J.P. 摩根-亚太地区-消费品行业-ANZ婴幼儿配方奶粉行业分析：产品、品牌、用途与产地-2019.8.7-63页.pdf

Asia Pacific Equity Research07 August 2019Equity Ratings and Price TargetsMkt CapPriceRatingPrice TargetCompanyTicker($mn)CCYPriceCurPrevCurEnd DatePrev End Datea2 Milk Company Ltd(ASX)A2M AU7,846.75AUD15.79OW17.23Jun-20a2 Milk Company Ltd(NZX)ATM NZ7,948.49NZD16.57OW18.00Jun-20Bellamys Australia LtdBAL AU699.36AUD9.13N9.50Jun-20Source:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 07 Aug 19.ANZ Infant Formula IndustryProduct(A2,Organic),Brand,Usage and Provenance are Positives-Initiate on A2M(OW)and BAL(N)Australia,New ZealandAustralian Consumer SectorShaun Cousins AC(61-2)9003-Bloomberg JPMA COUSINS J.P.Morgan Securities Australia LimitedShalin J Doshi(91-22)6157-J.P.Morgan Securities Australia Limited/J.P.Morgan India Private LimitedEuropean Consumer Goods and BeveragesCeline Pannuti,CFA(44-20)7134-J.P.Morgan Securities plcAnkur Gupta(91-22)6157-J.P.Morgan India Private LimitedSamuel Vialla(44-20)7134-J.P.Morgan Securities plcSee page 59 for analyst certification and important disclosures,including non-US analyst disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.The ANZ infant formula industry has been transformed by China demand with attributes of product,brand,usage and provenance key drivers.Initiate on A2M at OW(PT NZ$18.00)as we are confident of further market share gains assisted by expanding its addressable market.Initiate on BAL at N(PT A$9.50)with business enhancement underpinning A$500m revenue ambition,yet execution risk remains.ANZ infant formula industry.The dramatic rise in demand from China has been transformational.The premiumisation trend is a key driver of demand for ANZ product,with its ANZ provenance and usage resulting in market share gains by selected ANZ sourced infant formula companies.Looking forward,as part of a global collaboration report with our European Consumer Goods team,we highlight the outlook for the China infant formula market is robust but less attractive than the 10%growth rate across 2017 and 2018.A2M drivers.Product(A1 free),brand(aspirational,health&wellness),ANZ provenance,ANZ usage and the deep engagement with core consumers are key demand drivers.A2M has a nimble route to market which is able to adjust to changing points of purchase,while its understanding of daigou channel economics is a competitive advantage.There are some increasing industry risks,but we are confident further market share gains will be achieved.A2Mcan expand its addressable market(geographically,greater MBS presence)and continued to perform well when competitors have entered the A2 category.A2M Overweight.Despite share price outperformance,there is valuation support(DCF NZ$17.40)while the premium multiple is justified given the strong forecast revenue,EBITDA and EPS growth(3yr CAGR 23.2%).BAL drivers.Product(predominantly organic,a fast growing category where BAL has sourcing capability),brand(known and trusted for organics)and Australian provenance.BAL has set a A$500m revenue ambition predicated on new branding&product formulation,new product development(including China-label,subject to SAMR approval)with these initiatives supported by investments in marketing and its China team.There are increasing industry risks,especially the desire from China for domestic production to grow to 60%(47%currently),which for BAL could impact the timing of SAMR approval.BAL Neutral.There is modest valuation support(DCF A$9.03)and the prospect for P/E multiple expansion if earnings growth can be achieved.Yet we are cautious about the pace of multiple expansion given execution risk and the less established position which makes BAL more vulnerable to industry risks.2Asia Pacific Equity Research07 August 2019Shaun Cousins(61-2)9003-Table of ContentsExecutive Summary.3Australia&New Zealand Infant Formula Industry.3Initiate on A2M with Overweight,NZ$18.00/A$17.23 Share Price Target.3Initiate on BAL with Neutral,A$9.50 Share Price Target.4Valuation.5A2 Milk Company Ltd.6Company Overview.6Driver#1:A2 infant formula product,brand,provenance,usage,and engagement with core consumers drive demand.9Driver#2:An advantaged route to market to the key China consumer with daigou a positive and A2M able to expand its addressable market.11Driver#3:US liquid milk an attractive opportunity.14Risk#1:China infant formula market could see volume growth constrained by demographics with premiumisation to remain a driver but the pace could moderate17Risk#2:Competition within the China infant formula market could intensify,which would require market share gains to sustain growth rates.20Risk#3:Significant organisational change is occurring.21Financials.22Valuation.24FY19 Result Preview.28Bellamys Australia Ltd.29Company Overview.29Driver#1:Well positioned in the attractive and high growth organic food and infant formula market.29Driver#2:A$500m medium term revenue ambition a function