3
2.1
24.3
(2.9)
180
2
7.3
N/A
34.3
N/A
0.42
10.3
1.0
1.3
3.4
N/A
0.4
(7.3)
Silgan Holdings
3,709
185
10.0
9.2
216.2
165.6
0.27
14.8
5.0
8.1
25.8
25.2
(0.3)
(1.4)
Greif Inc-Cl A
4,353
147
7.2
7.7
86.1
N/A
0.61
19.1
3.4
N/A
9.2
9.1
(6.1)
(15.2)
Daeryuk Can
Great China Met
269
28
6.3
N/A
0.0
N/A
0.72
18.6
10.6
12.2
17.1
N/A
2.9
(7.6)
12,650
658
12.3
10.6
140.9
174.9
0.33
18.9
5.2
11.4
19.6
34.0
7.4
6.6
Sealed Air Corp
7,691
124
13.8
11.1
245.0
296.3
0.69
33.6
1.6
5.8
16.0
23.7
17.2
7.3
Packaging Corp
3,665
436
13.6
8.2
181.4
162.6
N.A
23.4
11.9
N/A
39.3
30.3
15.8
11.2
Aptargroup Inc
2,520
172
10.2
9.7
12.5
13.1
0.94
32.2
6.8
10.5
13.0
12.8
8.0
1.7
184
10
17.4
N/A
0.0
N/A
0.98
19.1
5.4
4.9
5.5
N/A
(8.7)
8.7
Amcor Ltd
Other packaging
Shenzhen Beaut-A
6
21 November 2014
Financial Exhibits
Profit & Loss (CNYm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover
1,744
2,160
2,278
2,618
3,029
Cost of sales
(1,194)
(1,580)
(1,718)
(1,981)
(2,298)
Gross profit
Dec-16F
550
579
560
636
730
(108)
(114)
(131)
(159)
(193)
(87)
(105)
(126)
(153)
(186)
42
56
41
79
101
Operating profit
397
417
344
403
452
Operating EBITDA
457
502
425
491
545
Depreciation of fixed assets
(59)
(89)
(81)
(89)
(94)
(1)
3
0
0
1
417
344
403
452
Gen & admin expenses
Selling expenses
Other operating costs
Amortisation of intangible assets
Operating EBIT
397
Interest income
6
4
4
6
8
Interest expense
(4)
(4)
(4)
(4)
(4)
Exchange gains
Pre-tax profit
(2)
397
0
417
-
-
-
344
405
457
Taxation
(82)
(99)
(76)
(87)
(98)
Profit after tax & minorities
315
317
268
318
359
Reported net profit
315
317
268
318
359
Recurring net profit
310
310
284
318
359
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
397
417
344
403
452
Depreciation & amortisation
60
85
81
88
93
Change in working capital
22
(158)
(99)
(194)
(153)
Cash flow (CNYm)
Operating profit
Other operating cash flow
Operating cash flow
7
487
Interest paid
Tax paid
Cash flow from operations
Capex
(3)
341
-
-
326
297
0
393
(4)
(4)
(4)
(4)
(4)
(75)
(103)
(68)
(78)
(88)
408
233
253
215
301
(275)
(205)
(200)
(150)
(150)
(4)
Other new investments
(4)
(4)
(4)
(4)
Other investing cash flow
79
36
4
6
Cash flow from investing activities
(200)
(173)
Dividends paid
(109)
(106)
0
0
(57)
28
23
(50)
-
-
-
Increase in debt
Other financing cash flow
Cash flow from financing activities
Cash at beginning of period
-
18
-
(148)
8
(146)
0
(166)
(61)
23
(50)
274
295
295
371
388
17
155
Total cash generated
42
(1)
Forex effects
(0)
(0)
Implied cash at end of period
(200)
315
295
76
0
-
-
-
371
388
543
7
21 November 2014
Financial Exhibits
Balance Sheet (CNYm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Total cash and equivalents
301
386
371
388
543
Inventories
475
437
505
660
766
Accounts receivable
283
433
501
576
666
Other current assets
135
149
182
209
242
Total current assets
1,194
1,405
1,560
1,834
2,218
Tangible fixed assets
1,388
1,032
1,251
1,370
1,381
Intangible assets
54
54
54
54
54
Total other assets
126
44
173
196
223
Total non-current assets
1,212
1,350
1,598
1,632
1,665
Total assets
2,405
2,754
3,157
3,465
