瑞信-美股-消费品行业-家居产品与饮料行业摘要：为保卫护城河而战-2019.3.8-42页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse 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.8 March 2019Americas/United StatesEquity ResearchConsumer Staples Household Products&Beverages INDUSTRY PRIMERResearch AnalystsKaumil Gajrawala212 325 3227kaumil.gajrawalacredit-Theo Brito212 325 4637theo.britocredit-Pallavi Bakshi212 538 8434pallavi.bakshicredit-Summary:Fighting to Defend the MoatWe summarize our launch of the Household Products and Beverage industry.The subsequent pages include the front page and executive summary excerpts from our larger company notes.For decades,staples companies have created shareholder value on a foundation of defensible competitive moats(brand-distribution-scale),opportunities for global expansion and favorable business economics.These pillars of value creation are under more risk than we can recall,evidenced by slowing growth rates across the industry.Meanwhile,margins and valuation are at or near peak.Despite slowing sales growth and asset utilization,industry margins expanded for a decade.Advertising,capital expenditures and even R&D declined for 15 years(at an accelerating rate),while cost savings increased.We cannot know for absolute certain if slower revenues are due to lack of investment.If that is not the case,the industry has a bigger problem:category growth rates are slowing and competitive moats are shrinking at a more rapid pace.Long-term growth story down(but not out).Population growth,rising incomes,urbanization,distribution,frontier markets,demand for convenience,innovation,etc.,support a positive equity story long-term.Our view is the long-term opportunity will be masked by near-term headwinds in the coming years.During this period,we expect most companies to continue,expand or enter an“investment phase”(read:build/rebuild competitive moat)at the expense of margins and earnings delivery.We highlight Constellation(STZ,Outperform 38%upside)and Colgate(CL,Underperform 13%downside)as our top recommendations.Figure 1:Consumer Staples Snapshot:Slowing Sales(Left)and Peaking Margins(Right)0%1%2%3%4%5%6%20042006200820102012201420162018Organic Sales Growth5-Year Average 15%16%17%18%19%20%20042006200820102012201420162018Operating Margin(Ex-Beverages)3-Year RollingSource:Company data,Credit Suisse estimates.Companies include KO,PEP,CHD,CLX,CL,KMB,PG,CPB,GIS,HSY,K,KHC,MDLZ,MKC.KO and PEP are excluded from margin calculation due to structural impact of acquiring or divesting bottling operations.8 March 2019Household Products&Beverages2Table of contentsFighting to Defend the Moat3Coverage.3Relative Rankings.4EPS Growth and Valuation Matrix.5Valuation Comparables.6Church&Dwight Co,Inc.(CHD)7Executive Summary.9The Clorox Company(CLX)11Executive Summary.13The Coca-Cola Company(KO)15Executive Summary.17Colgate-Palmolive Company(CL)19Executive Summary.21Constellation Brands(STZ)23Executive Summary.25Monster Beverage Corporation(MNST)27Executive Summary.29PepsiCo(PEP)31Executive Summary.33Procter&Gamble(PG)35Executive Summary.378 March 2019Household Products&Beverages3Fighting to Defend the MoatCoverageFigure 2:CS U.S.Household Products&Beverage CoverageU US S B Be ev ve er ra ag ge es s a an nd d H Ho ou us se eh ho ol ld d P Pr ro od du uc ct ts s&P Pe er rs so on na al l C Ca ar re e C Co ov ve er ra ag ge eT Ti ic ck ke er rC Co om mp pa an ny y N Na am me eC CS S R Ra at ti in ng gMMa ar rk ke et t P Pr ri ic ce eC CS S T Ta ar rg ge et tU Up ps si id de e/D Do ow wn ns si id de e (E ET TR R)N NT TMM P P/E E o on n MMa ar rk ke et t P Pr ri ic ce eO On ne e L Li in ne er rSTZC Co on ns st te el ll la at