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Morgan Stanley Greater China Consumer Retail Valuation (1)
 

Morgan Stanley Greater China Consumer Retail Valuation (1)

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    Morgan Stanley Greater China Consumer Retail Valuation (1) Morgan Stanley Greater China Consumer Retail Valuation (1) Presentation Transcript

    • January 5, 2010 Greater China Consumer Team Consumer/Retail Weekly Morgan Stanley Asia Limited+ Greater China Consumer/Retail Valuation Latest Developments Angela Moh Team Leader Sportswear angela.moh@morganstanley.com • Pou Sheng (3813.HK)– Mr. Lu Ning will resign as executive director for personal reasons, effective Jan. 31 2010. Mr Lu is a general manager overseeing the retail operation of certain subsidiaries of the Group. +852 2848 5405 Household & Personal Care Dennis Tao Sports/Footwear/Textiles • BaWang (1338.HK) – Introduced BaWang Men’s series at the end of Dec 09. This has three product categories – shampoo, dennis.tao@morganstanley.com other hair care (hair essence oil, conditioner), and shower gel. This is a high-end line under BaWang with a higher price point +852 2848 7136 and gross margin. Jackie Chan serves as the brand ambassador and the new Men’s series will be marketed along with Jackie Chan’s new movie. We feel that while the new Men’s line may cannibalize part the sales of the existing BaWang products as it Lillian Lou Food/Agri takes away some male customers with higher purchasing power, it could also help support the sales growth of BaWang brand by winning more higher end customers. lillian.lou@morganstanley.com +852 2848 6502 International Retail News • German Apparel Sales – According to TextilWirtschaft, total apparel sales in Germany fell 9% YoY in the week December 20 - Robert Lin Department Stores 26. The sales were quite weak as comparison last year was not difficult; total apparel sales growth was -6% in the same week rob.lin@morganstanley.com last year. The four-week moving average sales growth was flat YoY (compared with -2% and flat in the previous two weeks). +852 2848 5835 * Implications for Esprit (0330.HK) – The retail environment remains relatively volatile and management indicated that the wholesale order book is still weak going into Jan-Feb 2010, as wholesalers continue to order very cautiously. However, there have been some re-orders recently as wholesale customers’ inventories are very low. Comparison for the wholesale business should become easier in F4Q10 (C2Q10) when EU wholesale revenue dipped by 29% in LCU. With efforts to better differentiate each line, the new product lines are doing well. Germany WeeklyApparel Sales Sales German Weekly Apparel 30% 25% 20% Weekly Total Sales 1m Mov Avg Morgan Stanley does and seeks to do business with 15% companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may 10% have a conflict of interest that could affect the 5% objectivity of Morgan Stanley Research. Investors 0% should consider Morgan Stanley Research as only a -5% single factor in making their investment decision. -10% For analyst certification and other important -15% disclosures, refer to the Disclosure Section, located at the end of this report. -20% += Analysts employed by non-U.S. affiliates are not 5-May-08 5-May-09 5-Mar-08 5-Mar-09 5-Nov-08 5-Nov-09 5-Feb-08 5-Jan-08 5-Apr-08 5-Jun-08 5-Jul-08 5-Aug-08 5-Sep-08 5-Oct-08 5-Dec-08 5-Feb-09 5-Jan-09 5-Apr-09 5-Jun-09 5-Jul-09 5-Aug-09 5-Sep-09 5-Oct-09 5-Dec-09 5-Jan-10 registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject Source: TextilWirtschaft, Morgan Stanley Research company, public appearances and trading securities held by a research analyst account.
    • January 5, 2010 Greater China Consumer Team Table of Contents Page • China Department Store SSS Performance 3 • China Sportswear & Footwear SSS Performance 6 • Sector and Stock Performance Sector Performance Indices 7 Ranking by Share Performance 8 Stock Price Performance Table 9 • Sector and Stock Valuation Sector Valuation 10 Valuation Table 11 Ranking by P/E 15 2010E P/E vs. Historical Forward P/E Range 16 2011E P/E vs. Historical Forward P/E Range 17 2010E P/E vs. 2009-11E EPS Growth 18 2010E EV/ Sales vs. 2009-2011 Sales Growth 19 2010E EV/Sales vs. 2010E EBIT Margin 20 • Calendar of Events 21 2
    • January 5, 2010 Greater China Consumer Team Multi-Line Retailers SSS Performance 2009 Note: Unless otherwise noted figures are monthly SSS guided by company MS = Morgan Stanley Estimates; L = Low; M = Mid; H = High; single = single-digit growth; GWk=Golden Week; 5/1 = May Holiday Oct. Golden Week MS Est. Co Est. Rating FYE Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Comparison Period F09 F09 2Mo: ~10% 9M: 7.1% 7 Days Comp Parkson In-Line w/ 10% F09 1Q: 9% 1H: 6.7% 3Q: 7.5% N/A 10/1-10/7/2009 (3368.HK) OW Dec Guidance M-single M-single 5/1: >15% 2Q: 4.6% N/A N/A N/A F09 GWk: slightly >10% vs 9/28-10/4/2008 8% 8~9% 8 Days Comp 1H: 14.9% 26% 10/1/-10/8/2009 Golden Eagle 1Q: 13% 20% 2Q:17.7% 3Q: 16.5% F09 GWk: ~20% vs 9/14 + 9/29-10/5/2008 (3308.HK) OW Dec 2Mo: 14% 9.4% 15% 5/1: >25% 14% July + Aug: 18% 13~14% F08 GWk: 35% [9/14/08 = Mid-Autumn] 16% 16% 24.4% (incl. DM) 13.8% (Sept-Oct / excl. DM) 3Q: 17~18% 15.7% (Sept-Oct / incl. DM) 7 Days Comp Intime 1Q: ~10% 20% 1H: 13% 0% (incl DM) 2.5% (incl DM) 2.5% (incl DM) F09 GWk: 3~4% (excl. DM) 10/1-10/7/2009 (1833.HK) OW Dec 2Mo: 11% 6~7% 10~11% 5/1: ~20% M-teens 16% (ex DM) 22% (ex DM) 6~7% (ex DM) F08 GWk: 30% vs 9/28-10/4/2008 13% L-teen Flat 8 Days Comp NWDS (HK$) F3Q09: Flat 10~11% L-single F1Q10: Flat F09 GWk: H-single 10/1/-10/8/2009 (825.HK) EW Jun Flat Flat Flat Flat 5/1: M-teens (>1Q09) Flat to single >July SSS Neg F08 GWk: 20% vs 9/28-10/5/2008 5% M-single 3Q HK: L-single 3Q SHA: H-single C'way: H-teens Lifestyle 1H: Flat HK: Neg HK: +single HK: M-H single TST: L-teens (1212.HK) NC Dec (HK$) SHA: M-single SHA: H-single SHA: H-single SHA: M-teens 8 Days Comp Maoye S: M-single 3Q: S + SW: H-single F09 GWk S: H-single 10/1-10/8/2009 (848.HK) NC Dec 1Q: ~Flat 1H: 0.6% SW: H-single S + SW: H-single F09 GWk SW: >20% vs 9/29-10/6/2008 1H: -10.08% 13 Days Comp Gome (493.HK) NC Dec 1Q: -20.75% 2Q: -8.28% 3Q: 2.05% F09 GWk: gross sales +25% 9/26-10/8 Both Years Suning (002024.SZ) NC Dec 1Q: -11.98% 1H: -4.12% 3Q: 4.82% Wumart 9M: 4.6% (8277.HK) NC Dec 1Q: 2.4% 1H: 3.5% 3Q: 7.2% Jingkelong (0814.HK) NC Dec 1Q: -4.3% 1H: -3.4% Lianhua (0980.HK) NC Dec 1Q: -3% 1H: -1.7% Source: Company Guidance, Morgan Stanley Research Data updated As of 11/27/09. Note: F = Fiscal; 1H, 2H, 1Q, 2Q, 3Q, 4Q are all fiscal period end Note: BJ = Beijing; SHA = Shanghai; CD = Chengdu; CQ = Chongqing; SZ = Shenzhen; SW = South West Region 3 Note: OW = Overweight; EW = Equal-weight; UW = Underweight; NC = not covered