3,882
Short-term debt
150
177
200
150
150
Accounts payable
159
192
229
265
308
Other current liabilities
152
178
78
88
108
Total current liabilities
460
547
507
503
567
Other liabilities
85
111
137
164
190
Total non-current liabilities
85
111
137
164
190
Total liabilities
545
658
644
667
756
Share capital
938
962
962
962
962
Retained earnings reserve
922
1,134
1,551
1,836
2,164
Shareholders' equity
1,860
2,097
2,513
2,799
3,126
Total equity
1,860
2,097
2,513
2,799
3,126
Total liabilities & equity
2,405
2,754
3,157
3,465
3,882
Key Ratios (CNY)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Revenue growth (%)
10.8
23.8
5.5
14.9
15.7
Operating profit growth (%)
24.9
5.0
(17.5)
17.2
12.2
Net profit growth (%)
19.7
0.8
(15.6)
18.7
12.8
EPS growth (%)
19.7
0.6
(16.1)
18.7
12.8
Bv per share growth (%)
13.4
12.5
19.0
11.4
11.7
Operating margin (%)
22.8
19.3
15.1
15.4
14.9
Net profit margin (%)
18.1
14.7
11.8
12.1
11.8
Return on average assets (%)
14.1
12.3
9.1
9.6
9.8
Return on average equity (%)
18.0
16.0
11.6
12.0
12.1
Net debt to equity (%)
(8.1)
(10.0)
(6.8)
(8.5)
(12.6)
DPS
0.08
0.08
0.16
0.16
0.16
Recurrent cash flow per share
0.31
0.17
0.19
0.16
0.22
8
21 November 2014
SWOT Analysis
 Reliable alternative supplier of high-quality aseptic
packaging materials
 Litigation risk from
Tetra Pak in
Germany
 Established position in a highly-consolidated market
 Susceptible to price
wars
 Good relations with top-tier customers including
Mengniu and Yili
 Demand driven by
dairy products, with
China’s dairy
industry facing shortterm headwinds
 Targeting a 2530% share of
the China
market over the
next five years
 Pending results
from the SAIC’s
anti-trust
investigation on
its key
competitor –
Tetra Pak
 Lacks pricing power as an incumbent in the oligopoly
of aseptic packaging materials
 High customer concentration risk
P/E (x) vs EPS growth
P/BV (x) vs ROAE
10
8%
8
3%
6
-3%
-20%
Jan-13
P/E (x) (lhs)
EPS growth (rhs)
Jan-16
0
Jan-15
-14%
Jan-14
-9%
2
Jan-12
4
2
16%
2
12%
1
8%
1
4%
0
0%
P/B (x) (lhs)
Jan-16
14%
20%
Jan-15
12
3
Jan-14
19%
Jan-13
25%
14
Jan-12
16
Return on average equity (rhs)
Company Profile
Listed in Dec 2010, Greatview Aseptic Packaging supplies aseptic packs for dairy and non-carbonated soft drinks producers under the
trade name of “GA Pack”. Its major customers include Mengniu, Yili and Huierkang. The group is the second-largest aseptic packaging
manufacturer in China with a 13% market share in FY12.
9
21 November 2014
Recommendation Chart
Trading Buy
Dec-12
Take Prof it
7.05
4.88
6.05
na
Sell
5.24
Price Close
6.80 Recommendations & Target Price
6.30
5.80
5.30
4.80
4.30
3.80
3.30
2.80
2.30
Buy
Neutral
1.80
Dec-10
Dec-11
Not Rated
Dec-13
Date
Recommendation
Target Price Price
2014-09-01
Buy
7.05
5.94
2014-04-02
Buy
4.88
4.17
2013-12-04
Buy
5.24
4.64
2013-09-03
Buy
5.24
4.13
2013-05-16
Buy
6.05
4.79
Source : RHB, Bloomberg
10
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Greatview Aseptic Packaging Neutral – But Appear To Be Priced In

Transcription

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