中国方便面产业：低线城市带动了消费的持续复苏

1、GlobalResearch10 June 2019EquitiesAsiaFood & BeverageChristine Peng,CFAAnalyst EquitiesAsiaFood & BeverageChristine Peng,CFAAnalyst HYPERLINK mailto:christine-y.peng +852-29717571Ally ChenAnalyst HYPERLINK mailto:ally.chen ally.che HYPERLINK mailto:n n+886-2-87227347SatsukiKawasakiAnalyst HYPERLINK

2、mailto:satsuki.kawasaki +81-3-52086265Ting Wang,CFA HYPERLINK mailto:ting-za.wangBS Evidence Lab inside: Lower tier cities led tocontinuous consumption recoveryPotential profitability upside underpinned by continuing premiumisationInApril2019,UBSEvidenceLabconducted2,621interviewsw

3、ithChineseconsumers aged 18-64, residing across tier-1 to tier-5 cities, to better understand consumers perceptions,behaviour,andbrandpreferencesininstantnoodles.Thissurveysresults showed the continuation of the premiumisation trend we mentioned in our HYPERLINK /TRIPOD/DocumentService?objectId=0901

4、5aec8095e2b6&DocPart=RENDITION&Format=tpod_format_ubsw_pdf 2017 and HYPERLINK /shared/d2CxM37WLFEmFy 2018 studies, with 60% of regular buyers now spending more than Rmb5 on average on a bowl of noodles, up from 50% in 2018. Of regular buyers, 76% are willing to pay more than Rmb5 for a bowl of healt

5、hy, nutritional, and tasty instant noodles, implying furtherASPupsidepotential,inourview.Weseemid-tolong-termprofitabilityupside potentialforTingyiCaymanIslands(Tingyi)andUni-PresidentChina(UPC),giventheir leadership in the premium noodles segment.Increased purchase frequency points to volume upside

6、Thesurveyresultsshowedanobviousincreaseinpurchasefrequencyasaveragetimes of regular buyers purchasing instant noodles per week rebounded to 0.76 in 2019 (from 0.59 in 2018, 0.72 in 2017, and 0.81 in 2016), driven mostly by the increase in tier-2 to tier-5 cities. Increased purchase frequency implies

7、 the potential rebound of consumers demand for instant noodles in 2019, in ourview.A polarized consumption structure is likely for the noodles marketDespiteTingyisandUPCsleadingpositionsinthepremiumsegment,UBSEvidence Labs survey indicated a much higher purchase frequency for non-premium over premiu

8、m products, suggesting the majority of instant noodles consumed are mass productsdespitecontinuouspremiumisation,inourview.Wethinkfurtherinvestments in product development and consumer education are required given consumers still low (30%) perception of instant noodles as healthy and nutritional in

9、2019.Stock picks: we prefer Tingyi over UPC given its cheaper valuationWe have upgraded HYPERLINK /shared/d2L9XsvBB3gOSKQ Tingyi from Neutral to Buy, but maintain our Sell rating on HYPERLINK /shared/d2CCLBRZFKo7 UPC, withhigherearningsestimatesforboth.At8.2x2020EEV/EBITDATingyiistradingata 15%disco

10、unttoUPC,andwefeeltheearningsdownsidefromitspricecutshasbeen fully factored in given VAT cuts since this April. We expect Tingyis two-tiered brand strategy of growing premium product offerings, while maintaining mass-market dominance, will grow its instant noodles share from 2019. Tingyis bottled co

11、ffee offerings can potentially become growth drivers from 2020, as the negative impact from declining bottled water revenue abates.Instant noodles sector valuation summaryEPSCompanyReutersCodeSharePriceNewRatingOldPriceEV/EBITDA-tax)CAGR(%)Yield(%)target19E20E19E20E18-21E19E20ETingyi Cayman Islands0