    • January 5, 2010 Greater China Consumer Team Multi-Line Retailers Store SSS Performance 2008 Note: Unless otherwise noted figures are monthly SSS guided by company MS = Morgan Stanley Estimates; L = Low; M = Mid; H = High; single = single-digit growth; GWk=Golden Week Department Store Rating FYE Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 1H: 14.4% Parkson 2Q: M-teens 9M: M-teens F08: 12.1% (3368.HK) OW Dec 1Q: 15.4% M-teens 13% H-teens H-teens M-teens M-teens 13% 11~12% 4Q: 7~8% Golden Eagle 1H: 28% 15% F08: 21.4% (3308.HK) OW Dec 1Q: 25% 25% 20% 25% 25% 18% 21% GWk: 35% 20% 14% 1H: 12.6% Intime Wulin: -1% 3Q: 11% F08: 11.5% (1833.HK) OW Dec ex-Flag: 25% 10% 8% ~15% 8~9% 19% 9~10% NWDS (HK$) H-single F1H: 10.9% (825.HK) EW Jun F3Q: 27% 20~21% <15% 20~21% F1Q: 20% GWk: 20% L-teens single Lifestyle F08: 13.2% (1212.HK) NC Dec 1H: 19.5% 2H: 7.9% Maoye F08: 4.2% (848.HK) NC Dec 1H: 12.2% 2H: neg F08: -8.99% Gome (493.HK) NC Dec 1Q: 3.17% 1H: 0.49% 9M: 3.18% 4Q: -36% Suning (002024.SZ) NC Dec 1Q: 2% 1H: 0.02% 9M: 3.25% F08: -5.72% Wumart (8277.HK) NC Dec 1Q: 14.1% 1H: 13.9% 9M: 7.9% F08: 8.1% Jingkelong (0814.HK) NC Dec 1Q: 8.1% 1H: 9.5% 9M: 9.3% F08: 7.2% Lianhua (0980.HK) NC Dec 1H: 13.1% F08: 8.3% Source: Company Guidance, Morgan Stanley Research Note: F = Fiscal; 1H, 2H, 1Q, 2Q, 3Q, 4Q are all fiscal period end Note: BJ = Beijing; SHA = Shanghai; CD = Chengdu; CQ = Chongqing; SZ = Shenzhen; SW = South West Region 4 Note: OW = Overweight; EW = Equal-weight; UW = Underweight; NC = not covered
    • January 5, 2010 Greater China Consumer Team SSS Definitions for the Multi-line Retailers Note: Unless otherwise noted figures are monthly SSS guided by company Same Store Sales Definition # Years Opened For What Are Included? Existing Acq'd Merch Rental Mgt Other Op Stores Stores Sales Income Fees Income Others Include 100% JCE Sales. 2009 JCE stores include Xinjiang and Parkson >2yrs >2yrs Yangzhou. Closed stores excluded. Reported SSS based on HKD; Prior to FY08, SSS growth calculation NWDS >2yrs >2yrs based on existing stores >3yrs old Golden Eagle >2yrs Exclude SSS growth calculation using Gross Sales including VAT Intime >2yrs >2yrs Maoye >13 Mo Exclude Source: Company Guidance, Morgan Stanley Research Data updated as of 9/21/09 Note: F = Fiscal; 1H, 2H, 1Q, 2Q, 3Q, 4Q are all fiscal period end Note: BJ = Beijing; SHA = Shanghai; CD = Chengdu; CQ = Chongqing; SZ = Shenzhen; SW = South West Region 5
    • January 5, 2010 Greater China Consumer Team Retail SSS for Sportswear and Footwear 2008 2009E 2010E Mgt Guidance 1H08 2H08 1H09 3Q08 4Q08 1Q09 2Q09 3Q09 Specialty Retail Footwear Daphne - Daphne 8.2% 3.5% 5.3% Full year 09 =0-5% 16.3% 0.9% 1.0% 0.0% 1.0% 0.0% 0.0% 0.0% high single digit - Shoebox 22.6% 15.4% 13.1% Full year 09=10-15% 29.1% 16.6% 15.0% 15.0% 15.0% 15.0% 10-15% growth Apparel Expect 2H09 to be better than 1H09 low teens low teens higher than Ports Design 18.9% (13%) 30.0% 24.0% 13.0% n/a n/a growth growth 13% Sportswear Brands high-single high single mid single Anta 22-25% 9.2% 11.0% Full year 09 =high single digit growth 29.5% 20-22% 27.0% 16-18% 8-9% digit growth digit growth digit growth China Dongxiang 16.0% -1.0% 5.7% Full year =flat 20.0% 14.0% 4.0% 18.0% 10.0% 6.0% 2.0% -11.0% Expects 4Q09 to turn back to Li Ning 26.0% 3.3% 7.0% 26.0% 26.0% 0.0% 30.7% 20.0% n/a n/a -8.2% positive growth Expect 4Q09 =~10%; 2010 = low ~20% na na na na 5.0% na na 2.0% 5.0% 6.0% Xtep double digit 361 degree na 23.0% na na na na na na na na na 15-18% Hongxing na na na na na na na na na na 4-5% -15.0% Peak ~20% na na Full year double digit growth 20.0% ~20% ~20% 20.0% 20.0% 15.0% Sportswear Distributors down high 16.0% na 7.9% single digit up Pou Sheng N/A 11.0% 3-4% 16.0% 4% 5-6% 0-1% to Aug 6 Source: Company Guidance, Morgan Stanley Research Data updated as of 11/27/09
    • January 5, 2010 Greater China Consumer Team Sector Price Performance Unweighted Market Cap Weighted 350 300 300 Discretionary-MVWI 250 Staple-UWI Staple-MVWI Discretionary-UWI Export plays 250 Export Plays 200 200 150 150 100 100 50 50 Aug-09 Apr-09 May-09 Nov-09 Jan-09 Jun-09 Jul-09 Sep-09 Oct-09 Feb-09 Mar-09 Dec-09 Apr-09 Aug-09 May-09 Nov-09 Feb-09 Jun-09 Jul-09 Jan-09 Oct-09 Dec-09 Sep-09 Mar-09 Note: Staple Index includes: Tingyi, Mengniu, Uni President, Want Want, China Food, Hengan, Huiyuan, Tsingtao, China Resource, Yurun; Discretionary Index includes: Anta, Dongxiang, Golden Eagle, Gome, Intime, Lining, New World, Parkson, Ports, Pou Sheng, Xinyu Hengdeli, Daphne; Export Play Index includes: Li&Fung, Pacific Textile, Texwinca, Yue Yuen. 7 Source: Factset, Datastream, Morgan Stanley Research
    • January 5, 2010 Greater China Consumer Team Stock Price Performance YTD Absolute Stock Price Performance YTD Relative Stock Price Performance Pacific Textiles Pacific Textiles Daphne Daphne Fountain Set Fountain Set Xinyu Hengdeli Xinyu Hengdeli Intime Intime Yili ANTA ANTA Dongxiang Dongxiang Yili Golden Eagle Golden Eagle Uni-President China Uni-President China Gome Gome Mengniu Mengniu Belle Belle Tsingtao Tsingtao China Agri China Agri Ports Design Li & Fung Yurun Ports Design Xtep Yurun Li Ning Xtep Lianhua Li Ning Li & Fung Lianhua China Foods China Foods Bosideng Bosideng China Ting Stella Hengan China Ting Bawang Texwinca Ltd Stella Hengan Texwinca Ltd Bawang Dynasty Dynasty Tingyi Tingyi Wumart Wumart China Resources China Resources Weiqiao Textile Trinity* Trinity* Weiqiao Textile Lifestyle Lifestyle Fu Ji Food & Fu Ji Food & Catering Want Want Chaoda Modern Agri New World Want Want Chaoda Modern Agri New World Ausnutria Dairy Glorious Sun Parkson Ausnutria Dairy Global Bio-Chem Yue Yuen Shuanghui Parkson Glorious Sun Global Bio-Chem Yue Yuen China Flavor & Fragrances China Flavor & Pou Sheng Pou Sheng China Lilang* China Lilang* Samson Samson Giordano Esprit Giordano Shuanghui Esprit Peak President Chain Hongxing Peak President Chain Store Hongxing Huiyuan Huiyuan -80% -30% 20% 70% 120% 170% 220% 270% 320% 370% 420% -60% 40% 140% 240% 340% 440% 540% 640% Yili rel. perf. vs. Shanghai Composite Index. Shuanghui vs. Shenzhen Composite Index, Hongxing vs. Singapore Straits Times Index, President Chain vs. Taiwan SE Weighted Index, Li & Fung, Stella, Fountain Set, Lifestyle, Glorious Sun, Yue Yuen, Samson, Texwinca, Giordano, Pacific Textile, Trinity vs. Hang Seng Index, Others vs. Hang Seng China Enterprises Index 8 Source: Factset. Morgan Stanley Research. Past performance is no guarantee of future results. Results shown do not include transaction costs.