ti io on n B Br ra an nd ds sOutperform$168$23038%17.3xPredictable high-single digit revenue growth and FCF to spike as brewery capex abates.Valuation well below slower growth peers(18x now vs.21x avg).MNSTMMo on ns st te er r B Be ev ve er ra ag ge e C Co or rp pOutperform$62$7827%29.6xFastest growing company in coverage(low-double digits rev and EPS)with runway for continued growth.Clean balance sheet and cash generation should yield greater than$3.5b in coming years,levels not seen since partial sale to KO.CLXC Cl lo or ro ox x C Co oOutperform$157$17212%23.8xUnique portfolio position and 8%five-year Economic Profit CAGR justifies premium valuation(group 19x).CHDC Ch hu ur rc ch h&D Dw wi ig gh ht tNeutral$66$650%26.2xStable growth and well run.Sidelines on valuation(group 19x).PGP Pr ro oc ct te er r&G Ga am mb bl le eNeutral$99$1005%21.2xLong-followed turnaround complete,likely to sustain momentum.Playing offense.Sidelines on valuation(2-turns higher than 5-year average).KOC Co oc ca a-C Co ol la a C Co om mp pa an ny yNeutral$45$489%21.4xImproving business with solid organic rev growth,but valuation,lack of excess cash(refi risk)determines rating.PEPP Pe ep ps si iC Co oUnderperform$116$100(11%)20.9xAddressing beverage issues;we expect multiple stepped-up investment yrs.Frito-Lay still solid,but limited upside.21x for down 19 EPS and our expectation for out-year revisions.CLC Co ol lg ga at te e-P Pa al lm mo ol li iv ve eUnderperform$65$55(13%)22.9xOut-year margin risk as near-peak margin is reinvested to address several years of slowing growth and sales declines.Premium valuation at 23x.Source:Company data,Credit Suisse estimates.FactSet.ETR defined as stock return plus annual dividend yield.8 March 2019Household Products&Beverages4Relative RankingsFigure 3:CS U.S.Household Products&Beverage Relative RankingsSource:Credit Suisse.*Frito Lay*North America Beverages.8 March 2019Household Products&Beverages5EPS Growth and Valuation MatrixFigure 4:Valuation Matrix:Consumer StaplesKOPEPMNSTSTZCLELPGCHDCLXKMBCPBGISHSYKKHCMKCMDLZ5x8x11x14x17x20 x23x26x29x32x35x-25%-15%-5%5%15%2019 P/E2019 Consensus EPS GrowthSource:FactSet.Note,CLX reports GAAP EPS only 2019 EPS includes M&A deal dilution and lapping U.S.Tax Reform.For Beverage/HPC Only:Average 4%growth,23.6x PE.8 March 2019Household Products&Beverages6Valuation ComparablesFigure 5:Valuation ComparablesB Be ev ve er ra ag ge e -A Al lc co oh ho ol li ic cT Ti ic ck ke er rC Co om mp pa an ny y N Na am me eMMa ar rk ke et t C Ca ap pN NT TMM P P/E EN NT TMM E EV V/E EB BI IT TD DA AD Di iv v Y Yi ie el ld dN NT TMM N Ne et t D De eb bt t/E EB BI IT TD DA AABI.BRAnheuser-Busch InBev SA/NV$162,70017.3x11.7x2.2%3.7xBF.BBrown-Forman Corporation Class B$23,80027.1x20.8x1.1%1.7xCARL.b.CO Carlsberg A/S Class B$18,80020.9x10.3x2.6%8.4xDGE.LDiageo plc$96,40022.2x17.8x2.4%2.5xHEIN.ASHeineken NV$58,50019.8x11.1x2.1%1.7xPERP.PAPernod Ricard SA$46,50022.8x16.3x1.7%1.9xRCOP.PARemy Cointreau SA$6,60031.4x19.7x1.4%0.8xSAMBoston Beer Company,Inc.Class A$3,60035.3x17.6xNA(0.8x)STZConstellation Brands,Inc.Class A$31,80017.3x14.1x1.0%4.0 xTAPMolson Coors Brewing Company Class B$13,00012.5x9.2x2.9%3.2xMedian21.6x15.2x2.2xB Be ev ve er ra ag ge e -S So of ft t D Dr ri in nk ks sT Ti ic ck ke er rC Co om mp pa an ny y N Na am me eMMa ar rk ke et t C Ca ap pN NT TMM P P/E EN NT TMM E EV V/E EB BI IT TD DA AD Di iv v Y Yi ie el ld dN NT TMM N Ne et t D De eb bt t/E EB BI IT TD DA ACCEP.ASCoca-Cola European Partners Plc$23,20016.3x11.5x2.7%2.5xCCH.LCoca-Cola HBC AG$12,40020.7x10.4xNA0.4xCOTCott Corporation$2,10039.0 x9.6x1.8%2.9xFIZZNational Beverage Corp.