美国HY消费更新：家庭清洁市场策略分析

1、HY Consumer RefreshHouse cleaning, rec updates (COTY, TPX) + initiations (ENR, EPC)As we spring into spring, we thought it good timing to do a little house cleaning (Home & Garden, Personal Care & Cosmetics, Apparel & Footwear, and Toys), with a deep dive into Consumer Products. Broadly, Consumer Pr

2、oducts offers no pick over Domestic HY (CP 6.4%, 6.6% YTW) keeping us Neutral overall but we hope we can help position within thesector.Ups and in the background: Expect the consumer to remain strong, with unemployment and wages both supporting consumer spending. Input costs should be less a headwin

3、d in 2019, but against those that sell into Europe, and the competitive market remains fierce with continued growth (and price transparency) of online replenishment business and independentbrands.We are expanding our coverage of Household names, Edgewell (Neutral) and Energizer (Underweight). The ho

4、usehold sub-segment will see pressure this year (for the more international segments), and a continuation the highly competitive environments, particularly for the shaving (EPC SPB), feminine care (EPC) and batteries (ENR). Management teams are focused on improving efficiency and cutting costs to in

5、dustry pressures and EBITDA. We have seen a strong rally across the board since December, tracking the broader market, making us more cautious at new levels, and this in mind we are initiating on Energizer with an Underweight (integration risk and the highest leverage the sub-group). We are initiati

6、ng at Neutral Edgewell as the lowest levered of the group relatively short-dated We are staying Neutral Spectrum after the recentrun.The Face Personal Care & Cosmetics is a blurry: We like (6.5% notes are our AFL Consumer pick) the pickup vs consumer and rating (split B-BB), but expect the mass cosm

7、etics business to remain choppy and Revlon (REV). International, fragrances, and companys better brands should offset US consumer weakness. We would avoid AVP (Neutral) after a run up spurred M&A press has taken bonds to their 52wk highs; and PBH (Neutral), with bonds trading to shorter calls, not o

8、ffering enough for a triple-C rated credit, in ourview.We are cautious on the durable (moving to Neutral from Overweight), driven by relative value, with bonds at 52wk highs, trading in line with the split average. While are not predicting a recession this year, we point out that durables like TPX b

9、e impacted a consumer pullback in arecession.Apparel & Footwear players remain in a spot (and low levered) relatively tight trading levels, FX headwinds, M&A risk all illiquidity keep us Neutral. We view apparel & footwear as more insulated from the online shift with business diversification. Tariff

10、, transportation and trade issues should fade to the background though remains a pressure for2019.North America Credit Research09 April 2019US HY Consumer, Food, & Retail Carla Casella, CFA AC(1-212) 270-6798 HYPERLINK mailto:carla.casella carla.casellaSarah Manzone(1-212) 834-5488 HYPERLINK mailto:

11、sarah.manzone sarah.manzoneTarek Hamid(1-212) 834-5468 HYPERLINK mailto:tarek.x.hamid tarek.x.hamidJ.P. Morgan Securities LLCHY Consumer Products SectorRec:NeutralAVPNeutralCOTYOverweightEPCNeutralENRUnderweightHBINeutralMATNeutralPBHNeutralREVNeutralSPBNeutralTPXNeutralWWWNeutralNot covered:ACCO CE

12、NT KIKCN SMGSource: J.P. Morgan.See page 65 for analyst certification and important disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objecti

13、vity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / Table of Contents HYPERLINK l _bookmark0 Recommendations andRelativeValue4 HYPERLINK l _bookmark1 Picks, Pans, andTradeIdeas4 HYPERLINK l _bookmark2 1Q Earnings WillBeM

14、ixed8 HYPERLINK l _bookmark3 Year-to-Date Performance Driven IdiosyncraticEvents9 HYPERLINK l _bookmark4 JPM Consumer ProductsTop-10Issuers10 HYPERLINK l _bookmark5 Avon Products (AVP) Neutral11 HYPERLINK l _bookmark6 RelativeValue11 HYPERLINK l _bookmark7 Capital Structure&Liquidity11 HYPERLINK l _

