China Macroeconomics & Academia

Christopher Balding

Thematic (Sector/Industry)

<ol><li>Given the available data, we believe it indicates that Chinese consumer growth remains positive but significantly weaker than headline official numbers indicate.</li><li>Large retailers appear to be suffering near zero growth across a variety of products.</li><li>Online retailing is still growing rapidly but its rate of growth is slowing and remains responsible for only 10.6% of spending.</li><li>Due to the weakness in large retailers and strong but small market share of online retailers, this leaves only small and medium size retailers as driving official retail sales numbers. We find this a dubious conclusion.</li><li>The combined retail sales and physical output of consumer product data implies that retail and consumer spending is growing much closer to the 3-6% range than the official 11% retail sales growth.</li><li>Related services like transport and hotel is showing significant weakness that is more reflective of an overall weak retail and services sector.</li></ol>

Given the available data, we believe it indicates that Chinese consumer growth remains positive but significantly weaker than headline official numbers indicate.Large retailers appear to be suffering near zero growth across a variety of products.Online retailing is still growing rapidly but its rate of growth is slowing and remains responsible for only 10.6% of spending.Due to the weakness in large retailers and strong but small market share of online retailers, this leaves only small and medium size retailers as driving official retail sales numbers. We find this a dubious conclusion.The combined retail sales and physical output of consumer product data implies that retail and consumer spending is growing much closer to the 3-6% range than the official 11% retail sales growth.Related services like transport and hotel is showing significant weakness that is more reflective of an overall weak retail and services sector.

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Morningstar, Inc.

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Equity Bottom-Up

Tsingtao Brewery Co Ltd A / Equity Bottom-Up

<ul><li>Tsingtao delivered disappointing results for the first half&nbsp;of fiscal 2015, primarily due to intensified competition in China&rsquo;s brewery industry, weak consumer sentiment and its high base in the same period last year.</li><li>Total revenue fell by 5.3% year over year as a result of a 7.4% sales volume decline, with operating profit down 14%.</li><li>We have slashed our 2015 and 2016 earnings estimates by 15% and 18%, respectively, and have lowered our fair value estimate from HKD 46 per share to HKD 37 per share.</li><li>However, we believe that the company&rsquo;s narrow moat, which is based on its strong brand, remains intact. This brand drives a price premium and has enabled the company to earn a return well above its 8.1% cost of capital during the past five years.</li></ul><p>Analyst: Jennifer Song</p><p>Full report below the fold...</p>

Tsingtao delivered disappointing results for the first half&nbsp;of fiscal 2015, primarily due to intensified competition in China&rsquo;s brewery industry, weak consumer sentiment and its high base in the same period last year.Total revenue fell by 5.3% year over year as a result of a 7.4% sales volume decline, with operating profit down 14%.We have slashed our 2015 and 2016 earnings estimates by 15% and 18%, respectively, and have lowered our fair value estimate from HKD 46 per share to HKD 37 per share.However, we believe that the company&rsquo;s narrow moat, which is based on its strong brand, remains intact. This brand drives a price premium and has enabled the company to earn a return well above its 8.1% cost of capital during the past five years.Analyst: Jennifer SongFull report below the fold...

Tsingtao Delivers a Disappointing First-Half 2015 Result

China

Tsingtao Brewery Company Limited produces and distributes beer products.  The Company markets its products throughout China and around the world under the Tsingtao Beer brand name.

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Tsingtao Brewery Co Ltd H (168 HK)

Retail and Consumer Activity in China

Given the available data, we believe it indicates that Chinese consumer growth remains positive but significantly weaker than headline official...

Christopher Balding

Tsingtao Delivers a Disappointing First-Half 2015 Result

Tsingtao delivered disappointing results for the first half of fiscal 2015, primarily due to intensified competition in China’s brewery industry,...

Morningstar, Inc.

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