$3,10017.3x11.5xNANAKDPKeurig Dr Pepper Inc.$37,30021.3x15.8x3.4%3.5xKOCoca-Cola Company$193,50021.4x19.1x3.3%2.8xMNSTMonster Beverage Corporation$34,10029.6x21.0 xNA(0.8x)PEPPepsiCo,Inc.$164,70020.9x14.0 x3.3%1.9xMedian21.1x12.7x2.5xH Ho ou us se eh ho ol ld d P Pr ro od du uc ct ts sT Ti ic ck ke er rC Co om mp pa an ny y N Na am me eMMa ar rk ke et t C Ca ap pN NT TMM P P/E EN NT TMM E EV V/E EB BI IT TD DA AD Di iv v Y Yi ie el ld dN NT TMM N Ne et t D De eb bt t/E EB BI IT TD DA ACHDChurch&Dwight Co.,Inc.$16,10026.2x18.0 x1.3%1.3xCLColgate-Palmolive Company$56,90022.9x14.8x2.8%1.3xCLXClorox Company$20,00023.8x16.2x2.7%1.7xENREnergizer Holdings Inc$3,20013.9x11.1x2.0%5.1xEPCEdgewell Personal Care Co.$2,30012.3x8.5xNA2.3xKMBKimberly-Clark Corporation$40,20017.4x11.4x3.5%1.7xNWLNewell Brands Inc$7,30010.7x12.5x4.9%4.4xPGProcter&Gamble Company$247,50021.2x15.1x3.6%1.6xRB.LReckitt Benckiser Group plc$56,40017.2x13.9x2.8%2.0 xUNc.ASUnilever PLC$62,20018.2x13.6x3.0%1.8xMedian17.8x13.7x1.7xSource:FactSet.8 March 2019Household Products&Beverages7Americas/United StatesHousehold Products Church&Dwight Co,Inc.(CHD)RatingNEUTRALPrice(07-Mar-19,US$)65.63Target price(US$)65.0052-week price range(US$)69.18-45.41Market cap(US$m)16,138Enterprise value(US$m)17,155Target price is for 12 months.Research AnalystsKaumil Gajrawala212 325 3227kaumil.gajrawalacredit-Pallavi Bakshi212 538 8434pallavi.bakshicredit-Theo Brito212 325 4637theo.britocredit-Tested Structure,Solid Strategy,High ValuationA Tested Structure and a Well-Executed Strategy:We initiate coverage on Church&Dwight with a Neutral rating and$65 target price.We believe that Church is uniquely structured to continue to succeed in the pressured home and personal care environment owing to its(1)brand portfolio in diverse,growing categories with contribution from both legacy and acquired brands;(2)industry-leading reinvestment in both strong years and weak years;and(3)small-size advantage.Elevated valuation(26x)and peak margins are our main holdback.Track Record of M&A Winners:It is difficult to pinpoint exactly how Church manages a higher M&A success rate than its peers.We believe the companys track record stems from the comfort of a stable core,the agility to shop small brands with high share that are meaningful to the P&L,and a tested playbook of integration.Given stable organic revenue growth,Church does not need to M&A to grow,in our view.Margin Expansion,InternationalWait and See:We see risk in the margin component of Churchs annual growth targets(3%organic revenue,+50bp EBIT expansion,9%EPS growth).EBIT margin is high(19%vs.peak 21%),and it could be difficult to find further expansion levers given near-term commodity and freight inflation.The Intl division(17%of sales)is in the early stages of expansion and offers a long runway for growth,but to fully capture this opportunity,we would expect an investment step-up.Valuation:Our Neutral rating and$65 target price are based on a 27x multiple on our 2022 EPS estimate of$3.00,discounted back to 2019.The market is valuing CHD shares at 26x Bloomberg consensus,the extreme high end of the global HPC space,but more importantly,over one standard deviation above its own five-year average multiple.Upside risks include organic growth acceleration and above-plan M&A.Downside risks include weak organic growth,an international slowdown,and poor M&A execution.Share price performanceCHD.NS&P 500 INDEXApr-18Jul-18Oct-18Jan-1940506070On 07-Mar-2019 the S&P 500 INDEX closed at 2746.31Daily Mar07,2018-Mar07,2019,03/07/18=US$49.96Quarterly EPSQ1Q2Q3Q42018A0.630.490.58 0.572019E0.660.520.64 0.632020E0.700.550.68 0.66Financial and valuation metricsYear12/18A12/19E12/20E12/21EEPS(CS adj.)