    • January 5, 2010 Greater China Consumer Team Stock Performance Table Rank By YTD Price Absolute Price Performance Relative Price Performance Abs Perf. Company Ticker 12/31/2009 YTD Abs 1W Abs 1M Abs 3M Abs YTD Rel 1W Rel 1M Rel 3M Rel 7 ANTA 2020.HK 11.52 226.3% 2% -2% 20% 101% 1% 0% 11% 39 Ausnutria Dairy* 1717.HK 6.43 60.8% 7% NA NA -1% 6% NA NA 26 Bawang* 1338.HK 5.40 126.9% -14% 29% NA 40% -15% 30% NA 13 Belle 1880.HK 9.06 166.5% 0% -3% 14% 64% -1% -2% 5% 23 Bosideng 3998.HK 1.74 138.4% 9% 5% 39% 47% 8% 7% 29% 38 Chaoda Modern Agri 0682.HK 8.30 67.7% -2% 17% 77% 10% -3% 19% 64% 15 China Agri 0606.HK 10.20 164.9% 0% 2% 41% 63% -1% 3% 31% 45 China Flavor & Fragrances 3318.HK 1.65 42.2% 4% 7% 23% -12% 3% 9% 14% 22 China Foods 0506.HK 6.96 140.8% -1% 9% 30% 49% -3% 8% 25% 47 China Lilang* 1234.HK 5.40 38.5% 4% 41% NA -15% 3% 43% NA 32 China Resources 291.HK 28.35 109.7% 5% 15% 26% 29% 4% 16% 17% 24 China Ting 3398.HK 1.25 135.8% -1% 3% 9% 45% -2% 5% 1% 2 Daphne 0210.HK 6.25 396.0% -3% -2% 11% 206% -4% -1% 3% 8 Dongxiang 3818.HK 6.00 219.1% 1% 4% 16% 97% 0% 5% 8% 29 Dynasty 0828.HK 2.52 117.2% 4% 6% 52% 34% 3% 8% 41% 50 Esprit 0330.HK 51.75 17.9% -1% -1% 2% -22% -3% -1% -2% 3 Fountain Set 0420.HK 1.23 310.0% 1% -4% 26% 170% 0% -3% 16% 49 Giordano 0709.HK 2.30 17.9% 4% -2% 19% -22% 2% -2% 14% 41 Global Bio-Chem 0809.HK 1.91 54.0% 6% 3% -3% -5% 5% 5% -10% 43 Glorious Sun 0393.HK 2.89 51.3% 3% 16% 18% 0% 2% 17% 9% 9 Golden Eagle 3308.HK 15.84 191.2% 8% -6% 22% 80% 7% -4% 13% 11 Gome 0493.HK 2.82 179.8% 3% -6% 36% 73% 2% -4% 26% 25 Hengan 1044.HK 57.60 131.3% 1% -4% 23% 43% 0% -3% 14% 53 Hongxing CHHS.SI 0.19 2.7% 3% 6% -10% -38% 1% 0% -17% 54 Huiyuan 1886.HK 5.52 -43.0% 4% 15% 12% -65% 3% 17% 3% 5 Intime 1833.HK 7.18 243.5% 0% 11% 37% 112% -1% 13% 27% 21 Li & Fung 0494.HK 32.25 142.8% 0% 3% 3% 60% -2% 3% -1% 19 Li Ning 2331.HK 29.50 143.8% 10% 14% 24% 50% 9% 16% 15% 20 Lianhua 0980.HK 23.40 143.2% 4% 23% 36% 50% 3% 24% 26% 35 Lifestyle 1212.HK 14.50 84.7% 7% 7% 24% 22% 6% 7% 18% 12 Mengniu 2319.HK 27.75 175.3% 2% 16% 40% 70% 0% 16% 36% 37 New World 825.HK 7.11 67.7% 0% -9% 14% 3% -1% -8% 6% 1 Pacific Textiles 1382.HK 5.19 663.2% 2% 32% 92% 402% 0% 32% 84% 40 Parkson 3368.HK 13.68 55.5% 1% 1% 19% -4% 0% 3% 10% 52 Peak* 1968.HK 4.30 4.9% 6% 12% NA -35% 5% NA NA 16 Ports Design 0589.HK 24.10 156.4% 0% 12% 24% 58% -1% 14% 15% 46 Pou Sheng 3813.HK 1.16 39.8% -1% -3% -5% -14% -2% -2% -12% 51 President Chain Store 2912.TW 76.10 10.3% 1% 1% -3% -38% -2% -7% -11% 48 Samson 0531.HK 1.20 20.0% 4% -4% -25% -21% 3% -4% -30% 42 Shuanghui 000895.SZ 53.10 54.0% 2% 7% 27% -29% -1% 6% 0% 27 Stella 1836.HK 14.08 123.5% -3% -4% 8% 47% -4% -4% 4% 28 Texwinca Ltd 0321.HK 7.25 119.7% -4% 2% 18% 45% -5% 4% 10% 30 Tingyi 0322.HK 19.20 113.8% 2% 0% 20% 32% 1% 1% 11% 34 Trinity* 0891.HK 3.19 93.3% NA NA NA 27% NA NA NA 14 Tsingtao 0168.HK 43.00 165.8% 3% 10% 47% 64% 2% 12% 36% 10 Uni-President China 0220.HK 5.71 184.1% 4% 9% 26% 75% 3% 10% 17% Source: Factset, Datastream, Morgan Stanley 36 Want Want 151.HK 5.44 69.5% 1% -3% 19% 5% 0% -1% 11% Research 33 Weiqiao Textile 2698.HK 5.32 98.5% 2% 1% 11% 22% 1% 2% 3% Note: Past performance is no guarantee of 31 Wumart 8277.HK 12.28 113.2% -4% -2% 6% 32% -5% -1% -1% future results. Results shown do not include 4 Xinyu Hengdeli 3389.HK 2.94 267.5% 0% 0% 37% 127% -1% 1% 27% 18 Xtep 1368.HK 4.37 144.1% 1% 1% 17% 51% 0% 3% 8% transaction costs. 6 Yili 600887.SS 26.48 231.0% 0% -6% 35% 84% -4% -9% 14% * Listed in 2009 9 44 Yue Yuen 0551.HK 22.50 46.9% 3% 3% 5% -3% 1% 3% 0% 17 Yurun 1068.HK 23.00 152.5% 11% 20% 38% 56% 10% 22% 28%
    • January 5, 2010 Greater China Consumer Team Sector Valuation – 12M Forward P/E 45 Discretionary-Valuation 40 Staple-valuation 35 Export plays Staple-valuation (ex-Mengniu) 30 25 20 15 10 5 0 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Jul-05 Oct-05 Jul-06 Oct-06 Jul-07 Oct-07 Jul-08 Oct-08 Jul-09 Oct-09 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Note: Staple Index includes: Tingyi, Mengniu, Uni President, Want Want, China Food, Hengan, Huiyuan, Tsingtao, China Resources, Yurun; Discretionary Index includes: Anta, Dongxiang, Gome, Lining, Ports, Pou Sheng, Daphne, Xinyu Hengdeli; New World, Parkson, Intime, Golden Eagle, Export Play Index includes: Li&Fung, Pacific Textile, Texwinca, Yue Yuen. 10 Source: Factset, Morgan Stanley Research Factset. Research.
