勝利方式的擴展

1、Deutsche Deutsche ResearchAustralasiaAustralia New ZealandFood & BeverageIndustrya2 Milk and SynlaitDate16 February 2019Forecast ChangeExtending the winning formulaExecuting well - reiterate Buy on both ATM / SMLInthisreport,weuseanalysisofrecentindustrydatapointsalongwithourown onlinedatacapturetoc

2、alibrateour1H19ATMresultexpectation(20thFeb).have also taken the opportunity to review our medium-term growth for ATM following greater China regulatory certainty (late CY18) and to a larger US opportunity via adult nutrition. Notwithstanding the strong price performances CYTD of ATM +14% and SML +7

3、% (NZX 50G +5%), we reiterate our Buy ratings on both stocks. For ATM, our condence is underpinned by strong China Infant performance and our additional valuation support coming from a larger US opportunity set. SML rationale is linked to our condence in ATMsinfantformulaprospects,withthecompanystil

4、ltoexecuteanydiversicationstrategywithitsotherIFCcustomersandcategories.Strong daigou nish to ATM 1H19expect revenue +40% to NZ$609mn and EBITDA +40% to NZ$200mn, 33% at on on pcp. This implies a strong Nov / Dec monthly revenue run rate of +39% to NZ$120mn on pcp and is cycling a strong base. Its a

5、lso +30% the avg. Jul Oct-18 (4M19) run-rate of NZ$92mn. As always, a judgement factor is the Infant inventory position, which could swing our IF of +47% to NZ$500mny+/-NZ$20mn.Otheritems:ANZfreshr.+12%toNZ$95mn US/UKfreshr.+57%toNZ$14mn(xUKIFofNZ$15mn,bothonpcp).futurehealthfactors:(1)Kantarshare,(

6、2)Chinalabel%,and(3)USfresh updateIn our opinion, the current price is now well up to speed on China Infant (our DCF est. c.NZ$10), therefore investors will be looking for an underpin via gains in Kantar share (DBe +0.2pp qoq to 5.8%) and a strong lift in China label sales mix (DBe +3pp hoh to 15% M

7、AT) following increased distribution and SMAR. provide additional valuation support, we now need to see condence on the US growth option, specically further fresh distribution (1Q19 was 9k), sell through KPIs (?) and/or future leverage options via an Nutrition product set (similar to Freedom Foods p

8、ortfolio)?. may be hopeful on the latter points which may be saved for the inaugural investor In our revised group spot DCF valuation of c. NZ$14, we think an Adult Nutrition roll-out could be worth c.NZ$1.50 per share and we estimate US Fresh is per share. Southeast Asia is the other growth factor

9、(DCF c.NZ$1.50), but, as HYPERLINK mailto:adrian.allbon Adrian AllbonCraigs Investment Partners Research Analyst+64-9-969 1070 HYPERLINK mailto:ls Luke MillsCraigs Investment Partners Research Analyst+64-9-924-0508Key ChangesKey ChangesCompanyPriceRatingATM.NZ12.50to15.00-SML.NZ9.50to10.00-Source: D

10、eutsche BankSource: Deutsche Banka2 Milk and Synlaita2 Milk and SynlaitDeutscheBankAG/Sydnyimited.ThisresearchhasbeenpreparedinassociationwithCraigsInvestmentPartnerson:15/02/201920:27:10GMT DeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbe awarethat

11、thermmayhaveaconictofinterestthatcouldaecttheobjectivityofthisreport.Investorsshouldthis report as only a single factor in making their investment decision. DISCLOSURES AND CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P)091/04/2018.imited.7T2se3r0Ot6kwoPaoutlined in recent notes, we have already s

12、liced our initial bullish expectation and dont expect any meaningful revenue until FY20.Target price changes - ATM +20% to NZ$15 and SML +5% to NZ$10haveliftedourATMgrowthforecaststoreectthreefactors:(1)greater China regulatory certainty, (2) higher US fresh revenues to reect the distribution points

13、 and strong ATM marketing investment and (3) explicitly modellingaUSadultnutritionopportunity(logicalleveragepointtoUSfresh).As a result of our earnings upgrade (FY19-23E c.6% pa, longer term +10% (US adult nutrition) plus time value of money, our DCF-based TP is now to NZ$15.0 (avg. WACC 8.6%, RFR

