摩根斯坦利：中国消费行业研究报告2009年1月
China Consumer
Still Thriving, but Putting on
Some Brakes
Investment conclusion: We continue to look for
deceleration in growth in consumption and retail sales in
China, with greater earnings risk for the discretionary
names compared to the staples plays. While the staples
sector is generally more defensive, it is not immune to a
slowdown. However, falling commodity prices offer a
good buffer and the brands could use the extra margin
for additional promotions to help drive volume without
sacrificing earnings growth. We like Mengniu as a
recovery play and Want Want given relatively lower
valuation within the group. The discretionary names are
likely to face greater pressure from both slower sales
and margin risk from higher discounting. Valuation on
the discretionary names look more attractive, though we
feel possible disappointment in earnings delivery could
renew pressure on the stocks in the near term. For 2009,
we have currently factored in mid-single-digit earnings
growth for specialty retailers and department stores. For
longer-term investors, we see value in Anta and
Dongxiang, both of which are trading at our bear-case
fair values, with the share prices implying negative
earnings growth going into perpetuity.
Retail Sales Leading Indicator: Our proprietary retail
sales leading indicator model points to retail sales
decelerating to 11-12% by mid-year after peaking out at
20+% in 3Q08.
Earnings Revisions: We have adjusted our forecasts
down for most of the stocks in our coverage universe to
factor in possibly slower growth. For the staples, our
cuts are mainly on the topline to factor in some slower
volume, though falling commodity prices offer a big
buffer for margins. For discretionary stocks, our
revisions include cuts to both topline and margins given
greater discount pressure.

Contents
Investment Case.............................................................................................................................................................3
Food & Beverage............................................................................................................................................................5
Retail/Discretionary........................................................................................................................................................8
Company Analysis
Tingyi (0322.HK) ...........................................................................................................................................................15
Uni-President China (0220.HK) ...................................................................................................................................18
Want Want (0151.HK) ...................................................................................................................................................21
Shuanghui Investment (000895.SZ)............................................................................................................................24
Intime (1833.HK) ...........................................................................................................................................................27
Belle (1880.HK) .............................................................................................................................................................30
Daphne (0210.HK).........................................................................................................................................................33
Anta (2020.HK)..............................................................................................................................................................36
China Dongxiang (3818.HK) ........................................................................................................................................39
Li Ning (2311.HK)..........................................................................................................................................................42

Investment Case
Summary & Conclusions
Highlights
• Following our economics team’s cut in growth
assumptions for China, we have revisited our universe and
have made adjustments in our forecasts and price targets.
We expect greater moderation in growth of consumer
discretionary companies compared to staples and see
less earnings risk for the staples’ names.
• The staples sector is more defensive but will not be totally
immune to a slowdown. Topline risk could come from
reduction in volume as consumers take a more cautious
stance on overall spending. However, significant pullback
in commodity prices should provide a big buffer to
earnings and provide the staples companies with added
ammunition to fund additional advertising or promotions to
drive volume. We continue to like Mengniu (2319.HK,
HK$10.52, OW) as a recovery play and Want Want
(151.HK, HK$3.06, OW) given relatively lower valuation.
• The discretionary sector remains more exposed with
potential risk to both topline and margins. Valuation for
most names are fairly attractive, however, we feel it may
still be too early to switch into retail/discretionary names as
we have yet to see a bottoming of the deceleration in retail
sales growth in China in the near term. For long-term
investors, however, there are stocks emerging with deep
value. This includes Anta and Dongxiang, both of which
are trading below or at our bear case fair value, with the
current share price implying negative earnings growth
going into perpetuity.
Macro Outlook Further Weakening
Morgan Stanley’s China economist, Qing Wang, recently
revised down his China GDP growth forecasts to 5.5% from
7.5% in 2009E and to 8.0% from 8.5% in 2010E. The shock
impact of the hard landing in 4Q08 has substantially weakened
the confidence of both entrepreneurs and households, and
private investment will likely further weaken on a more
challenging external environment. Our economics team
expects an inflection point for recovery will likely appear around
mid-year hinging on the kick-in of the policy stimulus effect in
mid-year, stabilization of real estate investment and a tepid
recovery in G3 economies by 4Q09.
Albeit the broad-based downward revision of growth forecasts,
our economics team expects consumption will become a larger
driver for growth in 2009 on greater deterioration in investment
growth (Exhibit 1) (also see January 18, 2009 note, “China
Economics - 2009 Outlook Downgrade: Getting Much Worse
Before Getting Better”).
Exhibit 1
MS Revisions for China Economic Forecasts
New Old Diff New Old Diff
Real Term Growth
GDP 9 .0 9 .2 -0.2 ppt 5.5 7 .5 -2.0 ppt
Private Consumption 8.5 8.5 Flat 6.2 7.8 -1.6 ppt
Gross Fixed Inv 9.3 9.8 -0.5 ppt 6.0 8.7 -2.7 ppt
Export Growth 17.3 16.5 +0.8 ppt (3.0) 3.0 -6.0 ppt
Import Growth 18.4 18.5 -0.1 ppt (5.0) 4.2 -9.2 ppt
Inflation (CPI) 6.1 6.1 Flat (0.8) (0.8) Flat
3-mth Interest Rate (%, EOP) 1.71 1.98 -27 bps 0.36 1.17 -81 bps
2008E 2009E
Source: Morgan Stanley Research
E = Morgan Stanley Economics Research team estimates
Exhibit 2
Changes to Price Target
New Old New Old Diff
Staples
0322.HK Tingyi OW OW 1 0.00 1 0.00 0.0%
0220.HK Uni-President China OW OW 3 .00 3 .40 -11.8%
0151.HK Want Want OW OW 3 .60 3 .85 -6.5%
000895.SZ Shuanghui OW OW 4 5.00 5 0.00 -10.0%
Retail / Discretionary
2020.HK ANTA OW OW 5 .90 6 .70 -11.9%
1880.HK Belle OW OW 5 .00 5 .65 -11.5%
3818.HK China Dongxiang OW OW 3 .10 3 .60 -13.9%
0210.HK Daphne OW OW 2 .40 4 .20 -42.9%
1833.HK Intime EW-V EW-V 2 .76 3 .80 -27.4%
2331.HK Li Ning OW OW 1 7.80 1 9.50 -8.7%