15、bookmark8 Focus Itemsand Outlook12 HYPERLINK l _bookmark9 AVPModel13 HYPERLINK l _bookmark10 Coty Inc. (COTY) Overweight15 HYPERLINK l _bookmark11 RelativeValue15 HYPERLINK l _bookmark12 Capital Structure&Liquidity15 HYPERLINK l _bookmark13 Focus Itemsand Outlook16 HYPERLINK l _bookmark14 COTYModel1

16、7 HYPERLINK l _bookmark15 Edgewell Personal Care (EPC) Neutral19 HYPERLINK l _bookmark16 Relative Value19 HYPERLINK l _bookmark17 Capital Structure&Liquidity19 HYPERLINK l _bookmark18 Focus Itemsand Outlook20 HYPERLINK l _bookmark19 Background20 HYPERLINK l _bookmark20 CreditPositives22 HYPERLINK l

17、_bookmark21 CreditRisks22 HYPERLINK l _bookmark22 CovenantSummary23 HYPERLINK l _bookmark23 EPCModel23 HYPERLINK l _bookmark24 Energizer (ENR) Neutral25 HYPERLINK l _bookmark25 RelativeValue25 HYPERLINK l _bookmark26 Capital Structure&Liquidity25 HYPERLINK l _bookmark27 Focus Itemsand Outlook26 HYPE

18、RLINK l _bookmark28 CreditPositives26 HYPERLINK l _bookmark29 CreditRisks27 HYPERLINK l _bookmark30 ENRModel28 HYPERLINK l _bookmark31 Hanesbrands (HBI) Neutral30 HYPERLINK l _bookmark32 RelativeValue30 HYPERLINK l _bookmark33 Capital Structure&Liquidity30 HYPERLINK l _bookmark34 Focus Itemsand Outl

19、ook31 HYPERLINK l _bookmark35 HBIModel32 HYPERLINK l _bookmark36 Mattel (MAT) Neutral33 HYPERLINK l _bookmark37 RelativeValue33 HYPERLINK l _bookmark38 Capital Structure&Liquidity33 HYPERLINK l _bookmark39 Focus Itemsand Outlook35 HYPERLINK l _bookmark40 MATModel35 HYPERLINK l _bookmark41 Prestige C

20、onsumer Healthcare (PBH)Neutral37 HYPERLINK l _bookmark42 RelativeValue37 HYPERLINK l _bookmark43 Capital Structure&Liquidity37 HYPERLINK l _bookmark44 Focus Itemsand Outlook38 HYPERLINK l _bookmark45 PBHModel38 HYPERLINK l _bookmark46 Revlon (REV) Neutral40 HYPERLINK l _bookmark47 RelativeValue40 H

21、YPERLINK l _bookmark48 Capital Structure&Liquidity40 HYPERLINK l _bookmark49 Focus Itemsand Outlook41 HYPERLINK l _bookmark50 REVModel43 HYPERLINK l _bookmark51 Spectrum Brands (SPB) Neutral45 HYPERLINK l _bookmark52 RelativeValue:45 HYPERLINK l _bookmark53 Capital Structure&Liquidity45 HYPERLINK l

22、_bookmark54 Focus Itemsand Outlook46 HYPERLINK l _bookmark55 SPBModel46 HYPERLINK l _bookmark56 Tempur Sealy (TPX) Neutral48 HYPERLINK l _bookmark57 RelativeValue48 HYPERLINK l _bookmark58 Capital Structure&Liquidity48 HYPERLINK l _bookmark59 Focus Itemsand Outlook49 HYPERLINK l _bookmark60 Wolverin

23、e Worldwide (WWW) Neutral51 HYPERLINK l _bookmark61 Relative Value51 HYPERLINK l _bookmark62 Capital Structure&Liquidity51 HYPERLINK l _bookmark63 Focus Itemsand Outlook51 HYPERLINK l _bookmark64 WWWModel52 HYPERLINK l _bookmark65 HY ConsumerRelativeValue54 HYPERLINK l _bookmark66 HY ConsumerCoverag

24、e Report55 HYPERLINK l _bookmark67 Appendix58Recommendations and Relative ValueWe are staying Neutral HY Consumer Products after the sector outperformed the broader index YTD (+8.88 vs. the broader index +7.88%). The sector typically trades inside of Domestic HY (20bps today, slightly tighter to a y

25、ear ago). We believe upside is limited given the already tight spread and potential for leveraging M&A, while downside is somewhat limited by relatively conservative leverage/strong credit stats, for many of the bellwether anchors of the space.Table 1: HY Consumer Products vs. Domestic HY key stats

26、as of 4/8/2019Sector statisticsConsumer ProductsDomestic HY IndexYTD total return8.88%7.88%Spread to worst406 bp425 bpYield to worst6.41%6.61%Current yield6.06%6.61%Average ratingSplit BBSplit BBRatings StatisticsYTW by RatingBB4.92%Split BB5.43%B6.84%Split B8.67%CCC10.66%Source: Company data, J.P.