14、4.5% and TGR 3%). down risks: (1) quality/safetyissue,(2)regulatorydisruption,and/or(3)mgmt.executionof growthoptions(referreportforfurtherdetails).Our SML TP +5% to NZ$10 (avg. WACC 8.4%, RFR 4.5% and TGR 2%) timevalueofmoney.OurearningstrackisunchangedwithhigherneartermATM volume oset by weaker ot

15、her IFC brand performance, mainly Munchkin. downrisks:(1)regulatorychanges,(2)foodsafetyincidentand/or(3)execution ofcapitalexpansionplans(referreportforfurtherdetails).Strong daigou nish to 1H19Key 1H19 group metricsare expecting total 1H19 revenue of NZ$609mn and +40% on The swing factors are with

16、in the infant business and specically inventory build / sell down, which our analysis of recent port suggestsis+/-c.NZ$20mnandresultsinarenuerangebeteenNZ$589mn to NZ$629mn, or +35% to 45% growth on pcp.Moreover, our 1H sales estimate implies a strong Nov / Dec monthly revenue run rate of +39% on pc

17、p to NZ$120mn and relative to Jul Oct-18 (4M19) run rate of NZ$92mn and +41% onpcp.Divisionally,weareexpecting:(1)infantformularevenuetoprint+47% on pcp to +NZ$500mn and underpinned by our analysis of recent data prints and daily online web scraping analysis (detailed insections below), (2) ANZ fres

18、h sales +12% on pcp to NZ$95mn, and (3) US / UK+57% on pcp to NZ$13.5mn (note excluding DBe NZ$15mn of UK infant sales).Ourotherareasoffocusare:(1)MBSroll-outandthroughitsChina label%oftotalIFsales(DBe+3pponFY18to15%),(2)ChinaKantar market share (DBe +0.2pp on 1Q19 MAT to 5.8%), and (3) U.S.fresh bu

19、sinessKPIS(e.g.distributionfootprintgrowthandsalesvelocity)At the EBITDA line we are expecting NZ$200mn, +40% on pcp margin broadly at on pcp at33%.Strong infant formula momentum through Nov / Dec-18NZStatsportdataindicatesaliftininfantformulavolumesthrough Nov/Dec-18ouranalysisofLyttletonportdatasu

20、ggeststhatfollowing its 4M19 sales update, infant momentum looks to have remained very strong through Nov / Dec-18 and with total stage 1 3 volumes lifting+79%onpcpto8.2kMTandtoliftthetotal1H19to17.8kMTand+30% onpcp(dataadjustedforrevenuerecognitiontiming).Moreover,onanunderlyingcountrymixbasistheNo

21、v/Dec-18portdata highlights: (1) Australian volumes remain very strong, +137% on pcp 4kMTandweexpectthisreectsstrongcorporatedaigoudemandon-goinggrocery/pharmacystock-outissues,and(2)China/Hongvolumes also tracking very strong and +43% on pcp to 4.1kFigure 212.0k10.0k8.0k6.0k4.0k2.0k0.0k1Q172Q173Q17

22、4Q171Q182Q183Q184Q181Q192Q19AustraliaChinaHong KongSource: NZ StatsSource: NZ StatsSource: NZ StatsSource: NZ StatsFigure 1: NZ Stats data indicates strong IF momentum through Nov / Dec-18.HongKong Dunsandelcapacity 3-mth rollingavg.ChinaAustralia5,0004,0003,0002,0001,0000Figure 3: .given that our d

23、aily online analysis of individual daigou indicates retail stock levels remain tight. Avg. daily inv.(rhs)Stage 3Stage 2Stage 10k0k5k100k15k10k200k20k300k30k25k400kFigure4 12-monthavg. 12-monthavg. Stage3 Stage2100%90%80%70%60%50%40%30%20%10%Margin recoveryMarket long supply & label transitionStock-

24、out issuesTaobao transactionsLyttleton port stage 1 - 3 volume (MT)Apr-16Jun-16Aug-16Oct-16Dec-16Feb-17Apr-17Jun-17Aug-17Oct-17Dec-17Feb-18Apr-18Jun-18Aug-18Oct-18Dec-18Lyttleton port data stages 1 - 3 (MT)Ouronlinedailyanalysisofindividualdaigou(viaalsosuggests strongtradingthroughNov/Dec-18,howeve