12、322.HK12.20BuyNeutralHK$14.468.6x8.2x16.2x18.9x4.7%4.54.8Uni-President China Holdings0220.HK8.16SellSellHK$8.059.9x9.2x10.7x12.1x7.8%3.84.1Uni-President Enterprises1216.TW81.50NeutralNeutralNT$80.009.8x9.5x15.9x16.3x5.7%3.13.4Nissin Foods Holdings2897.T6,620.00BuyNeutral7,70010.5x9.7xNANA2.5%1.51.8N

13、ote:Pricesasof6June2019;TingyisEV/EBITDAhasbeenadjustedforminorityinterests. Source: Thomson Reuters, UBSestimates HYPERLINK /investmentresearch /investmentresearchThisreporthasbeenpreparedbyUBSSecuritiesAsiaLimited. ANALYSTCERTIFICATIONANDREQUIREDDISCLOSURESBEGIN ONPAGE17. UBSdoesandseekstodobusine

14、sswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbe aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider thisChina Instant NoodlesUBSResearchTHESISMAPa guide to our thinking and whats where in this report H

15、YPERLINK l _bookmark1 OUR THESIS IN PICTURESMOST FAVOREDLEAST FAVOREDTingyi Cayman Islands, Nissin FoodsUni-President China, Uni-President EnterprisesPIVOTAL QUESTIONSQ: Will the premiumisation trend lead to accelerated revenue growth for the instant noodle industry in China in2019E?Verylikely,inour

16、view.UBSEvidenceLabsurveyresultspointedtoincreasedaveragespendingper bowl of noodles, together with an obvious increase in purchase frequency in 2019. At the same time, we see additional room for product upgrading to further meet consumers demand for healthy, nutritional, and tasty instant noodles.

17、This is because consumers positive perception towards instant noodles in the 2019 survey did not continue to grow compared with the previous yearsresults.AsTingyisandUPCsnon-premiumproductssawmuchhigherpurchasefrequency than for their premium products, we prefer Tingyis two-tiered brand strategy, wh

18、ich aims to grow premiumproductofferings,withmass-marketdominance,toUPCsfocusonprofitability. HYPERLINK l _bookmark2 moreUBS VIEWWe believe the mass market still accounts for the majority of instant noodles consumption asUBS Evidence Labs survey indicated a much higher purchase frequency for Tingyis

19、 and UPCs non- premiumproductsoverpremiumproducts,despitetheirleadingpositionsinthepremiumsegment. We feel further investments in product development and consumer education are required given consumers still low (about 30%) perception of instant noodles being healthy and nutritional in 2019.EVIDENCE

20、UBSEvidenceLabsurveyresultsshowed:1)averagespendingperbowlofnoodlesgrew7%YoYto Rmb5.82 in 2019, with 60% of regular buyers spending more than Rmb5 on average on a bowl of noodles, up from 50% in 2018, pointing to a continuing premiumisation trend in consumption of instant noodles; 2) the average tim

21、es of regular buyers purchasing instant noodles per week increasesto0.76,upfrom0.59in2018;and3)ofrespondents,32%believeinstantnoodlescanbe healthy, nutritional, and tasty in 2019, similar to 33% in 2018.WHATS PRICED IN?At 8.2x 2020E EV/EBITDA Tingyi is trading at a 15% discount to UPC, and we feel t

22、he earnings downside from its price cuts has been fully factored in given VAT cuts since this April. We expect Tingyis two-tiered brand strategy of growing premium product offerings, while maintaining mass- marketdominance,willgrowitsinstantnoodlessharesfrom2019.Tingyisbottledcoffeeofferings can pot

23、entially become growth drivers from 2020, as the negative impact from declining bottledwaterrevenueabates. HYPERLINK l _bookmark3 Averagespendingperbowlofinstantnoodles (regularbuyers)100%90%Purchase frequency now (regular buyers)7%7%7%6%7%7%7%201620172018Onlybuynoodlesin plasticpack8%3%14%3%25%37%3

