DOCSLIB.ORG

THE NEGLECTED RISK Why Deforestation Risk Should Matter to Chinese Financial Institutions

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
THE NEGLECTED RISK Why Deforestation Risk Should Matter to Chinese Financial Institutions DISCLOSURE INSIGHT ACTION THE NEGLECTED RISK Why deforestation risk should matter to Chinese financial institutions May 2019 CONTENTS 5 Key Findings 39 Asset owners and asset managers 6 Executive Summary 40 Chapter 4. Conclusions and recommendations 8 Chapter 1. Introduction 41 Conclusions 9 Global trends in ESG investment 42 Recommendations 10 An overlooked investment risk 45 Appendix I 12 Why should financial institutions address Research scope and methodology deforestation in their value chains? 45 Research scope 15 Chapter 2. Key findings 45 Company selection methodology 16 The current state of financial institutions’ environment management 46 Financial flow analysis methodology 18 The current state of corporates’ deforestation risk management 48 Methodology of estimating soy-related capital across sector 24 Financial institutions active in the soy sector 50 Research limitations 28 Institutional Investors 51 Appendix II Bond and share underwriters 30 Distribution of capital and exposure to deforestation risks across sectors 52 Appendix III Top 20 investors 32 Chapter 3. International policies, initiatives and good practice 53 Appendix IV Qualitative relationships 33 International policies and initiatives 54 Appendix V 34 Banks CDP responses 38 Institutional Investors Important Notice The contents of this report may be used by anyone providing acknowledgment is given to CDP Worldwide (CDP). This does not represent a license to repackage or resell any of the data reported to CDP or the contributing authors and presented in this report. If you intend to repackage or resell any of the contents of this report, you need to obtain express permission from CDP before doing so. CDP has prepared the data and analysis in this report based on responses to the CDP information request. No representation or warranty (express or implied) is given by CDP as to the accuracy or completeness of the information and opinions contained in this report. You should not act upon the information contained in this publication without obtaining specific professional advice. To the extent permitted by law, CDP does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it. All information and views expressed herein by CDP is based on their judgment at the time of this report and are subject to change without notice due to economic, political, industry and firm-specific factors. Guest commentaries where included in this report reflect the views of their respective authors; their inclusion is not an endorsement of them. CDP, their affiliated member firms or companies, or their respective shareholders, members, partners, principals, directors, officers and/or employees, may have a position in the securities of the companies discussed herein. The securities of the companies mentioned in this document may not be eligible for sale in some states or countries, nor suitable for all types of investors; their value and the income they produce may fluctuate and/or be adversely affected by exchange rates. ‘CDP Worldwide’ and ‘CDP’ refer to CDP Worldwide, a registered charity number 1122330 and a company limited by guarantee, registered in England number 05013650. © 2019 CDP Worldwide. All rights reserved. 2 3 KEY FINDINGS { China has become the largest importer and consumer of soy, with a heavy dependence on foreign sources, especially Latin America. This exposes China’s soy supply chain to deforestation risks. New analysis by CDP found that at least US$2.1 billion of loans made by Chinese financial institutions to Chinese companies in the soy supply chain are exposed to deforestation risks, representing 40.09% of total loans provided to the sector; bond and share issues with value of over US$7.1 billion are exposed, as are US$1.55billion worth of shares. { None of the financial institutions identified has assessed its capital exposure related to deforestation risks, nor have any developed dedicated policies to address deforestation risks. Only 23% (eight out of 35) have a policy in place to integrate general environmental considerations into financial decision- making. { Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China are the top three banks lending to the soy sector, providing 62% of the total loans. Bosera Asset Management Company, China Southern Asset Management Company and E Fund Asset Management Company are the top three institutional investors funding the sector, representing 25% of the total value of shareholdings in the soy sector. { Five companies (Archer Daniels