25、rthatbeingsaidinventory levels look to have remained low following the label transition through ATMs 4Q18. into consideration the strong portFigure 1: NZ Stats data indicates strong IF momentum through Nov / Dec-18.HongKong Dunsandelcapacity 3-mth rollingavg.ChinaAustralia5,0004,0003,0002,0001,0000F

26、igure 3: .given that our daily online analysis of individual daigou indicates retail stock levels remain tight. Avg. daily inv.(rhs)Stage 3Stage 2Stage 10k0k5k100k15k10k200k20k300k30k25k400kFigure4 12-monthavg. 12-monthavg. Stage3 Stage2100%90%80%70%60%50%40%30%20%10%Margin recoveryMarket long suppl

27、y & label transitionStock-out issuesTaobao transactionsLyttleton port stage 1 - 3 volume (MT)Apr-16Jun-16Aug-16Oct-16Dec-16Feb-17Apr-17Jun-17Aug-17Oct-17Dec-17Feb-18Apr-18Jun-18Aug-18Oct-18Dec-18Lyttleton port data stages 1 - 3 (MT)Source: Taobao, Deutsche Bank estimatesSource: Taobao, Coles, Deutsc

28、he Bank estimatesSource: Taobao, Deutsche Bank estimatesSource: Taobao, Coles, Deutsche Bank estimatesSep-17Oct-17Nov-17Dec-17Jan-18Feb-18Mar-18Apr-18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19Feb-19Individual daigou margin (10-day rolling avg.)May-17Jun-17Jul-17Aug-17Sep-17Oct-17Nov-17De

29、c-17Jan-18Feb-18Mar-18Apr-18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Sep-17Oct-17Nov-17Dec-17Jan-18Feb-18Mar-18Apr-18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19Feb-19Individual daigou margin (10-day rolling avg.)May-17Jun-17Jul-17Aug-17Sep-17Oct-17Nov-17Dec-17Jan-18Feb-18Mar-18Apr-

30、18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19We expect ATM should deliver 1H infant formula revenue between NZ$480 -$520mn, or +41 to 52% growth on pcp and +47% at the midpoint key points below:estimateATMstotalinfantformulavolumeoverthe1H19wasMT and reecting: (1) NZ Stats export data for

31、 stage 1 3 product (adj.forATMrevenuerecognitiontiming)whichindicates17.5kMTwas exportedthroughLyttleton,(2)ourassumptionthatstage4productaccounts for 5% of ATMs total mix (0.9k MT), (3) net inventory sell down of +0.6k MT, but partly oset by (4) 0.5k MT of Munchkin stage 1 3 volume also captured in

32、 the Lyttleton port export data.Our average price per can proxy indicates 1H pricing was NZ$24.3and+6.4% on FY18, which we note is ahead of our expectation and given ATMsaggedwholesalepriceincreaseforstage3/4product(+7%andFigure 6: Our net revenue per can proxy is NZ$24.3 and+6.4% on FY18 FY avg. co

33、st percan FY avg. rev percan Cost per canFigure 6: Our net revenue per can proxy is NZ$24.3 and+6.4% on FY18 FY avg. cost percan FY avg. rev percan Cost per canproxy Net rev per canproxy$30$25$20$15$10$5$24.3$22.8Cumulativeinfantformulavolume(MT)LyttletonPortimpliedpricepercan(NZ$)Figure5:estimateAT

34、Ms1Hinfantvolumewas 18.5kMT25.0 k20.0 k18.5 k15.9 k15.0 k11.1 k10.0 k8.3 k6.4 k4.1 k5.0 k0.0 kJul-18Aug-18Sep-18Oct-18Nov-18Dec-18LyttletonPortStages1-3(ATM,DBe)ATM Stage 4 (DBe 5% mix)InventorySource:NZ Stats, Deutsche Bank estimatesSource: NZ Stats, Deutsche Bank estimatesSource:NZ Stats, Deutsche

35、 Bank estimatesSource: NZ Stats, Deutsche Bank estimatesJul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18Our analysis suggest total infant between NZ$480 - $520mnJul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18 based

36、on our analysis above, we expect ATM should report formularevenueofNZ$500mnatthemidpointor47%growthonhat being said, e see three y swing actos (DBe +/- (1) inventory build or sell down, with our midpoint estimate assumingFigure 8: We expect 1H infant sales of NZ$500mn,+47% on pcp and reecting a part