of new branding,new product launches and SAMR approval for China label product.30Driver#3:Baby food is a complementary stable growth avenue with halo benefits.33Risk#1:SAMR approval not yet received,organic infant formula economics not yet attractive,and execution risk.34Risk#2:China infant formula market could see volume growth constrained by demographics with premiumisation to remain a driver but the pace could moderate35Risk#3:Competition within the China infant formula market could intensify,which would require market share gains to sustain growth rates.37Financials.39Valuation.40FY19 Result Preview.44Appendix.45a2 Milk Company Ltd(ASX).50a2 Milk Company Ltd(NZX).53Bellamys Australia Ltd.563Asia Pacific Equity Research07 August 2019Shaun Cousins(61-2)9003-Executive SummaryAustralia&New Zealand Infant Formula IndustryThe Australia&New Zealand(ANZ)infant formula industry has been transformed.China infant formula demand,especially foreign-sourced and premium formula,has increased rapidly following a milk product safety scandal in 2008,with market growth over the past 2 years benefitting from improved demographics and an acceleration of premiumisation.The premiumisation trend is a key driver of demand for ANZ product,with its ANZ provenance and usage resulting in market share gains by selected ANZ sourced infant formula companies.Further,product specifications have also found appeal from consumers in China,with A1 free(A2M)and organic(BAL),as well as goat,product innovation that can drive further market share gains.The route to market and the regulation of route to market is dynamic,requiring nimble operators with sound inventory management,while an understanding of daigou(personal shopper)channel economics has also been required to access the market share gains available.Looking forward,as detailed in a global collaboration report with the European Consumer Goods team led by Celine Pannuti,the outlook for the China infant formula market is robust but less attractive than the 10%growth rate across 2017 and 2018.Volume growth will be constrained by demographics(birth rate and kilos consumed),while the current pace of premiumisation may not be able to be sustained.In that environment,market share growth will be required to achieve rates of growth near historic levels,intensifying competition.Against this backdrop we initiate on A2M at Overweight and BAL at Neutral noting confidence that these companies will be able to grow market share from the current levels by expanding distribution reach while emphasising brand&product differentiation,as well as provenance&usage.We are more confident on A2M given its established position and route to market,while we await SAMR approval for BAL for its China label product although operational improvements are being deployed to take advantage of the market opportunity.Initiate on A2M with Overweight,NZ$18.00/A$17.23 Share Price Target We initiate on A2M with an Overweight recommendation and a 30 June 2020 share price target of NZ$18.00(A$17.23 for A2M AU).The summary of investment drivers and risks are outlined in the table below.Table 1:A2M-Summary of Investment Drivers and Investment RisksInvestment Drivers Investment Risks Driver#1:A2 infant formula product,brand,provenance,usage,and engagement with core consumers drive demandRisk#1:China infant formula market could see volume growth constrained by demographics with premiumisation to remain a driver but the pace could moderateDriver#2:An advantaged route to market to the key China consumer with daigou a positive and A2M able to expand its addressable market Risk#2:Competition within the China infant formula market could intensify which would require market share gains to sustain growth ratesDriver#3:US liquid milk an attractive market opportunity Risk#3:Significant organisational change is occurring Source:J.P.Morgan.A2M has several key drivers.Product(A1 free),brand(aspirational,health&wellness),ANZ provenance,ANZ usage and a deep engagement with core consumers.A2M has a nimble route to market which is able to adjust to changing points of purchase,while its understanding of daigou channel 4Asia Pacific Equity Research07 August 2019Shaun Cousins(61-2)9003-economics is a competitive advantage.Looking forward,further growth in China is forecast as A2M can continue to expand its addressable market,geographically and by channel,especially Mother&Baby Stores(MBS)where it is somewhat under-represented.A2M is exposed to some industry risks but we are confident further market share gains will be achieved.The outlook for the China infant formula market is less robust as demographics constrain volume growth and questions exist on the pace of ongoing premiumisation.This could see greater level of competition for access to MBS,while China has indicated a desire to grow domestic production of infant formula to 60%.For A2M,it is able to expand its addressable