    • January 5, 2010 Greater China Consumer Team Sector Valuation Table – Hong Kong-Listed RIC Company Name Rating Target Currency Last Mkt Cap Avg Trading Calendarised P/E 09-11 EPS PEG Hist Div Yield EV/EBITDA Price Code Price (US$ mn) Vol (US$m) 2008 2009E 2010E 2011E Growth 10E P/B 2008 2009E 2008 2009E HONG KONG LISTED COMPANIES Consumer Staples 0341.HK Cafe De Coral NC NA HKD 17.74 1,276 1.4 22.6 20.1 17.7 15.6 13.4 1.3 4.2 2.9% 3.6% 12.7 11.3 8052.HK Convenience Retail Asia NC NA HKD 2.00 188 0.1 16.4 NA NA NA NA NA 1.9 3.6% NA 5.5 NA 0345.HK Vitasoy Intl. NC NA HKD 5.44 714 0.6 28.0 21.3 18.2 16.0 15.3 1.2 4.3 4.0% 4.7% 12.4 11.3 Average 726 0.7 22.3 20.7 17.9 15.8 14.4 1.3 3.5 3.5% 4.1% 10.2 11.3 Consumer Discretionary Department Stores 0984.HK Aeon Stores (HK) NC NA HKD 12.80 429 0.1 12.6 16.9 13.8 12.2 17.9 0.8 3.1 2.3% 2.6% 3.6 3.5 1212.HK Lifestyle Intl. NC NA HKD 14.50 3,131 2.4 20.5 25.3 22.5 19.9 12.5 1.8 4.7 1.7% 1.6% 16.1 17.9 0289.HK Wing On Company Intl NC NA HKD 10.84 413 0.1 1.9 NA NA NA NA NA 0.5 4.8% NA NM NA Average 1,324 0.9 11.7 21.1 18.2 16.1 15.2 1.3 2.8 2.9% 2.1% 9.9 10.7 Apparel & Footwear Branded/ Retailers 0483.HK Bauhaus NC NA HKD 1.50 70 0.1 8.1 NA NA NA NA NA 1.4 8.8% NA 4.0 NA 0592.HK Bossini NC NA HKD 0.42 85 0.2 NA NA NA NA NA NA 1.0 NA NA NA NA 0113.HK Dickson Concepts NC NA HKD 4.26 205 0.3 7.2 NA NA NA NA NA 0.9 7.9% NA 3.2 NA 1388.HK Embry Holdings NC NA HKD 4.02 208 0.2 13.9 14.0 9.9 NA NA NA 2.0 1.7% 2.9% 10.8 NA 0330.HK Esprit Holdings* E 60.00 HKD 51.75 8,320 34.3 11.5 13.3 11.9 10.2 14.1 0.8 4.0 8.1% 5.5% 7.8 8.8 0709.HK Giordano Intl.* E 1.65 HKD 2.30 443 0.4 11.0 24.8 12.8 10.1 56.5 0.2 1.8 4.1% 1.5% 6.5 10.2 0999.HK I.T NC NA HKD 1.51 225 0.6 13.4 10.7 8.4 7.0 NA 0.4 1.4 2.8% 2.9% NA NA 0130.HK Moiselle NC NA HKD 0.95 35 0.1 5.4 NA NA NA NA NA 0.7 6.8% NA 3.0 NA 0333.HK Top Form Intl. NC NA HKD 0.52 72 0.2 NA NA NA NA NA NA 1.0 NA NA NA NA 0891.HK Trinity NC NA HKD 3.19 620 9.2 49.0 38.0 22.0 19.0 41.3 0.5 2.6 0.0% 0.0% 22.3 NA 0375.HK YGM Trading NC NA HKD 6.52 129 0.0 7.3 NA NA NA NA NA 1.3 6.1% NA 6.0 NA Average 947 4.1 14.1 20.2 13.0 11.6 37.3 0.5 1.7 5.2% 2.5% 7.9 9.5 Export Plays 0494.HK Li & Fung* O 38.50 HKD 32.25 15,708 31.9 42.3 29.9 22.7 19.3 24.5 0.9 9.1 1.7% 2.7% 13.9 11.5 0311.HK Luen Thai Holdings NC NA HKD 0.78 100 0.1 7.5 NA NA 4.0 NA NA 0.1 3.0% NA 1.5 NA 1382.HK Pacific Textiles* O 5.63 HKD 5.19 960 1.0 19.4 12.9 10.8 9.8 14.8 0.7 2.4 2.8% 2.9% 9.5 6.5 0531.HK Samson Holdings* E 1.55 HKD 1.20 472 0.2 NM 11.6 8.9 8.9 14.3 0.6 0.1 4.8% 4.0% 8.0 6.7 1836.HK Stella International Holdings NC NA HKD 14.08 1,638 0.6 9.9 13.0 11.7 10.4 11.6 1.0 0.3 5.3% 5.3% 7.3 7.8 1223.HK Symphony Holdings NC NA HKD 0.43 96 0.2 NM NA NA NA NA NA 0.6 3.8% NA NM NA 0321.HK Texwinca Holdings* E 7.30 HKD 7.25 1,242 3.0 11.0 10.7 9.6 8.3 13.3 0.7 2.3 5.9% 5.5% 6.7 6.4 0551.HK Yue Yuen* E 22.70 HKD 22.50 4,787 5.7 13.0 11.0 10.9 9.7 6.5 1.7 0.2 3.9% 4.6% 8.9 8.0 Average 3,125 5.3 17.2 14.9 12.4 10.1 14.2 0.9 1.9 3.9% 4.2% 8.0 7.8 Other Branded Specialty Stores 0590.HK Luk Fook Holdings NC NA HKD 6.70 426 0.4 11.1 11.8 10.9 9.5 11.7 0.9 2.6 2.8% 2.1% 8.7 9.1 0178.HK Sa Sa Intl. NC NA HKD 5.14 919 1.4 26.7 20.9 17.2 14.5 20.1 0.9 6.3 4.1% 5.1% 14.7 13.6 Average 672 0.9 18.9 16.3 14.0 12.0 15.9 0.9 4.5 3.4% 3.6% 11.7 11.3 Wholesale Distributors 2387.HK Integrated Dist. Service NC NA HKD 11.28 466 0.4 14.7 16.2 16.7 NA NA NA 3.5 3.5% 4.0% 8.2 7.6 Note: * Morgan Stanley coverage. NC = not covered. Last price = Dec 31, 2009 11 Source: FactSet, Morgan Stanley Research E = Morgan Stanley Research estimates, except FactSet consensus estimates for NC companies.
    • January 5, 2010 Greater China Consumer Team Sector Valuation Table – Hong Kong-listed China Plays – Consumer Staples RIC Company Name Rating Target Currency Last Mkt Cap Avg Trading Calendarised P/E 09-11 EPS PEG Hist Div Yield EV/EBITDA Price Code Price (US$ mn) Vol (US$m) 2008 2009E 2010E 2011E Growth 10E P/B 2008 2009E 2008 2009E HONG KONG LISTED CHINA PLAYS Consumer Staples Food & Beverage 1717.HK Ausnutria Dairy NC NA HKD 6.43 830 13.6 81.4 31.5 21.8 NA NA NA 6.5 0.0% NA 68.1 NA 0682.HK Chaoda Modern Agri. NC NA HKD 8.30 3,256 11.8 7.7 6.1 5.5 4.6 15.5 0.4 1.8 0.4% 0.9% 5.1 4.4 0606.HK China Agri-Industries* O 10.80 HKD 10.20 5,077 11.9 14.0 17.8 13.3 10.6 29.9 0.4 2.9 1.8% 1.7% 10.9 10.6 3318.HK China Flavor & Fragrances NC NA HKD 1.65 103 0.2 7.1 5.2 NA NA NA NA 1.0 1.3% NA 12.3 NA 0506.HK China Foods* O 7.30 HKD 6.96 2,507 3.7 40.2 30.5 22.5 18.4 28.7 0.8 3.8 0.9% 1.2% 20.7 15.6 1886.HK China Huiyuan Juice NC NA HKD 5.52 1,046 3.7 12.3 NM 41.1 30.6 NM NA 1.6 0.8% 0.4% 20.6 50.0 2319.HK China Mengniu Dairy* O 32.00 HKD 27.75 6,215 18.8 NM 29.0 26.9 22.0 14.8 1.8 8.4 0.0% 0.7% NM 15.2 0291.HK