27、Morgan.Figure 1: HY Index vs. HY Consumer Products STW (bps)1000bp900bp800bp700bp600bp500bp400bp07-Apr-1407-Jun-1407-Aug-1407-Oct-1407-Dec-1407-Apr-1407-Jun-1407-Aug-1407-Oct-1407-Dec-1407-Feb-1507-Apr-1507-Jun-1507-Aug-1507-Oct-1507-Dec-1507-Feb-1607-Apr-1607-Jun-1607-Aug-1607-Oct-1607-Dec-1607-Feb

28、-1707-Apr-1707-Jun-1707-Aug-1707-Oct-1707-Dec-1707-Feb-1807-Apr-1807-Jun-1807-Aug-1807-Oct-1807-Dec-1807-Feb-19JPMDomesticHYJPM Domestic HY ConsumerProductsSource: J.P. Morgan.Picks, Pans, and Trade IdeasA healthy consumer should continue to support the sector, offset by the continued growth of onli

29、ne retail, which brings price transparency, as well as a need to tailor products and promotions for each retailer or channel. In the background, we see less input cost pressure in 2019 but greater FX challenges.The household sub-segment should see some FX pressure this year (for the more internation

30、al segments), and a continuation of the highly competitive environments,particularly for the shaving (EPC and SPB), feminine care (EPC) and batteries (ENR). Management teams are focused on improving efficiency and cutting costs to offset industry pressures and grow EBITDA. We have seen a strong rall

31、y across the board since December, tracking the broader market, making us more cautious at new levels.Non-Durable & DurablesAcco BrandsNon-Durable & DurablesAcco BrandsACCONot CoveredB1/BB3755.250%12/15/202498.885.48%313 bp3.2x3.0 xREPRESENTATIVE BENCHMARK BONDLEVERAGECompanyTickerRecRatingAmt($mm)C

32、ouponMaturityPriceYTWSTWGrossNetFootwear & ApparelHanesbrandsHBINeutralBa2/BB-9004.875%5/15/202699.564.95%253 bp3.7x3.3xWolverine WorldwideWWWNeutralBa2/BB+2505.000%9/1/202697.645.39%296 bp1.9x1.4xAvonAVPNeutralB3/B *+4627.000%3/15/202397.967.61%529 bp4.5x3.0 xCentral Garden & PetCENTNot CoveredB1/B

33、B3005.125%2/1/202893.196.14%365 bp3.2x1.0 xCotyCOTYOverweightB3 *-/BB-5506.500%4/15/202698.466.78%436 bp5.0 x4.7xEdgewellEPCNeutralBa3/BB5004.700%5/24/2022101.254.27%195 bp3.3x2.7xEnergizerENRUnderweightB2/B+5006.375%7/15/2026102.725.77%343 bp0.0 x0.0 xMattelMATNeutralB1/BB-1,5006.750%12/31/202599.1

34、36.91%451 bp7.3x4.4xPrestige BrandsPBHNeutralCaa1/B6006.375%3/1/2024102.925.27%296 bp5.6x5.5xRevlonREVNeutralCaa3/CCC5005.750%2/15/202187.5013.62%1126 bp13.0 x12.6xScotts Miracle GrowSMGNot CoveredB1/B+2505.250%12/15/202699.745.29%285 bp5.1x5.0 xSpectrum BrandsSPBNeutralB2/B+1,0005.750%7/15/2025102.