Midland (ADM), Cargill, Bunge, Louis Dreyfus Company and COFCO1) covered in the sample, which account for 52% of Brazilian soy imports into China, have taken steps to manage deforestation risks within their supply chains. The majority of Chinese companies, however, focus primarily on local pollution control; only a few companies – Muyuan Foodstuff Co., Ltd., Sunner Development Co., Ltd, and Wens Foodstuff Group – have taken action to tackle climate change. { Overall, environmental management by Chinese financial institutions focuses primarily on pollution control. The banking sector demonstrates a better awareness of climate risks than institutional investors, but the awareness of deforestation risks linked to soft commodities remains a work in progress. { Financial institutions with environmental risk management systems in place should take steps to improve their practices. They should first assess the proportion of capital in their portfolio or loan books that is exposed to deforestation risks, before assessing individual exposures to deforestation risks, developing policies to integrate deforestation risk assessment and management, engage and collaborate with portfolio/client companies to eliminate deforestation and mitigate the risks associated with it. 1. Of these, ADM, Cargill, and Bunge responded to the CDP forests questionnaire in 2018 and respectively received scores of C, C and B-. COFCO also responded for the first time but didn’t receive a score. 4 5 EXECUTIVE SUMMARY As the global financial sector increasingly recognizes the risks Step-by-step recommendations posed by environmental challenges, financial institutions have been integrating environmental concerns into their financial To encourage Chinese financial institutions to do so, CDP offers recommendations based on an analysis of current management status and good practice from overseas. The steps set out below decisions. allow institutions seeking an inclusive and sustainable approach to investment to progress according to their own context and goals. Financial institutions are also acknowledging All types of flow are clustered in the feed the crucial role of forests in climate change manufacturing, poultry and pig breeding mitigation, and that deforestation could erode sectors. In particular, pig breeding sector the value of companies participating in the attracts the largest amount of investment, and Financial institutions should first understand their exposure to production, trading and use of the commodities bond and share underwritings. deforestation linked to soy trading and processing. Financial – soy, timber, palm oil and cattle products – most associated with deforestation. Financial { Over the 2013-17 research period, US$2.1 institutions should identify and estimate the volume of financing institutions are therefore increasingly considering billion of loans exposed to deforestation exposed to soy-driven deforestation. deforestation risks in their decision making. risks were made by Chinese financial institutions, accounting for over 40.09% total China is the biggest consumer of forest-risk loans provided to the soy sector. More than Financial institutions should analyse their exposure to deforestation commodities. In particular, China is the largest US$7.1 billion of bond and share issuance Starter level importer and consumer of soy. In 2017, China underwriting, accounting for 54.7% of shares risks by understanding the degree to which portfolio and client imported 63% of the soy traded globally. In and bonds issued by the sector, potentially companies are sensitive to deforestation and exposed to the soy addition, with growing domestic demand for soy faced deforestation risk. As of the end of 2017, value chain. and uncertainties around Sino-US trade relations, about US$1.55 billion of shareholdings were it is foreseeable that Chinese demand for soy estimated to be exposed representing 64.85% from high-deforestation areas, particularly Latin of total shareholdings. America, will continue to rise. This could potentially Financial institutions should develop deforestation risk mangement trigger further and faster deforestation which, in { Only 23% (eight out of 35) of financial policies to guide the integration of deforestation concerns into turn, poses increased regulatory, reputational and institutions active in the soy sector have decision-making processes. For financial institutions with existing operational risks to the soy sector and associated a policy of integrating environmental financial institutions in China. considerations into financial decisions. environmental management frameworks, deforestation risk None of the identified financial institutions management should be integrated. However, these financial institutions are yet to pay has assessed the proportion of their capital attention to the impacts
