Equity Analysis /
China

CN : Consumer Staples - Overall - Mixed 1H21 results for the consumer sector

    Lei Yang
    Lei Yang

    Research Analyst

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    Hang XU
    FeiFei SUN
    CGS-CIMB
    11 September 2021
    Published byCGS-CIMB

    Sportswear, beer, dairy and beverage players delivered stronger-than-expected 1H21 results, owing to increasing demand, successful mix upgrades and a low base in 1H20. The 1H21 results of condiment, cosmetics, instant noodle and tissue players were below expectations because of higher channel inventory and raw material prices, intensifying competition and a high base in 1H20. The baijiu sector also delivered solid 1H21 results, but the market still has some concerns about the valuation level of baijiu players. Covid volatility has affected domestic consumption in 3Q21, especially in the catering- and tourism-related industries. We expect the sales growth of condiment and beer players to be under pressure in 3Q21F. Our top picks are Li Ning, Tsingtao (H), Mengniu and Wuliangye. The underweight sub-sectors include condiments (Haitian and Jonjee) and supermarkets (Yonghui).