24、4%44%46%64%59%48%1%6%2%5%RMB 208%3%14%3%25%37%34%44%46%64%59%48%1%6%2%5%RMB 11-20RMB 5-10RMB 2041% 56% 32% 65%59% 68% 80% 57% 71%75% 54%RMB 11-20In 2019, 60% of regular buyers spent more than Rmb5 on a bowl of noodles, up from 50% in 2018 and 40% in30% 64% 44%39%57%2017, implying strong continuation

25、 of premiumisation46%34%33% 44% 26%20162017201820192016201620172018201920162017201820192016201720182019201620172018201941%RMB 5-10Rmb20 Rmb11-20 Rmb5-10RMB 20RMB 11-20RMB 5-1010%34%33%Rmb20 Rmb11-20 Rmb5-10 6% above the MRA.47%25%NeutralFSR is between -6% and 6% of the MRA.39%22%SellFSR is 6% below

26、the MRA.14%19%Short-Term RatingDefinitionCoverage3IB Services4BuyStockpriceexpectedtorisewithinthreemonthsfromthetime theratingwasassignedbecauseofaspecificcatalystorevent.1%1%SellStockpriceexpectedtofallwithinthreemonthsfromthetime theratingwasassignedbecauseofaspecificcatalystorevent.1%1%Source: U

27、BS. Rating allocations are as of 31 March 2019.1:Percentage of companies under coverage globally within the 12-month rating category.2:Percentageofcompanieswithinthe12-monthratingcategoryforwhichinvestmentbanking(IB)serviceswereprovided within the past 12 months.3:Percentage of companies under cover

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31、an investment horizon of 12 months.EXCEPTIONS AND SPECIAL CASES:UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management,performancerecord,discount;Sell

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35、held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows.UBS AG Hong Kong Branch: Christine Peng, CFA. UBS Securities Pte. Ltd., Taipei Branch: Ally Chen. UBS Securities Japan Co., Ltd.: Satsuki Kawasaki. UBS S

36、ecurities Co. Limited: Ting Wang, CFA.Company DisclosuresCompany NameReuters12-month ratingShort-term ratingPricePrice dateNissin Foods Holdings52897.TNeutralN/A6,62006 Jun 2019Tingyi Cayman Islands0322.HKNeutralN/AHK$12.2006 Jun 2019Uni-President China Holdings0220.HKSellN/AHK$8.1606 Jun 2019Uni-Pr

37、esident Enterprises1216.TWNeutralN/ANT$81.2006 Jun 2019Source: UBS. All prices as of local market close.Ratingsinthistablearethemostcurrentpublishedratingspriortothisreport.Theymaybemorerecentthanthestock pricing date5.UBSAG,itsaffiliatesorsubsidiariesexpecttoreceiveorintendtoseekcompensationforinve

38、stmentbanking services from this company/entity within the next three months.Unlessotherwiseindicated,pleaserefertotheValuationandRisksectionswithinthebodyofthisreport.Foracompleteset ofdisclosurestatementsassociatedwiththecompaniesdiscussedinthisreport,includinginformationonvaluationandrisk, please

39、contactUBSSecuritiesLLC,1285AvenueofAmericas,NewYork,NY10019,USA,Attention:InvestmentResearch.Nissin Foods Holdings ()PriceTarget()Stock Price()01-Apr-1601-Jun-1601-Aug-1601-Oct-1601-Dec-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Dec-1701-Feb-1801-Apr-1801-Jun-1801-Aug-1801-Oct-1801-Dec-1801-

40、Feb-1901-Apr-1901-Jun-1901-Apr-1601-Jun-1601-Aug-1601-Oct-1601-Dec-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Dec-1701-Feb-1801-Apr-1801-Jun-1801-Aug-1801-Oct-1801-Dec-1801-Feb-1901-Apr-1901-Jun-19Sell NoRatingDateStock Price ()Price Target ()Rating2016-03-045560.05080.0Sell2016-03-235530.0-N

