Hold Shanghai Jahwa
Total Page:16
File Type:pdf, Size:1020Kb
13 October 2017 Retail / Wholesale Trade Shanghai Jahwa Deutsche Bank Markets Research Rating Company Date Hold Shanghai Jahwa 13 October 2017 Company Update Asia China Reuters Bloomberg Exchange Ticker Price at 11 Oct 2017 (CNY) 32.17 Consumer 600315.SS 600315 CH SHH 600315 Price target - 12mth (CNY) 30.04 Retail / Wholesale Trade 52-week range (CNY) 32.44 - 25.79 Shanghai Composite 3,389 Jahwa parent co. to buy 20% stake of Jahwa listco at RMB38/share Valuation & Risks Anne Ling Tender offer announced after market close Shanghai Jahwa (Jahwa) announced after market close today that Shanghai Research Analyst Jahwa Group, the parent company of Jahwa listco, plans to buy up to 20% of +852-2203 6177 Jahwa's shares at RMB38/share. Jahwa’s shares will resume trading from 13 Oct. Louise Li Details are as below: Research Associate +852-2203 6152 Buyer: Shanghai Jahwa Group (parent company of Jahwa listco). Price/price relative Seller: All the shareholders excluding all the entities under Ping An (ChinaPing 50 An Life Insurance, Shanghai Huisheng Industrial Company, and Shanghai Tai Fu Xiang Er Equity Investment Fund Partnership). 40 30 20 Offer price: RMB38/share (+18% vs the closing price, RMB32.15/share before Jan '16 Jul '16 Jan '17 Jul '17 suspension) Shanghai Jahwa Shanghai Composite (Rebased) Period: 30 days after the announcement. The subscription will only start after it Performance (%) 1m 3m 12m announces a full circular. Absolute 6.0 1.9 12.7 Shanghai Composite 0.3 5.8 10.5 No. of shares: Involves 135m shares (20% of total issued shares). Source: Deutsche Bank Key indicators (FY1) Amount: RMB5.1bn, 20% of the amount (RMB1bn) to be deposited as guarantee. ROE (%) 7.7 Net debt/equity (%) -6.9 Capital funding: from Ping Pu Investment, the parent company of Shanghai Book value/share (CNY) 8.23 Jahwa Group under Ping An. Price/book (x) 3.9 Net interest cover (x) 49.1 Rationale: 1) The share acquisition is a way to strengthen the parent company’s Operating profit margin (%) 9.0 control on the listed company. 2) Premium in offer price reflects Ping An’s Source: Deutsche Bank confidence in the China HBC industry and Jahwa’s long-term perspective; 3) This tender offer is a partial tender offer; i.e., the parent company intends to maintain Jahwa’s listing status after completion. Future plan: Apart from this tender offer, Shanghai Jahwa Group does not have a plan to continue increasing the stake of Jahwa listco in the next 12 months. Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its reseDistributedarch repo ron:ts. T12/10/2017hus, inves t22:18:07ors shou lGMTd be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. THE CONTENT MAY NOT BE DISTRIBUTED IN THE PEOPLE'S REPUBLIC OF CHINA ("THE PRC") (EXCEPT IN COMPLIANCE WITH THE APPLICABLE LAWS AND REGULATIONS OF PRC), EXCLUDING SPECIAL ADMINISTRATIVE REGIONS OF HONG KONG AND MACAU. 0bed7b6cf11c 13 October 2017 Retail / Wholesale Trade Shanghai Jahwa Deutsche Bank view Post the share purchase, Ping An will remain Jahwa’s controlling shareholder. The table below shows the share structure change from Shanghai Jahwa Group and the related companies under Ping An. We believe the mechanism is similar to the last tender offer initiated by Ping An in November 2015. However, the offer price looks more attractive for the shareholders. There is one difference. Last time, the offer price was 9%/-3% vs. the average share price of the past three/six months, respectively. This time, Ping An’s offer price is 23%/27% higher than the average price of the past/six months, implying a 62%/49% 2017/18 PE. Figure 1: Share structure change after parent company acquires 20% of listco Source: Deutsche