37、ial inventory rebuildInventory buildIFsalesfrominventory/additionalstage4productPort dataDBeinventoryDBe1H19movementIFsalesdataestimate4M19 IF sales Nov /DecportImplied1H19Figure 8: We expect 1H infant sales of NZ$500mn,+47% on pcp and reecting a partial inventory rebuildInventory buildIFsalesfromin

38、ventory/additionalstage4productPort dataDBeinventoryDBe1H19movementIFsalesdataestimate4M19 IF sales Nov /DecportImplied1H19$200271$300300480480$500$400500520$700$600+209We expect inventory mvmt. to be the key swing factorATM4MFY19revenue(NZ$,mn)Infant formula revenue (NZ$, mn)Figure 7:We estimate 4M

39、19 IF sales were NZ$300mn and supported by an inventory sell down$400We estimate 4M19 infant sales was NZ$300mn300+29271PortdataSalesfromTotal run-rateinventory+8368$360+60$320$280$240$200ANZ freshUS / UKTotal revenueSource: Company data, Deutsche Bank estimatesSource: Deutsche Bank estimatesSource:

40、 Company data, Deutsche Bank estimatesSource: Deutsche Bank estimatesWe expect MBS / China label to lift hoh +3pp to 15% of total IF salesOur analysis of Lyttleton port data on a country mix basis, shows total China stage 1 3 volume for the 1H was 5.5k or c. 31% of volume. given last reported (FY18)

41、 China label revenue was only 12% of total, we suspect that these volumes reect aofbothCBEC(Englishlabel)andMBS(Chinalabel)product.In order to indicatively split the two sales channels, we assume volume with an average price per can NZ$25 reects MBS volume, our expectation of a higher gross revenue

42、per can sell in price for the sales channel (see our Jul-18 note titled Brand New Thinking, note we expect net revenue broadly at across sales channels and as previously guided by management). On this basis, our analysis suggests that 3k MT was MBS , or 18% of total volume over the 1H.That being sai

43、d, we expect 1H19 reported China label % of sales will be lower and c. 15% and due to: (1) our expectation of timing dierences between port data and ATMs revenue recognition mainlanddistributors,and(2)our4M19analysissuggestedthatlabel%wasc.14-14.5%(basedonmanagementscommentsthat4M YTDChinalabelsales

44、was+75%onpcp)andvs.portdatawhichimplied 4M19 was c.17%.Figure 9: Our indicative split of NZ Stats infant formula data by sales channel24.0kFigure 9: Our indicative split of NZ Stats infant formula data by sales channel24.0k20.0k16.0k12.0k8.0k4.0k0.0k3.6kJul-185.5kAug-18 English label proxy7.1kSep-18

45、14.3k9.5k17%Oct-18China labelproxy17.0k18%Dec-18Figure 10: We expect China label (MBS) to lift +3pp to 15% of total IF sales20%20k15%16%14%16k12%12.0k12%12k10.0k8%8%6.7k8k4%3.7k4%4k1.5k0%0k2H161H172H171H182H184M191H19MBS store footprint (rhs) % China label(lhs) % China label (DBe,lhs)Source: NZ Stat

46、s, Deutsche Bank estimatesSource: Company data, Deutsche Bank estimatesSource: NZ Stats, Deutsche Bank estimatesSource: Company data, Deutsche Bank estimatesCumulative stage 1 - 3 volume (MT)US / UK: key focus US distribution roll-out / sales velocityCumulative stage 1 - 3 volume (MT)Our analysis of

47、 ATMs FY18 reported US / UK revenue suggests that excluding infant formula sales to exporters (NZ$15mn), US / UK fresh sales was NZ$17.4mn. Moreover, we expect the majority of this was skewed toward the US given agged challenging marketconditions.Interestingly, assuming ATM would only sell IF into t

48、he UK at broadly similarmarginstoANZ/ China(givenstockshortagesatthetime),suggests that within its reported NZ$27mn US / UK segmental loss was a c. +NZ$6mn benet from infant formula sales. Moreover, thisimpliesthatATMsinvestment/operatingcostbasewasacross its US / UK fresh platforms, and assuming it