market(geographically,greater MBS presence)and it has performed well when competitors have entered the A2 category.A2M is evolving with significant organisational change.Such management changes are not unexpected yet these must not upset the culture that has driven the significant growth of the business.Valuation support exists despite strong share price performance.A2M has outperformed the ASX 100 by 37.9%since 1 January 2019 and is trading at high earnings multiples.Yet there is valuation support(DCF NZ$17.40)while we suggest the premium multiple is justified given the strong forecast revenue,EBITDA and EPS growth over the next 3-6yrs.Table 2:A2M Sales,EBITDA and EPS Growth and P/E Multiple J.P.Morgan Estimates 2016201720182019E2020E2021E2022E2023E2024E2025ESales growth 127.7%55.8%67.9%42.1%26.8%19.1%13.6%11.1%10.8%10.0%EBITDA growth Na158.6%100.5%48.1%24.9%24.2%18.5%16.5%13.4%12.9%EPS growth Na185.2%114.0%50.2%26.3%24.7%18.8%16.8%13.7%13.2%P/E Na134.7x63.0 x41.9x33.2x26.6x22.4x19.2x16.9x14.9xSource:Company reports,J.P.Morgan estimates and Bloomberg.June year end.P/E as of 6-Aug-19.Initiate on BAL with Neutral,A$9.50 Share Price Target We initiate on BAL with a Neutral recommendation and a 30 June 2020 share price target of A$9.50 per share.The summary of investment drivers and risks are outlined in the table below.Table 3:BAL-Summary of Investment Drivers and Investment RisksInvestment Drivers Investment Risks Driver#1:Well positioned in the attractive and high growth organic food and infant formula marketRisk#1:SAMR approval not yet received,organic infant formula economics not yet attractive,and execution riskDriver#2:$500m medium term revenue ambition a function of new branding,new product launches and SAMR approval for China label product Risk#2:China infant formula market could see volume growth constrained by demographics with premiumisation to remain a driver but the pace could moderateDriver#3:Baby food is a complementary stable growth avenue with halo benefitsRisk#3:Competition within the China infant formula market could intensify which would require market share gains to sustain growth ratesSource:J.P.Morgan.BAL has a focus on organics with business enhancements occurring.It is well positioned to leverage the fast growing organic food and infant formula market.It has expertise in sourcing organic product,which is difficult;it has a predominantly organic product range;and it enjoys a known&trusted brand with organic credentials.The company has set a A$500m revenue ambition(A$275-300m FY19 guidance)predicated on new branding&product formulation and new product development(including China-label,subject to SAMR State Administration for Market Regulation approval),with these initiatives supported by investments in marketing and its China team.Finally,its baby food product 5Asia Pacific Equity Research07 August 2019Shaun Cousins(61-2)9003-helps drives brand awareness for the core consumer,introducing and extending the time with the brand.BAL is exposed to some industry risks which we suggest may moderate the rate of market share gains in China.The outlook for the China infant formula market is less robust as demographics constrain volume growth and questions exist on the pace of ongoing premiumisation.This could see greater level of competition for access to MBS,while China has indicated a desire to grow domestic production of infant formula to 60%.For BAL,these challenges may impact the timing of SAMR approval and require greater investment to regain momentum in China.While the brand&product offering are attractive,the more challenged external environment is more impactful as the business remains in turnaround.BAL faces several company specific risks and uncertainties.There has been a delay with SAMR approval(for China-label product)and it has not yet been received.The economics of BAL organic formula are less attractive than peers,with higher price points(and volumes)required to offset the higher COGS associated with organic product.Further,there is significant change occurring at BAL,and while there has been sound performance in its new branding&product reformulation,execution risk remains.Valuation support mixed.BAL has outperformed the ASX 100 by 2.2%since 1 January 2019.There is modest valuation support(DCF A$9.03)and the prospect for P/E multiple expansion if earnings growth can be achieved.Yet we are cautious about the pace of multiple expansion given execution risk and the less established position which makes BAL more vulnerable to industry risks.Table 4:BAL Sales,EBITDA and EPS Growth and P/E Multiple J.P.Morgan Estimates 2016201720182019E2020E2021E2022E2023E2024E2025ESales growth 85.4%2.6%36.9%-12.7%18.0%21.7%8.3%5.6%5.0%3.7%EBITDA growth 299.2%-21.6%64.8%-20.7%29.6%16.9%11.8%8.8%8.4%5.9%EPS growth 269.1%-29.6%50.4%-24.6%33.3%17.0%13.3%10.3%9.7%7.1%P/E NaNaNa29.4x22.0 x18.8x16.6x15.1x13.7x12.8xSource:Company re