Bank, company announcement Forecasts and ratios Year End Dec 31 2015A 2016A 2017E 2018E 2019E Sales (CNYm) 5,792.6 5,266.3 6,278.2 6,928.9 7,615.7 EBITDA (CNYm) 788.8 372.8 719.0 894.8 1,057.0 Reported NPAT (CNYm) 2,210.0 216.0 414.3 527.4 678.5 Reported EPS FD(CNY) 3.28 0.32 0.62 0.78 1.01 DB EPS FD(CNY) 3.28 0.32 0.62 0.78 1.01 DB EPS growth (%) 145.5 -90.2 92.4 27.2 28.6 PER (x) 12.3 91.0 52.3 41.1 32.0 EV/EBITDA (x) 29.5 42.8 27.7 21.7 17.8 DPS (net) (CNY) 0.99 0.10 0.19 0.24 0.31 Yield (net) (%) 2.4 0.3 0.6 0.8 1.0 Source: Deutsche Bank estimates, company data Page 2 Deutsche Bank AG/Hong Kong 13 October 2017 Retail / Wholesale Trade Shanghai Jahwa Appendix 1 Important Disclosures *Other information available upon request Disclosure checklist Company Ticker Recent price* Disclosure Shanghai Jahwa 600315.SS 32.17 (CNY) 11 Oct 2017 NA *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg, and other vendors. Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/ DisclosureDirectory.eqsr. Aside from within this report, important conflict disclosures can also be found at https://gm/db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Anne Ling Historical recommendations and target price. Shanghai Jahwa (600315.SS) (as of 10/11/2017) 50.00 Current Recommendations Buy Hold 1 40.00 Sell Not Rated Suspended Rating 5 2 4 6 3 30.00 ** Analyst is no longer at Deutsche Bank 20.00 Security price 10.00 0.00 Jan '16 May '16 Sep '16 Jan '17 May '17 Sep '17 Date 1. 11/30/2015 Hold, Target Price Change CNY 40,67 Anne Ling 4. 03/24/2017 Hold, Target Price Change CNY 31,60 Anne Ling 2. 03/15/2016 Hold, Target Price Change CNY 25,76 Anne Ling 5. 06/28/2017 Hold, Target Price Change CNY 32,30 Anne Ling 3. 08/16/2016 Hold, Target Price Change CNY 24,70 Anne Ling 6. 08/16/2017 Hold, Target Price Change CNY 30,04 Anne Ling §§§§$$$$$§§§§§ Deutsche Bank AG/Hong Kong Page 3 13 October 2017 Retail / Wholesale Trade Shanghai Jahwa Equity Rating Key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock. Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Newly issued research recommendations and target prices supersede previously published research. Page 4 Deutsche Bank AG/Hong Kong 13 October 2017 Retail / Wholesale Trade Shanghai Jahwa Additional Information The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively "Deutsche Bank"). Though the information herein is believed to be reliable and has been obtained from public sources believed to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness. Hyperlinks to third- party websites in this report are provided for reader convenience only. Deutsche Bank neither endorses the content nor is responsible for the accuracy or security controls of these websites. ? If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in this report, or is included or discussed in another communication (oral or written) from a Deutsche Bank analyst, Deutsche Bank may act as principal for its own account or as agent for another person. Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own account or with customers, in a manner inconsistent with the views taken in this research report. Others within Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those taken in this research report. Deutsche Bank issues a variety of research products, including fundamental analysis, equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication may differ from recommendations contained in others, whether as a result of differing time horizons, methodologies or otherwise. Deutsche Bank and/or its affiliates may also be holding debt or equity securities of the issuers it writes on. Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking, trading and principal trading revenues.