China Res. Enterp. NC NA HKD 28.35 8,762 15.6 25.1 28.3 19.7 25.4 5.4 3.6 2.7 1.5% 1.4% 12.3 12.4 1068.HK China Yurun Food* E 18.04 HKD 23.00 4,965 14.1 31.0 27.1 22.8 20.2 15.7 1.5 7.4 0.8% 0.8% 30.1 21.4 0828.HK Dynasty Fine Wines NC NA HKD 2.52 405 0.5 21.5 20.5 17.8 14.8 17.6 1.0 1.8 2.0% 2.3% 8.1 8.5 0809.HK Global Bio-Chem NC NA HKD 1.91 571 1.4 3.4 23.9 7.3 6.5 91.3 0.1 0.6 1.6% 0.4% 5.6 8.6 0336.HK Huabao NC NA HKD 8.37 3,358 11.4 27.6 21.5 17.6 14.7 21.1 0.8 9.2 1.3% 1.7% 21.1 16.8 0124.HK Kingway Brewery NC NA HKD 1.80 397 0.3 NM NM NA NA NA NA 1.0 0.0% NA 18.1 NA 0322.HK Tingyi* E 19.00 HKD 19.20 13,840 11.8 52.8 36.1 30.5 25.1 20.0 1.5 1.5 0.9% 1.4% 24.1 17.2 0168.HK Tsingtao Brewery NC NA HKD 43.00 7,258 7.1 98.9 40.2 33.1 28.1 19.7 1.7 8.1 0.6% 1.1% 27.4 20.1 0220.HK Uni-President China* O 5.60 HKD 5.71 2,652 2.5 53.3 21.4 19.9 17.0 12.3 1.6 3.2 0.9% 1.4% 20.9 11.0 0151.HK Want Want* E 5.50 HKD 5.44 9,270 9.8 34.9 29.1 24.0 20.0 20.6 1.2 1.5 1.3% 2.8% 23.5 21.9 Average 4,355 7.8 30.7 24.1 21.6 18.4 24.0 1.3 3.5 1.0% 1.3% 17.4 16.7 Food Retailers 0814.HK Jingkelong NC NA HKD 6.32 336 0.6 17.5 14.8 12.7 10.9 16.4 0.8 1.7 3.6% 3.9% 6.1 6.4 0980.HK Lianhua Supermarket NC NA HKD 23.40 1,878 1.0 41.8 29.0 23.4 18.6 24.8 0.9 5.1 0.7% 1.4% 7.1 8.3 1832.HK Times NC NA HKD 5.55 626 1.3 35.3 30.6 25.7 NA NA NA 3.0 0.9% 0.9% 14.9 14.6 8277.HK Wumart Stores NC NA HKD 12.28 1,970 3.0 30.8 30.9 25.1 20.3 23.5 1.1 5.5 1.3% 1.2% 13.7 12.7 Average 1,202 1.5 31.3 26.3 21.7 16.6 21.6 0.9 3.8 1.6% 1.9% 10.4 10.5 Household & Personal Goods 1338.HK Bawang* O 3.56 HKD 5.40 2,024 5.5 35.9 35.3 32.0 30.2 16.5 1.9 5.7 1.4% 0.7% 39.4 27.4 1044.HK Hengan Intl. NC NA HKD 57.60 9,062 16.5 55.6 34.3 28.2 24.3 18.9 1.5 10.9 1.2% 1.8% 37.8 24.8 3331.HK Vinda NC NA HKD 5.51 643 3.0 48.1 13.3 12.2 11.0 10.2 1.2 3.3 0.8% 2.0% 16.3 8.8 Average 4,852 8.4 46.5 27.7 24.2 21.8 15.2 1.5 6.6 1.2% 1.5% 31.2 20.3 Note: * MS coverage. NC = Not covered; NA = not applicable Last price = Dec 31, 2009 Source: FactSet, Morgan Stanley Research E = Morgan Stanley Research estimates, except FactSet consensus estimates for NC companies. 12
    • January 5, 2010 Greater China Consumer Team Sector Valuation Table – Hong Kong-listed China Plays – Consumer Discretionary RIC Company Name Rating Target Currency Last Mkt Cap Avg Trading Calendarised P/E 09-11 EPS PEG Hist Div Yield EV/EBITDA Price Code Price (US$ mn) Vol (US$m) 2008 2009E 2010E 2011E Growth 10E P/B 2008 2009E 2008 2009E HONG KONG LISTED CHINA PLAYS Consumer Discretionary Restaurants 0538.HK Ajisen* E 6.40 HKD 6.64 915 0.9 32.3 22.7 19.5 17.4 14.1 1.4 3.7 0.9% 1.3% 12.8 8.5 0968.HK Little Sheep* E 3.50 HKD 4.30 570 0.6 27.6 24.2 18.9 18.3 15.3 1.2 3.6 1.7% 1.8% 19.2 13.4 Average 742 0.7 30.0 23.5 19.2 17.8 14.7 1.3 3.7 1.3% 1.6% 16.0 11.0 Department Stores 3308.HK Golden Eagle* O 12.20 HKD 15.84 3,714 6.8 52.5 38.6 28.7 22.5 30.9 0.9 15.0 2.1% 0.5% 26.6 27.0 1833.HK Intime Department Store* O 5.70 HKD 7.18 1,621 2.0 41.2 37.7 25.2 19.7 38.4 0.7 3.4 1.0% 2.4% 18.3 17.0 0825.HK New World Department Store E 6.60 HKD 7.11 1,530 1.8 24.0 22.0 18.7 14.6 22.6 0.8 3.3 1.3% 2.0% 10.7 9.1 3368.HK Parkson Group* O 14.20 HKD 13.68 4,953 9.9 40.4 35.2 27.5 22.1 26.4 1.0 9.8 1.2% 1.4% 24.5 21.2 0848.HK Maoye NC NA HKD 2.14 1,611 3.9 17.6 17.8 13.0 10.1 32.6 0.4 3.4 0.0% 2.8% 11.4 11.1 1212.HK Lifestyle Intl. NC NA HKD 14.50 3,131 2.4 20.5 25.3 22.5 19.9 12.5 1.8 4.7 1.7% 1.6% 16.1 17.9 Average 2,760 4.5 32.7 29.4 22.6 18.2 27.2 0.9 6.6 1.2% 1.8% 17.9 17.2 Apparel & Footwear Branded/ Retailers 1361.HK 361 Degrees NC NA HKD 4.56 1,221 5.0 NM 10.5 8.8 NA NA NA 3.3 0.0% 3.5% 8.2 5.0 2020.HK ANTA Sports Limited* O 13.20 HKD 11.52 3,702 14.69 28.6 21.5 17.8 15.2 18.7 1.0 5.6 2.4% 2.1% 20.0 13.7 1880.HK Belle* O 10.00 HKD 9.06 9,859 20.8 33.9 27.3 21.3 20.7 14.8 1.4 5.0 0.8% 1.1% 22.6 18.2 3998.HK Bosideng* O 1.88 HKD 1.74 1,745 4.4 10.8 15.4 12.7 11.4 16.1 0.8 1.8 6.2% 6.9% 8.8 8.0 3818.HK China Dongxiang* O 6.30 HKD 6.00 4,387 17.5 22.2 21.4 17.9 15.9 16.1 1.1 4.5 2.4% 2.8% 13.6 11.5 1234.HK China Lilang NC NA HKD 5.40 836 4.8 37.5 20.5 15.9 12.4 28.9 0.6 10.8 0.0% 1.9% 32.4 14.9 0210.HK Daphne* O 6.70 HKD 6.25 1,321 2.4 20.8 17.9 14.4 12.1 21.7 0.7 5.5 0.9% 1.1% 12.7 9.9 2331.HK Li Ning * E 23.30 HKD 29.50 3,982 11.4 37.8 30.1 25.1 22.1 16.7 1.5 12.6 1.9% 1.2% 22.7 16.1 1968.HK Peak NC NA HKD 4.30 1,165 5.7 21.4 11.1 10.2 7.7 20.0 0.5 6.1 0.0% 2.0% 18.0 11.2 0589.HK Ports Design* O 28.50 HKD 24.10 1,748 3.6 28.5 24.4 19.8 17.1 19.4 1.0 9.4 1.0% 3.6% 23.7 18.6 3813.HK Pou Sheng* E 1.33 HKD 1.16 642 0.4 9.4 22.8 10.5 7.8 70.8 0.1 1.0 0.0% 0.0% 8.7 21.5 1368.HK Xtep International NC NA HKD 4.37 1,226 1.9 16.3 14.2 12.1 10.0 19.2 0.6 2.8 1.1% 4.2% 10.6 9.4 Average 2,653 7.7 24.3 19.8 15.5 