35、195.17%285 bp4.3x3.5xTempur SealyTPXNeutralB1/BB-6005.500%6/15/2026100.075.48%315 bp4.0 x3.9xSource: J.P. Morgan estimates, Company data, Bloomberg.We dont see much to do in Apparel & Footwear for now. The HY players maintain relatively low leverage (most target keeping leverage 1x less leverage) to

36、 Energizer today (though we are Neutral SPB at current levels).Initiating on Edgewell with a NeutralWe are initiating at Neutral on Edgewell as the lowest levered of the group with relatively short-dated bonds. We think these levels (3.8-9% YTW) represent fair value given relatively tight trading le

37、vels (about 110-120bps inside BBs) and weak covenants, and increasing competition from larger players (PG, ULVR LN, KMB) as well as unique start-ups (Dollar Shave, owned by Unilever; Harrys), offset by the somewhat sticky business (wet shave, feminine care, infant & sun care) and solid FCF ($200mn).

38、Both issues of 4.7% notes (21s and 22s) are trading near their highs, driven by the broader HY market rebound since December 2018 as well as managements comments that it is focused on debt reduction. Both bonds trade inside of both the BB index and HY Consumer Products. The 21s trade 120bps inside t

39、he BB index, and the 22s trade 110bps inside the average BB; both trade well inside HY Consumer Products (6.4%).Downgrading Tempur Sealy to Neutral from OverweightWe are moving to Neutral from Overweight on TPX on a relative value basis, with bonds at 52wk highs, trading in line with the split B/BB

40、average. While we are not predicting a recession this year, we point out that durables like TPX would be impacted by a consumer pullback in a recession. TPX 5.5% 26 trade 99.75, or 5.5% to a 6/26 YTW, in line with the split-B/BB average as well as with Consumer peers ACCO and Energizer 2025. After r

41、unning up 10 points since late December, we believe current levels are fair, which moves us to Neutral.Table 5: Personal Care, OTC, and Cosmetics NamesTickerJPMRatingAmt ($mm)CouponMaturityPriceYTWYTW DateSTWNet LevAVPNeutralBa1/BB- *+5007.875%8/15/2022104.118.21%8/15/2021590 bp-0.1xAVPNeutralB3/B *

42、+3876.600%3/15/2020102.052.94%3/15/202051 bp3.0 xAVPNeutralB3/B *+4627.000%3/15/202397.647.58%3/15/2023526 bp3.0 xAVPNeutralB3/B *+2448.950%3/15/204395.559.08%3/15/2043627 bp3.0 xCOTYOverweightB3 *-/BB-5506.500%4/15/202698.755.80%4/15/2026347 bp5.1xREVNeutralCaa3/CCC5005.750%2/15/202189.0010.14%2/15

43、/2021778 bp12.6xREVNeutralCaa3/CCC4506.250%8/1/202453.116.47%8/1/2024413 bp12.6xPBHNeutralCaa1/B4005.375%12/15/2021100.75-13.09%12/15/2019-1552 bp5.5xPBHNeutralCaa1/B6006.375%3/1/2024102.884.79%3/1/2022248 bp5.5xSource: J.P. Morgan estimates, Company data.In Personal Care & Cosmetics, we prefer COTY

44、While we expect the US mass cosmetics business to remain choppy for Coty and Revlon (REV), International, fragrances, and each companys better brands should offset US consumer weakness (for Coty this includes Burberry, Gucci, Tiffany and for Revlon this includes Elizabeth Arden). We would avoid AVP

45、(Neutral) after an run up spurred by M&A press has taken bonds to their 52wk highs; and PBH (Neutral), with bonds trading to shorter calls, not offering enough yield for a triple-C rated credit, in our view.We are Overweight COTY, and added its 6.5% note due 2026 to our HY Credit AFL in March 2019.

46、Coty is a global player in cosmetics, skin care, fragrance, and beauty, with brands CoverGirl, Rimmell, Max Factor, Clairol, and Younique; fragrances Burberry, Calvin Klein, Boss, Gucci, and miu miu; and professional brands Wella and OPI, among others. We like the high yield for the rating and belie

47、ve the company will de-lever as a result of cost savings over the coming 2 years.Cotys only USD notes, its 6.5% 26 ($550mn outstanding), trade 6.7% to a 4/26 YTW, over 100bps wide to similar maturities of Energizer (5.7% YTW, 5.1x levered) or Spectrum (5% YTW, 3.8x levered). We believe COTY looks at

48、tractive at these levels, as investors can pick up 10bps over the Consumer Products index and 130bps over the split-BB index.1Q Earnings Will Be MixedWe are not expecting much positive out of 1Q earnings. Companies have a lot to blame weakness on, including poor weather through March and a late East