49、s UK fresh business was break even (diculty to calibrate), this would sit against its business.Figure 11: Our analysis of US / UK underlying sales indicates NZ$17mn of fresh sales across both countries.$40DBe indicative split13.44.0DBeUKfreshDBe USfresh$3532.4$30$2515.0$2017.4$15$10$5$0Reported US /

50、 UKReported UK IFFY18 US /freshrevenueUK salesSource: Company data, Deutsche Bank estimatesSource: Company data, Deutsche Bank estimatesSource: Company data, Deutsche Bank estimatesSource: Company data, Deutsche Bank estimatesFigure 12: .and interestingly, from an EBITDA perspective, highlights c. N

51、Z$-34mn of fresh cost which we assume is mostly US-focusedReported US / UK EBITDAFreshbusinessimpliedEBITDAIF contribution(DBe, 40% $30$20$10$0-$10-$20-$30-28-34+6Total implied fresh investment of NZ$34mn below GM lineFigure 14: .and a key area of focus will be US fresh sales pull through, excluding

52、 any UK IF / fresh contribution Total reported US /UK UKinfant US / UKfresh2H19E1H19E2H181H18$45.0$40.0$35.0$30.0$25.0$20.0$15.0$10.0$5.0$0.0We expect to see a stepup in US UK revenue, with US dist. roll outFY18US/UKsalescontribution(NZ$,mn)US / UK revenue (NZ$, mn)FY18US/UkEBITDAcontribution(NZ$,mn

53、)Lookingintothe1Hresultandonahohrun-ratebasis,weexpecttotal USFigure 12: .and interestingly, from an EBITDA perspective, highlights c. NZ$-34mn of fresh cost which we assume is mostly US-focusedReported US / UK EBITDAFreshbusinessimpliedEBITDAIF contribution(DBe, 40% $30$20$10$0-$10-$20-$30-28-34+6T

54、otal implied fresh investment of NZ$34mn below GM lineFigure 14: .and a key area of focus will be US fresh sales pull through, excluding any UK IF / fresh contribution Total reported US /UK UKinfant US / UKfresh2H19E1H19E2H181H18$45.0$40.0$35.0$30.0$25.0$20.0$15.0$10.0$5.0$0.0We expect to see a step

55、up in US UK revenue, with US dist. roll outFY18US/UKsalescontribution(NZ$,mn)US / UK revenue (NZ$, mn)FY18US/UkEBITDAcontribution(NZ$,mn)Figure 13: We expect to see a continued lift in ATMs distribution footprint (4M19 was 9k and +3k on FY18) into the 1H.Source: Company dataSource: Company data, Deu

56、tsche Bank estimatesFigure 13: We expect to see a continued lift in ATMs distribution footprint (4M19 was 9k and +3k on FY18) into the 1H.Source: Company dataSource: Company data, Deutsche Bank estimatesOur revised ATM operating outlookFY19 / 20 outlooke he re-based FY19/20 renue higher or: (1) ston

57、ger momentum (refer earlier section), (2) lower CBEC regulatory accepting some risk still exists as tighter tax collections are and (3) US fresh given more distribution points and strong investment beingmade.In sum, this lifts our FY19 revenue to +41% to NZ$1.3bn (was +31% NZ$1.2bn) and EBITDA to +4

58、3% to NZ$405mn, margin 31% (was $374mn)onpcp.ForFY20,wenowexpectrevenue+19%toNZ$1.55bn (was +20% to NZ$1.45bn) and EBITDA to +16% to NZ$472mn, 31% (was NZ$450mn) onpcp.Medium to long-term outlookhave updated our China infant retail market size for the Euromonitor estimate of US$21bn for CY18. Lookin

59、g forward we continue to assume lower market growth of 3.5% pa (vs Euromonitor of +7% pa) to reect the macro back drop of declining birthrates as a downsiderisk.Figure 15: Euromonitor is forecasting the Chinese infant formula market to grow at a 5-year CAGR of +7% (DBe 3.5%). Growth,yoyForecast (lhs

60、, US$bn)Actual (lhs, US$bn)-5%$0.00%$5.05%$10.010%7%7%8%8%$15.09%15%$20.0$20.720%$25.025%$30.0$29.930%$35.0Chinainfantformularetailvalue(US$,bn)Ourmedium-termFigure 15: Euromonitor is forecasting the Chinese infant formula market to grow at a 5-year CAGR of +7% (DBe 3.5%). Growth,yoyForecast (lhs, U