41、o Rating2016-06-065670.05270.0Sell2016-11-225790.06200.0Neutral2017-06-237110.0-No Rating2019-04-187640.07700.0NeutralSource: UBS; as of 06 Jun 2019Tingyi Cayman Islands (HK$)01-Apr-1601-Jun-1601-Oct-1601-Dec-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Dec-1701-Feb-1801-Apr-1801-Jun-1801-Aug-1

42、801-Oct-1801-Dec-1801-Feb-1901-Apr-1901-Jun-1901-Apr-1601-Jun-1601-Oct-1601-Dec-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Dec-1701-Feb-1801-Apr-1801-Jun-1801-Aug-1801-Oct-1801-Dec-1801-Feb-1901-Apr-1901-Jun-19PriceTarget(HK$)Stock Price(HK$)01-Aug-16Buy Neutral No Rating01-Aug-16DateStock Pr

43、ice (HK$)Price Target (HK$)Rating2016-03-047.5914.42Buy2016-03-117.498.02Neutral2016-06-216.86.94Neutral2016-11-028.43-No Rating2016-11-038.739.86Buy2017-03-289.7210.84Buy2017-09-2011.7413.88Buy2017-12-0212.717.43Buy2018-03-2116.8819.12Buy2018-06-2718.121.35Buy2018-08-2815.119.45Buy2018-11-2710.4813

44、.19Neutral2019-02-2710.9812.28Neutral2019-03-2612.0812.64NeutralSource: UBS; as of 06 Jun 2019Uni-President China Holdings (HK$)15.0PriceTarget(HK$)Stock Price(HK$)01-Apr-1601-Jun-1601-Aug-1601-Oct-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Feb-1801-Apr-1801-Jun-1801-Aug-1801-Oct-1801-Feb-190

45、1-Apr-1901-Jun-1901-Apr-1601-Jun-1601-Aug-1601-Oct-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Feb-1801-Apr-1801-Jun-1801-Aug-1801-Oct-1801-Feb-1901-Apr-1901-Jun-19Buy NeutralSell NoRatingDateStockPrice(HK$)PriceTarget(HK$)Rating2016-03-045.257.23Neutral2016-03-095.56-NoRating2016-03-115.415.7

46、2Neutral2016-03-225.836.13Neutral2016-06-216.996.44Sell2016-08-116.065.47Sell2016-11-185.335.38Neutral2017-02-165.476.29Neutral2017-09-207.258.27Buy2018-03-306.799.09Buy2018-06-279.4911.16Buy2018-12-037.086.49SellSource: UBS; as of 06 Jun 2019Uni-President Enterprises (NT$)PriceTarget(NT$)Stock Pric

47、e(NT$)8060402001-Apr-1601-Jun-1601-Aug-1601-Oct-1601-Dec-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Dec-1701-Feb-1801-Apr-1801-Jun-1801-Aug-1801-Oct-1801-Dec-1801-Feb-1901-Apr-1901-Jun-1901-Apr-1601-Jun-1601-Aug-1601-Oct-1601-Dec-1601-Feb-1701-Apr-1701-Jun-1701-Aug-1701-Oct-1701-Dec-1701-Feb-

48、1801-Apr-1801-Jun-1801-Aug-1801-Oct-1801-Dec-1801-Feb-1901-Apr-1901-Jun-19Buy NoRatingDateStock Price (NT$)Price Target (NT$)Rating2016-03-0456.759.62Buy2016-03-2258.059.0Neutral2016-04-0955.656.0Neutral2016-08-0463.564.0Neutral2016-11-1854.658.7Neutral2017-04-0657.757.6Neutral2017-09-1165.1-No Rati

49、ng2018-01-1969.268.0Neutral2018-07-0577.074.5Neutral2018-12-0373.371.5NeutralSource: UBS; as of 06 Jun 2019Company profile and fee and risk statement under the Japanese Financial Instruments & Exchange LawCompanyNameetc:UBSSecuritiesJapanCo.,Ltd.,FinancialInstruments&ExchangeFirm,KantoLocalFinancial

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