49、er, both of which exacerbate retailer shelf stocking. FX headwinds will likely persist through at least mid-year. Most companies have already guided to a 2019 that is back-end loaded.The March quarter is a seasonally small quarter for most players; as such, we will be listening more for the back-hal

50、f outlook and update on cost-savings programs.Table 6: HY Consumer Earnings CalendarMondayTuesdayWednesdayThursdayFriday1-Apr-192-Apr-193-Apr-194-Apr-195-Apr-198-Apr-199-Apr-1910-Apr-1911-Apr-1912-Apr-19PBH Q4E15-Apr-1916-Apr-1917-Apr-1918-Apr-1919-Apr-1922-Apr-1923-Apr-1924-Apr-1925-Apr-1926-Apr-19

51、MAT Q1 16:0529-Apr-1930-Apr-19HBI Q1 EMondayTuesdayWednesdayThursdayFriday1-May-192-May-193-May-19AVP Q1 TPX Q1 EACCO Q1 Bef-mkt6-May-197-May-198-May-199-May-1910-May-19ENR Q2 EPC Q2ECOTY Q3 WWW Q1 E SPB Q2013-May-1914-May-1915-May-1916-May-1917-May-1920-May-1921-May-1922-May-1923-May-1924-May-19Sou

52、rce: Bloomberg, Company data, J.P. Morgan estimates.Year-to-Date Performance Driven by Idiosyncratic EventsIdiosyncratic news and events have driven the total return YTD, more so than industry trends.Cosmetics gains YTD (AVP, COTY, REV all in the biggest gainers) were driven by M&A, or equity and fi

53、nancing transactions rather than industry or company performance: Avon has been approached as an M&A target (Natura), Revlons largest shareholder, Ron Perelman, has been buying shares and lending it short- term funds, giving the market comfort that he would be likely to support the company if it can

54、not refinance its debt, and largest shareholder, JAB Investments, is increasing itsstake.The rest of the top gainers were driven by the general market bounce back from lows in December, particularly for the names that had been beaten up most during December (Energizer, KIK,Mattel).Figure 4: Top YTD

55、Performers in HY Consumer Products (Jan-Mar)AVP 2023s REV 2021s COTY 2026s MAT 2025s ENR 2026s KIKCN 2023s TPX 2026s AMWD 2026s ACCO 2024s HBI 2026s13.7%13.5%12.9%12.6%11.5%11.0%10.2%9.8%16.1%19.0%0.0%2.0%4.0%6.0%8.0%10.0% 12.0% 14.0% 16.0% 18.0% 20.0%Source: J.P. Morgan.JPM Consumer Products Top-10

56、 IssuersThe top 10 issues (chart below) represent almost 60% of this relatively concentrated index, and represent a cross-section of sub-sector industries apparel & textile (HBI), household (SPB, EPC, ENR, KIKCN, TPX), personal care (EPC, FIRSTQ, PBH, REV), and the one-off toy player, MAT. This dive

57、rsity among the top issuers tends to balance the sector despite sometimes wide variations in return on a namebasis.Figure 5: Top-10 Consumer Products Issuers by Market Weight (as of 3/26/19)9.3%9.1%9.3%9.1%6.4%5.9%5.6%5.4%5.1%5.0%3.9%3.4%9.0%8.0%7.0%6.0%5.0%4.0%3.0%2.0%1.0%0.0%MATHBISPBENREPCTPXPBHF

58、IRSTQ KIKCNREVSource: J.P. Morgan.Avon Products (AVP) NeutralWe are Neutral AVP. Avon is an international direct-to-consumer cosmetics, skin care, and home business. Its largest markets include Brazil, Mexico, Russia, Philippines, UK, Turkey, Colombia, Argentina, Poland, and South Africa. The compan

59、y has a low leverage ratio and positive FCF, but its securities are highly volatile, tracking EM trends (particularly Brazil). The upside risk to our rating is growth in new and emerging markets or M&A (as Natura covered by Joseph Giordano from our LatAm Equity Research team and Avon have confirmed

60、discussions). The downside risks to our rating include continued representative declines or potential weakness in a key market (Brazil being the largest at 20% of sales).Relative ValueAVP trades wide to its domestic CP peers because it has more of an EM business profile, with the majority of its rev