(US$)2.272.452.592.76Prev.EPS(US$)-Revenue(US$m)4,145.94,295.54,435.24,632.9EBITDA(US$m)9369791,0071,049EV/EBITDA(current)18.517.717.216.5FCF yield(%)4.34.34.54.8Net debt(US$m)1,1941,017839661ROIC(%)17192021 Number of shares(m)246IC(current,US$m)3,648EV/IC(x)4.7Net debt(Next Qtr.,US$m)1,177.3Dividend(current,US$)0.91Net debt/EBITDA(12/18A)1.3Dividend yield(%)1.39Source:Company data,Refinitiv,Credit Suisse estimates8 March 2019Household Products&Beverages8Church&Dwight Co,Inc.(CHD)Price(07 Mar 2019):US$65.63;Rating:NEUTRAL;Target Price:65.00;Analyst:Kaumil GajrawalaIncome Statement12/18A12/19E12/20E12/21ERevenue(US$m)4,145.94,295.54,435.24,632.9EBITDA(US$m)9369791,0071,049Depr.&amort.(141)(139)(136)(134)EBIT(US$)795840872915Net interest exp(79)(76)(76)(84)PBT(US$)723774805841Income taxes(154)(161)(169)(177)Profit after tax569613636665Other NPAT adjustments(0)000Cash Flow12/18A12/19E12/20E12/21ECash flow from operations764768797825CAPEX(60)(62)(67)(69)Free cashflow to the firm703706731755Cash flow from investments(112)(62)(67)(69)Net share issue(/repurchase)(123)(300)(315)(331)Dividends paid(213)(228)(238)(247)Changes in Net Cash/Debt902177178177Balance Sheet(US$)12/18A12/19E12/20E12/21ECash&cash equivalents317394772849Account receivables345367379396Total fixed assets598596598602Investment securities-Total assets6,0696,0976,4306,477Total current liabilities1,3261,3461,3701,404Shareholder equity2,4542,5632,6712,784Total liabilities and equity6,0696,0976,4306,477Net debt1,1941,017839661Per share12/18A12/19E12/20E12/21ENo.of shares(wtd avg)251250246241CS adj.EPS2.272.452.592.76Prev.EPS (US$)-Dividend(US$)0.870.910.971.03Free cash flow per share2.802.822.983.14Earnings12/18A12/19E12/20E12/21ESales growth(%)9.83.63.34.5EBIT growth(%)2.85.63.85.0Net profit growth(%)15.17.73.74.5EPS growth(%)18.06.84.75.8EBITDA margin(%)22.622.822.722.6EBIT margin(%)19.219.619.719.8Pretax margin(%)17.418.018.218.2Net margin(%)13.714.314.314.3Valuation12/18A12/19E12/20E12/21EEV/EBITDA(x)18.517.717.216.5P/E(x)28.926.725.323.8Returns12/18A12/19E12/20E12/21EROIC(%)17.218.619.621.0Gearing12/18A12/19E12/20E12/21ENet debt/equity(%)48.739.731.423.8Quarterly EPSQ1Q2Q3Q42018A0.630.490.580.572019E0.660.520.640.632020E0.700.550.680.66Company BackgroundChurch&Dwight,Inc.is the producer and marketer of Arm&Hammer,Trojan,First Response,and a large portfolio of household products brands.The business is organized into two segments:Consumer Domestic and Consumer International.Blue/Grey Sky ScenarioOur Blue Sky Scenario(US$)72.00Shares could trade at 28x,the high end of CHDs own 5-year average NTM P/E multiple,suggesting a Blue sky price of$72.This scenario assumes 19 top line accelerates to+5-7%based on the combination of sustained+3-5%organic growth plus additional M&A contribution of 2-4pp.We would expect EBIT margin to expand+100bp YOY.This would imply a 2019 EPS of$2.58.Our Grey Sky Scenario(US$)45.00Shares could contract on such weak performance to 20 x,the low end of CHDs own 5-year average NTM P/E multiple,suggesting a Grey sky price of$45.This assumes 19 topline decelerates to+1-3%based on weakness in organic growth plus no revenue boost from recent acquisitions.We would expect EBIT margin to contract,as lack of operating leverage and EBIT margin could fall to 18.9%.This implies a 19 EPS of$2.24.Share price performanceCHD.NS&P 500 INDEXApr-18Jul-18Oct-18Jan-1940506070On 07-Mar-2019 the S&P 500 INDEX closed at 2746.31Daily Mar07,2018-Mar07,2019,03/07/18=US$49.96Source:Company data,Refinitiv,Credit Suisse estimates8 March 2019Household Products&Beverages9Executive SummaryWe Initiate Coverage of