13.9 23.9 0.8 5.7 1.4% 2.5% 16.9 13.2 Electronics & Watch Retailers 3389.HK Xinyu Hengdeli NC NA HKD 2.94 1,544 4.5 14.0 20.3 17.0 14.0 20.2 0.8 4.4 1.4% 1.4% 15.5 14.6 0493.HK Gome NC NA HKD 2.82 5,478 31.7 30.6 27.8 21.4 17.6 25.6 0.8 4.4 1.4% 0.6% 16.4 17.5 Average 3,511 18.1 22.3 24.1 19.2 15.8 22.9 0.8 4.4 1.4% 1.0% 16.0 16.1 Hong Kong Export Plays 3398.HK China Ting NC NA HKD 1.25 338 0.1 6.3 9.8 7.6 6.5 23.0 0.3 1.3 7.8% NA 4.6 NA 0393.HK Glorious Sun NC NA HKD 2.89 395 0.7 5.8 11.2 10.8 NA NA NA 1.7 9.2% 5.3% 5.1 3.7 2313.HK Shenzhou Intl. NC NA HKD 10.18 1,635 2.8 16.2 9.2 7.7 7.0 14.6 0.5 3.9 1.9% 4.3% 11.3 6.7 2698.HK Weiqiao Textile NC NA HKD 5.32 820 1.2 3.8 6.7 7.2 NA NA NA 0.4 5.2% 4.4% 3.7 NA Average 797 1.2 8.0 9.3 8.3 6.8 18.8 0.4 1.8 6.0% 4.7% 6.2 5.2 Note: * MS coverage. NC = not covered; NA = not applicable Last price = Dec 31, 2009 Source: FactSet, Morgan Stanley Research E = Morgan Stanley Research estimates, except FactSet consensus estimates for NC companies. 13
    • January 5, 2010 Greater China Consumer Team Sector Valuation Table – Taiwan-, Singapore-, China-listed RIC Company Name Rating Target Currency Last Mkt Cap Avg Trading Calendarised P/E 09-11 EPS PEG Hist Div Yield EV/EBITDA Price Code Price (US$ mn) Vol (US$m) 2008 2009E 2010E 2011E Growth 10E P/B 2008 2009E 2008 2009E TAIWAN Consumer Staples Food & Beverage 1216.TW Uni President NC NA TWD 39.45 4,761 16.2 14.0 18.5 16.6 51.2 -39.8 -0.4 2.7 2.1% 2.1% 9.7 NA 1201.TW Wei Chuan NC NA TWD 43.60 683 12.6 49.0 20.2 21.8 NM NM NA 4.5 0.0% NA 19.1 NA Average 2,722 14.4 31.5 19.4 19.2 51.2 -39.8 -0.4 3.6 1.0% 2.1% 14.4 NA Food Retailers 5903.TW Family Mart NC NA TWD 60.00 415 0.0 21.2 17.5 15.8 NA NA NA 3.6 4.1% 14.0% 4.8 NA 2912.TW President Chain Store* E 77.46 TWD 76.10 2,450 5.3 19.8 14.2 14.6 13.0 4.5 3.2 4.8 2.7% 3.7% 13.8 12.1 Average 1,432 2.6 20.5 15.8 15.2 13.0 4.5 3.2 4.2 3.4% 8.9% 9.3 12.1 Food Packaging 9939.TW Taiwan Hon Chuan NC NA TWD 53.00 386 6.4 14.6 12.2 10.2 11.1 4.6 2.2 2.5 3.2% NA 6.5 NA Consumer Discretionary Department Store 2903.TW Far Eastern Department* E 32.50 TWD 36.70 1,378 7.4 129.0 37.3 27.7 23.6 25.7 1.1 2.2 0.8% 2.3% 10.6 9.6 SINGAPORE Consumer Staples Food & Beverage CHDA.SI China Dairy NC NA SGD 0.20 63 0.0 8.2 NA NA NA NA NA 1.0 0.8% NA NM NA CLFB.SI China Lifestyle NC NA SGD 0.17 62 0.1 4.8 NA NA 5.1 NA NA 0.8 1.2% NA 3.0 NA CHNM.SI China Milk NC NA SGD 0.34 181 2.2 2.5 0.1 0.1 0.3 -31.3 0.0 0.6 1.7% 1.5% -3.0 NA DAIR.SI Dairy Farm NC NA USD 5.99 8,072 1.0 25.8 21.0 18.1 16.9 11.6 1.6 3.1 1.9% 7.3% 15.1 13.9 PPFH.SI Peoples Food NC NA SGD 0.63 508 0.5 5.3 NA NA NA NA NA 0.7 5.4% 4.6% 2.2 NA SYFH.SI Synear Food NC NA SGD 0.32 312 1.7 7.6 12.0 10.0 8.6 18.3 0.5 0.7 1.2% 0.0% 4.3 6.2 Average 1,533 0.9 9.0 11.1 9.4 7.7 -0.5 0.7 1.2 2.0% 3.3% 4.3 10.1 Consumer Discretionary Apparel & Footwear Branded/ Retailers CHHS.SI China Hongxing Sports NC NA SGD 0.19 383 1.7 6.3 13.7 10.0 7.7 33.8 0.3 0.7 4.1% 1.3% 1.6 4.5 HGUO.SI Hongguo NC NA SGD 0.32 91 0.2 5.8 7.5 6.1 5.4 17.8 0.3 1.0 0.8% 0.0% 3.5 NA Average 237 1.0 6.1 10.6 8.1 6.5 25.8 0.3 0.9 2.4% 0.6% 2.6 4.5 China A Share & B Share 000895.SZ Shuanghui * O 57.40 CNY 53.10 4,713 16.3 48.1 39.3 33.2 24.5 26.7 1.2 13.5 0.9% 1.0% 26.1 21.3 600467.SS Homey Aquatic* E 7.00 CNY 9.87 916 19.9 50.2 40.4 26.2 20.5 40.3 0.7 5.2 0.0% 0.0% 26.8 25.2 002069.SZ Zhangzidao Fishery* U 13.40 CNY 37.55 1,244 14.1 67.3 59.6 51.3 34.2 32.0 1.6 6.8 0.4% 0.9% 33.6 36.3 600519.SS Kweichow Moutai * O 226.00 CNY 169.82 23,475 70.7 42.2 32.7 25.2 21.1 24.6 1.0 14.3 0.5% 0.7% 27.9 21.9 000858.SZ Wuliangye * E 32.00 CNY 31.66 17,602 166.2 66.4 40.6 30.4 25.9 25.2 1.2 10.6 0.0% 0.2% 42.4 25.3 000568.SZ Luzhou Lao Jiao Co. Ltd* O 45.00 CNY 39.04 7,972 88.2 43.0 34.5 28.8 23.6 20.8 1.4 15.6 0.9% 1.5% 34.0 29.5 000869.SZ Yantai Changyu A* E 66.05 CNY 76.02 5,871 7.2 44.8 35.8 30.0 25.3 19.0 1.6 15.8 1.4% 1.6% 32.0 25.1 200869.SZ Yantai Changyu B* O 65.00 HKD 68.97 4,692 1.8 35.8 28.5 24.0 20.2 19.0 1.3 12.6 1.8% 2.0% 25.3 19.8 600887.SS Yili Industrial* E 31.00 CNY 26.48 3,100 26.2 NM 32.7 26.3 21.9 22.4 1.2 7.6 0.0% 0.0% 8.8 19.1 600809.SS Shanxi Xinghuacun Fen Win E 41.00 CNY 42.93 2,722 13.7 75.8 42.6 32.8 28.5 22.2 1.5 12.7 0.4% 0.3% 33.5 21.4 Average 7,231 42.4 52.6 38.7 30.8 24.6 25.2 1.3 11.4 0.6% 0.8% 29.0 24.5 US ADY.DF American Dairy NC NA USD 21.87 475 9.0 NM 10.3 7.9 5.6 36.0 0.2 4.1 0.0% NA 12.3 12.2 SYUT.N Synutra International NC NA USD 14.19 766 0.4 NM NM 21.3 NA NA NA 10.0 0.0% NA -11.6 NA Average 621 4.7 NM 10.3 14.6 5.6 36.0 NA 7.0 0.0% NA 0.4 12.2 14 Note: * MS coverage. NC = not covered Last price = Dec 31, 2009 Source: FactSet, Morgan Stanley Research E = Morgan Stanley Research estimates, except FactSet consensus estimates for NC companies.
