Tuesday, August 27, 2013

Consumer sector: Still under pressure (OCBC)

Consumer sector:
Still under pressure
For 2HCY13, we expect consumer-related companies under the FTSE Straits Times Consumer Services Index (FSTCS Index) to experience lower-than-expected revenue growth as sentiment turns bearish both domestically and abroad. With weaker economic data points (e.g. Indonesia’s GDP and China’s slowdown) re-affirming lingering economic uncertainty, consumer companies are likely to face challenges as consumers shift away from discretionary spending. As we expect sell-offs of the sector to continue in light of these headwinds, we maintain our UNDERWEIGHT rating on the sector. Within the sector, we favour counters with defensive qualities such as Sheng Siong [BUY; FV: S$0.82] over counters with high exposure to emerging Asia consumer demand like Petra Foods [HOLD; FV: S$3.95] and counters with wafer-thin operating margins like BreadTalk [SELL; FV: S$0.77].


2Q earnings: revenue below expectations
According to Bloomberg, consumer-related companies under the FTSE Straits Times Consumer Services Index (FSTCS Index) reported lower-than-expected top-line figures for 2QCY13 (below estimates by 6.6%). Fortunately, a favourable cost environment during the quarter helped to improve earnings per share (EPS), which fared better at +11.5% over forecasts.

What does this mean? A weaker 2HCY13
Despite the decent bottom-line performance, we are likely to see a continuation of lower-than-expected revenue growth in 2HCY13 as consumer demand face headwinds in the respective domestic and overseas markets. The favourable cost environment is also likely to reverse in light of rising fuel costs and inflation concerns, which pose potential challenges to operating margins and hinder the ability of companies to pass on price increases to consumers.

Muted domestic outlook
Domestically, SG retail sales are still remain tepid and uninspiring, in our view. Inflation and economic uncertainty remains the top two concerns for consumers, who have indicated in a series of surveys conducted that they intend to cut back on discretionary spending. Given this sentiment, we expect domestic spending to taper off in most categories except supermarkets, where we anticipate a continued shift in spending patterns towards dining-in. On a positive note, tourist spending could help to cushion the drop-off, especially with the upcoming F1 event in Sep.

EM Asia data points turning bearish
Looking abroad, the recent economic data points such as the reduction of Indonesia’s GDP forecast, falling consumer confidence, possible slowdown in China etc have suggested that the regional retail outlook is also turning a tad bearish. Coupled with the weakening regional currencies against the US and Singapore dollar, consumer companies with regional exposure could face greater headwinds in the coming months.

Maintain UNDERWEIGHT; favour defensives
We maintain our UNDERWEIGHT on the sector in light of the overhang of macro-uncertainty, and the sector to continue de-rating with investors locking-in profits from before. Within the sector, we favour counters with defensive qualities such as Sheng Siong [BUY; FV: S$0.80] over counters with high exposure to emerging Asia consumer demand like Petra Foods [HOLD; FV: S$3.95] and with thin margins like BreadTalk [SELL; FV: S$0.77].


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date:21/08/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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