    • January 5, 2010 Greater China Consumer Team Stock Valuation F2010E P/E, P/E ex-Cash C2010E P/E: Key Greater China Consumer Plays Huiyuan Shuanghui* Tsingtao Brewery Bawang* Bawang Tingyi* Golden Eagle* Want Want Hengan Intl. Tingyi Parkson* Shuanghui Mengniu* Golden Eagle Yili* Parkson Intime* Li Ning * Mengniu Want Want* Yili Lianhua Supermarket Intime China Yurun Food* Li Ning Li & Fung* China Foods* China Yurun Lifestyle Li & Fung Gome China Food Belle* Little Sheep UPC* Ports Design Uni-President China China Resources Belle Ajisen* New World Little Sheep* Ports Design New World* Ajisen Dongxiang* Anta* Dongxiang Dynasty Fine Wines ANTA Xinyu Hengdeli President Chain President Chain* Daphne Daphne* Esprit China Agri* Giordano Intl.* China Agri Bosideng* Bosideng 10E PE ex Cash Xtep Giordano 10E PE Esprit Holdings* Pou Sheng Yue Yuen* Glorious Sun Pacific Textiles Pacific Textiles* Yue Yuen Pou Sheng* Texwinca Hongxing Texwinca Holdings* x China Ting 0 10 20 30 40 Global Bio-Chem Chaoda Modern Agri. x 0 5 10 15 20 25 30 35 40 45 *Companies covered by Morgan Stanley Research; Other companies’ valuation based on Factset consensus estimates; Last price = Dec 31, 2009 Source: Factset, Morgan Stanley Research E = Morgan Stanley Research estimates 15
    • January 5, 2010 Greater China Consumer Team 2010E P/E at Current Price vs. Historical Range 2010E P/E vs Jan96-Dec09 Historical Fwd PE 70 Hi 60 Lo 10E PE 50 40 30 20 10 0 Anta* Ajisen* China Agri* Xinyu Huiyuan Pou Sheng* Lining* Bosideng* Giordano* Dongxiang* Stella Esprit* Little Sheep* Shuanghui* UPC* Belle* Tingyi* Daphne* Gome China Li & Fung* Intime* Parkson* Ports* Xtep Hengan Golden ChinaResou Yurun* Yili* Bawang* PacificTextil Tsingtao New World* Want Want* Mengniu* Texwinca* Yue Yuen* *Companies covered by Morgan Stanley Research; Other companies’ valuation based on Factset consensus estimates •Daphne: P/E range excludes Dec.99-Oct. 01, Dec 97- Jun 06; Tingyi: P/E range excludes Apr 97- Aug. 99;as data are not meaningful. •Mengniu and Yili: P/E range excludes Jan-07 to Sep08, as data are not meaningful. 16 Source: Factset, Morgan Stanley Research E = Morgan Stanley Research estimates
    • January 5, 2010 Greater China Consumer Team 2011E P/E at Current Price vs. Historical Range 11E P/E vs Jan96-Dec09 Historical FWD PE Range 80 Hi 70 Lo 60 11E PE 50 40 30 20 10 0 China Agri* Anta* Ajisen* Xinyu Hengdeli Huiyuan Little Sheep* Gome Pou Sheng* Dongxiang* Belle* Parkson* Giordano* Stella Lining* Esprit* Daphne* Ports* Intime* Shuanghui* Golden Eagle* China Resources Tingyi* Bosideng* Uni President China* China Foods* Li & Fung* Xtep Hengan Yili* Pacific Textile* Bawang* Yurun* Tsingtao New World* Want Want* Yue Yuen* Mengniu* Texwinca* *Companies covered by Morgan Stanley Research; Other companies’ valuation based on Factset consensus estimates •Daphne: P/E range excludes Dec.99-Oct. 01, Dec 97- Jun 06; Tingyi: P/E range excludes Apr 97- Aug. 99;as data are not meaningful. •Mengniu and Yili: P/E range excludes Jan-07 to Sep 08, as data are not meaningful. 17 •Source: Factset, Datastream, Morgan Stanley Research E = Morgan Stanley Research estimates
    • January 5, 2010 Greater China Consumer Team 2010E PE vs. 2009-11 EPS Growth 45 40 35 Bawang Shuanghui 30 Tingyi Tsingtao Mengniu Hengan Golden Eagle Parkson 25 Want Want Yili 10 PE Belle Li Ning Li & Fung Foods China Intime Lifestyle Ports 20 UPC Ajisen Yurun Lianhua Gome CRE Xinyu Hengdeli Little Sheep New World Dynasty President Chain Anta 15 Dongxiang Daphne Bosideng China Agri Esprit 10 YY Xtep Texwinca Pacific Textiles China Ting 5 Chaoda 0 0 5 10 15 20 25 30 35 40 45 09-11 EPS CAGR Names in red = retailers; blue = staples; black = export plays 09-11 data are estimates, closing price as of Dec 31, 2009. Pou Sheng, Huiyuan and Giordano are not on the chart. Pou Sheng: 09- 11 EPS CAGR of 70.8% and 10E PE of 10.5x; Giordano: 09-11 EPS CAGR of 56.6%, 10E P/E of 12.4x. Note: Morgan Stanley Research estimates for Esprit, Giordano, China Mengniu, Tingyi, President Chain Store, Uni-President China, Anta, Li Ning, Intime, Daphne, Bosideng, Pacific Textiles, Texwinca, Yue Yuen, and Li & Fung, Shuanghui, Yili, Pou Sheng, China Agri, Dongxiang, Little Sheep, Ajisen, Want Want, New World, Parkson, Golden Eagle, Bawang, Yurun, Ports Design; Consensus FactSet estimates for all others. Source: Morgan Stanley Research Estimates, FactSet 18
    • January 5, 2010 Greater China Consumer Team 2010E EV/ Sales vs. 2009-11 Sales Growth 6 Ports Bawang Hengan 5 Dongxiang 4 10 EV/ Sales Want Want 3 Anta Huiyuan Belle Li Ning Chaoda Golden Eagle Tsingtao Parkson 2 Tingyi Xinyu Hengdeli Little Sheep Esprit Xtep Ajisen UPC Daphne Bosideng YY DynastyPacific Textiles Mengniu Li & Fung Intime 1 New World China Foods Bio-Chem Shuanghui China Agri President Chain Texwinca Giordano Gome Yili CREHongxing Pou Sheng Lianhua 0 0% 5% 10% 15% 20% 25% 30% 35% 09-11 Sales CAGR Names in red = retailers; blue = staples; black = export plays 09-11 data are estimates, closing price as of Dec 31, 2009. Note: Morgan Stanley Research estimates for Esprit, Giordano, China Mengniu, Tingyi, President Chain Store, Uni- President China, Anta, Li Ning, Intime, Daphne, Bosideng, Pacific Textiles, Texwinca, Yue Yuen, Li & Fung, Shuanghui, Yili, Pou Sheng, China Agri, Dongxiang, Little Sheep, Ajisen, Want Want, New World, Parkson, Golden Eagle, Bawang, Yurun, Ports Design; Consensus FactSet estimates for all others. Source: Morgan Stanley Research Estimates, FactSet 19
    • January 5, 2010 Greater China Consumer Team 2010E EV/ Sales vs. 2010E EBIT Margin 6 Bawang Ports Hengan 5 Dongxiang 4 10 EV/ Sales Want Want 3 Anta Belle Li Ning Huiyuan Golden Eagle Tsingtao Parkson Yurun Tingyi 2 Little Sheep Esprit President Chain Intime Ajisen Xtep UPCXinyu Hengdeli Bosideng Li & Fung Mengniu YY Dynasty Daphne 1 Shuanghui China Foods New World Texwinca Gome China Agri Bio-Chem Yili Pacific Textiles Pou Sheng Giordano Hongxing CRE Lianhua Glorious Sun 0 0% 5% 10% 15% 20% 25% 30% 35% 40% 10E EBIT Margin Names in red = retailers; blue = staples; black = export plays 2010 data are estimates, closing price as of Dec 31, 2009. Note: Morgan Stanley Research estimates for Esprit, Giordano, China Mengniu, Tingyi, President Chain Store, Uni-President China, Anta, Li Ning, Intime, Daphne, Bosideng, Pacific Textiles, Texwinca, Yue Yuen, Li & Fung, Shuanghui, Yili, Pou Sheng, China Agri, Dongxiang, Little Sheep, Ajisen, Want Want, New World, Parkson, Golden Eagle, Bawang, Yurun, Ports Design; Consensus FactSet estimates for all others. Source: Morgan Stanley Research Estimates, FactSet 20
    • January 5, 2010 Greater China Consumer Team Calendar of Events (January) January SUN MON TUE WED THU FRI SAT 1 2 3 6 7 8 9 Yue Yuen / Pou Sheng Dec. Sales* President Chain Dec. Sales* 10 11 12 13 14 15 16 H&M Dec. Sales 17 18 19 20 21 22 23 HK CPI for Dec 09 24 25 26 27 28 29 30/31 H&M 2009 Annual Result * Approximate Date Source: Company data, HK Census and Statistics Department, Morgan Stanley Research 21
    • January 5, 2010 Greater China Consumer Team Morgan Stanley ModelWare is a proprietary analytic framework that helps clients uncover value, adjusting for distortions and ambiguities created by local accounting regulations. For example, ModelWare EPS adjusts for one-time events, capitalizes operating leases (where their use is significant), and converts inventory from LIFO costing to a FIFO basis. ModelWare also emphasizes the separation of operating performance of a company from its financing for a more complete view of how a company generates earnings. Disclosures Section The information and opinions in Morgan Stanley Research were prepared or are disseminated by Morgan Stanley Asia Limited (which accepts the responsibility for its contents) and/or Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z, regulated by the Monetary Authority of Singapore, which accepts the responsibility for its contents), and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H, regulated by the Monetary Authority of Singapore, which accepts the responsibility for its contents), and/or Morgan Stanley Taiwan Limited and/or Morgan Stanley & Co International plc, Seoul Branch, and/or Morgan Stanley Australia Limited (A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents), and/or Morgan Stanley Smith Barney Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813, which accepts responsibility for its contents), and/or Morgan Stanley India Company Private Limited and their affiliates (collectively, "Morgan Stanley"). For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY, 10036 USA. Analyst Certification The following analysts hereby certify that their views about the companies and the securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in the report: Angela Moh, Dennis Tao, Lillian Lou, Robert Lin TUnless otherwise stated, the individuals listed on the cover page of this report are research analysts. Global Research Conflict Management Policy Morgan Stanley Research has been published in accordance with our conflict management policy, which is available at www.morganstanley.com/institutional/research/conflictpolicies. Important US Regulatory Disclosures on Subject Companies The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. The fixed income research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues (which include fixed income trading and capital markets profitability or revenues), client feedback and competitive factors. Fixed Income Research analysts' or strategists' compensation is not linked to investment banking or capital markets transactions performed by Morgan Stanley or the profitability or revenues of particular trading desks. Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research, including market making, providing liquidity and specialized trading, risk arbitrage and other proprietary trading, fund management, commercial banking, extension of credit, investment services and investment banking. Morgan Stanley sells to and buys from customers the securities/instruments of companies covered in Morgan Stanley Research on a principal basis. Morgan Stanley may have a position in the debt of the Company or instruments discussed in this report. Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions. 22
    • January 5, 2010 Greater China Consumer Team Disclosures (cont.) As of November 30, 2009, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: Belle International, China Dongxiang Group Co. Ltd, Esprit Holdings, Li & Fung Ltd. As of November 30, 2009, Morgan Stanley held a net long or short position of US$1 million or more of the debt securities of the following issuers covered in Morgan Stanley Research (including where guarantor of the securities): Far Eastern Department Store, Li & Fung Ltd, Parkson Retail Group Limited. Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of ANTA Sports Products, BaWang International Holdings, Belle International, China Dongxiang Group Co. Ltd, China Yurun Food Group Ltd., Yue Yuen Industrial. Within the last 12 months, Morgan Stanley has received compensation for investment banking services from ANTA Sports Products, BaWang International Holdings, China Agri- Industries, China Yurun Food Group Ltd., Pou Sheng International Holdings. In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Belle International, China Foods Limited, Intime Department Store (Group), Li & Fung Ltd, Pacific Textiles Holdings Limited, Parkson Retail Group Limited, Samson Holding Ltd., Tingyi (Cayman Islands), Uni-President China, Yue Yuen Industrial. Within the last 12 months, Morgan Stanley & Co. Incorporated has received compensation for products and services other than investment banking services from Uni-President China. Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: ANTA Sports Products, BaWang International Holdings, Belle International, China Agri-Industries, China Foods Limited, China Yurun Food Group Ltd., Intime Department Store (Group), Li & Fung Ltd, Pacific Textiles Holdings Limited, Parkson Retail Group Limited, Pou Sheng International Holdings, Samson Holding Ltd., Tingyi (Cayman Islands), Uni-President China, Yue Yuen Industrial. Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: Belle International, Bosideng International Holdings Limited, China Dongxiang Group Co. Ltd, China Foods Limited, Golden Eagle Retail Group Limited, Intime Department Store (Group), Samson Holding Ltd., Uni-President China, Yue Yuen Industrial. Within the last 12 months, Morgan Stanley has either provided or is providing non-securities related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: China Dongxiang Group Co. Ltd, Samson Holding Ltd., Uni-President China. Within the last 12 months, an affiliate of Morgan Stanley & Co. Incorporated has received compensation for products and services other than investment banking services from China Dongxiang Group Co. Ltd, Samson Holding Ltd., Uni-President China. An employee, director or consultant of Morgan Stanley is a director of Belle International, China Dongxiang Group Co. Ltd. The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. The fixed income research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues (which include fixed income trading and capital markets profitability or revenues), client feedback and competitive factors. Fixed Income Research analysts' or strategists' compensation is not linked to investment banking or capital markets transactions performed by Morgan Stanley or the profitability or revenues of particular trading desks. Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research, including market making, providing liquidity and specialized trading, risk arbitrage and other proprietary trading, fund management, commercial banking, extension of credit, investment services and investment banking. Morgan Stanley sells to and buys from customers the securities/instruments of companies covered in Morgan Stanley Research on a principal basis. Morgan Stanley may have a position in the debt of the Company or instruments discussed in this report. Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions. 23
    • January 5, 2010 Greater China Consumer Team Disclosures (cont.) STOCK RATINGS Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below). Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Global Stock Ratings Distribution (as of December 31, 2009) For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside our ratings of Overweight, Equal- weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.. Coverage Universe Investment Banking Clients (IBC) Stock Rating Category Count % of Total Count % of Total % of Rating IBC Category Overweight/Buy 953 39% 286 41% 30% Equal-weight/Hold 1093 45% 322 46% 29% Not-Rated/Hold 23 1% 3 0% 13% Underweight/Sell 376 15% 82 12% 22% Total 2,445 693 Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley or an affiliate received investment banking compensation in the last 12 months.. Analyst Stock Ratings Overweight (O or Over) - The stock's total return is expected to exceed the total return of the relevant country MSCI Index, on a risk-adjusted basis over the next 12-18 months. Equal-weight (E or Equal) - The stock's total return is expected to be in line with the total return of the relevant country MSCI Index, on a risk-adjusted basis over the next 12-18 months. Not-Rated (NR) - Currently the analyst does not have adequate conviction about the stock's total return relative to the relevant country MSCI Index on a risk-adjusted basis, over the next 12-18 months. Underweight (U or Under) - The stock's total return is expected to be below the total return of the relevant country MSCI Index, on a risk-adjusted basis, over the next 12-18 months. Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months. Analyst Industry Views Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicated below. In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below. Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below. Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index. 24
    • January 5, 2010 Greater China Consumer Team Disclosures (cont.) Important Disclosures for Morgan Stanley Smith Barney LLC Customers Citi Investment Research & Analysis (CIRA) research reports may be available about the companies or topics that are the subject of Morgan Stanley Research. Ask your Financial Advisor or use Research Center to view any available CIRA research reports in addition to Morgan Stanley research reports. Important disclosures regarding the relationship between the companies that are the subject of Morgan Stanley Research and Morgan Stanley Smith Barney LLC, Morgan Stanley and Citigroup Global Markets Inc. or any of their affiliates, are available on the Morgan Stanley Smith Barney disclosure website at www.morganstanleysmithbarney.com/researchdisclosures. For Morgan Stanley and Citigroup Global Markets, Inc. specific disclosures, you may refer to www.morganstanley.com/researchdisclosures and https://www.citigroupgeo.com/geopublic/Disclosures/index_a.html. Each Morgan Stanley Equity Research report is reviewed and approved on behalf of Morgan Stanley Smith Barney LLC. This review and approval is conducted by the same person who reviews the Equity Research report on behalf of Morgan Stanley. This could create a conflict of interest. Other Important Disclosures Morgan Stanley produces an equity research product called a "Tactical Idea." Views contained in a "Tactical Idea" on a particular stock may be contrary to the recommendations or views expressed in research on the same stock. This may be the result of differing time horizons, methodologies, market events, or other factors. For all research available on a particular stock, please contact your sales representative or go to Client Link at www.morganstanley.com. For a discussion, if applicable, of the valuation methods and the risks related to any price targets, please refer to the latest relevant published research on these stocks. Morgan Stanley Research does not provide individually tailored investment advice. Morgan Stanley Research has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. The securities, instruments, or strategies discussed in Morgan Stanley Research may not be suitable for all investors, and certain investors may not be eligible to purchase or participate in some or all of them. Morgan Stanley Research is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any particular trading strategy. 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    • January 5, 2010 Greater China Consumer Team Disclosures (cont.) Morgan Stanley Research is disseminated in Japan by Morgan Stanley Japan Securities Co., Ltd.; in Hong Kong by Morgan Stanley Asia Limited (which accepts responsibility for its contents); in Singapore by Morgan Stanley Asia (Singapore) Pte. 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    • January 5, 2010 Greater China Consumer Team The Americas Europe Japan Asia/Pacific 1585 Broadway 20 Bank Street, Canary Wharf 4-20-3 Ebisu, Shibuya-ku 1 Austin Road West New York, NY 10036-8293 London E14 4AD Tokyo 150-6008 Kowloon United States United Kingdom Japan Hong Kong Tel: +1 (1)212 761 4000 Tel: +44 (0)20 7425 8000 Tel: +81 (0)3 5424 5000 Tel: +852 2848 5200 © 2010 Morgan Stanley 27