Load more

Recommended publications
  • Significantly Regulated Organizations Added
    Significantly Regulated Organizations Added ‐ September 2017 DUNS COUNTRY BUSINESS NAME TICKER SYMBOL EXCHANGE NAME NUMBER NAME 565406188 BRITISH AMERICAN TOBACCO ZIMBABWE ZIMBABWE BAT.ZW Zimbabwe Stock 565568949 MEDTECH HOLDINGS LTD ZIMBABWE MMDZ.ZW Zimbabwe Stock 565412350 NATIONAL FOODS LTD ZIMBABWE NTFD.ZW Zimbabwe Stock 565679081 STARAFRICA CORPORATION LTD ZIMBABWE SACL.ZW Zimbabwe Stock 555364141 CENTRAL PHARMACEUTICAL JOINT STOCK VIETNAM DP3 Hanoi Stock Exchange CHUONG DUONG BEVERAGE JOINT STOCK Ho Chi Minh Stock 555317798 COMPANY VIETNAM SCD Exchange 555297766 DANAMECO MEDICAL JOINT STOCK VIETNAM DNM Hanoi Stock Exchange DUC GIANG CHEMICALS AND DETERGENT 555345573 POWDER JOINT STOCK COMPANY VIETNAM DGC Hanoi Stock Exchange 555248250 Ha Long Canned Food Joint Stock Co. VIETNAM CAN Hanoi Stock Exchange 555530381 HA NOI INVESTMENT GENERAL VIETNAM SHN Hanoi Stock Exchange 555271543 HA TAY PHARMACEUTICAL JOINT STOCK VIETNAM DHT Hanoi Stock Exchange HOANG ANH GIA LAI JOINT STOCK Ho Chi Minh Stock 555335798 COMPANY VIETNAM HNG Exchange 555319636 HUNG HAU AGRICULTURAL CORPORATION VIETNAM SJ1 Hanoi Stock Exchange 555530218 HUNG VIET GREEN AGRICULTURE JOINT VIETNAM HVA Hanoi Stock Exchange KLF JOINT VENTURE GLOBAL INVESTMENT 555529792 JOINT STOCK COMPANY VIETNAM KLF Hanoi Stock Exchange 555340068 LAM DONG PHARMACEUTICAL JOINT STOCK VIETNAM LDP Hanoi Stock Exchange MECHANICS CONSTRUCTION AND 555303278 FOODSTUFF JOINT STOCK COMPANY VIETNAM MCF Hanoi Stock Exchange Ho Chi Minh Stock 555365190 NAFOODS GROUP JOINT STOCK COMPANY VIETNAM NAF Exchange NORTH PETROVIETNAM FERTILIZER & 555458287 CHEMICALS JOINT STOCK COMPANY VIETNAM PMB Hanoi Stock Exchange Ho Chi Minh Stock 555279715 S.P.M CORPORATION VIETNAM SPM Exchange SAIGON BEER ALCOHOL BEVERAGE Ho Chi Minh Stock 555254439 CORPORATION VIETNAM SAB Exchange 555341953 SAM CUONG ELECTRIC MATERIALS JS CO.
    [Show full text]
  • 1 1 China Petroleum & Chemical Corporation 1913182 70713
    2011 Ranking 2010 Company Name Revenue (RMB, million) Net profit (RMB Million) Rankings (x,000,000) (x,000,000) 1 1 China Petroleum & Chemical Corporation 1913182 70713 2 2 China National Petroleum Corporation 1465415 139871 3 3 China Mobile Limited 485231 119640 China Mobile Revenue: 485,231,000,000 4 5 China Railway Group Limited 473663 7488 5 4 China Railway Construction Corporation Limited 470159 4246 6 6 China Life Insurance Co., Ltd. 388791 33626 7 7 Bank of China Ltd 380821 165156 8 9 China Construction Company Limited 370418 9237 9 8 China Construction Bank Corporation 323489 134844 10 17 Shanghai Automotive Group Co., Ltd. 313376 13698 11 . Agricultural Bank of China Co., Ltd. 290418 94873 12 10 China Bank 276817 104418 China Communications Construction Company 13 11 Limited 272734 9863 14 12 China Telecom Corporation Limited 219864 15759 China Telecom 15 13 China Metallurgical Co., Ltd. 206792 5321 16 15 Baoshan Iron & Steel Co., Ltd. 202413 12889 17 16 China Ping An Insurance (Group) Co., Ltd. 189439 17311 18 21 China National Offshore Oil Company Limited 183053 54410 19 14 China Unicom Co., Ltd. 176168 1228 China Unicom 20 19 China PICC 154307 5212 21 18 China Shenhua Energy Company Limited 152063 37187 22 20 Lenovo Group Limited 143252 1665 Lenovo 23 22 China Pacific Insurance (Group) Co., Ltd. 141662 8557 24 23 Minmetals Development Co., Ltd. 131466 385 25 24 Dongfeng Motor Group Co., Ltd. 122395 10981 26 29 Aluminum Corporation of China 120995 778 27 25 Hebei Iron and Steel Co., Ltd. 116919 1411 28 68 Great Wall Technology Co., Ltd.
    [Show full text]
  • Annual Report 2020
    2020 ANNUAL REPORT JOY CITY PROPERTY LIMITED ANNUAL REPORT 2020 CConttribbutee quualitty greeen liviing sppaca e annd sservicees, leadd thhe treennd of a faashhionaabble liffessttylee, iin orddeer to beecoomee a leaadder aammong reeall esttate brands in thhe PPRC wiwith thhee greeata eest ssustainnabble ddevvelooppmment pootenntiaal. MMaximizee thee benefits off custtomerss, sharehooldeers and staff memberrs wwhoolehearrtedly. CONTENTS Company Profile 2 Corporate Governance Report 73 Major Business Structure 4 Directors’ Report 85 Major Events and Awards 6 Five Years Financial Summary 108 Financial Highlights 12 Independent Auditor’s Report 109 Chairman’s Statement 14 Financial Statements and Notes 113 Joy-Full Occasions 17 Definitions 248 Management Discussion and Analysis 25 Corporate Information 252 Profile of Directors and Senior Management 65 2 Joy City Property Limited Annual Report 2020 Company Profile Joy City Property Limited is a large-scale Kong-Macao Greater Bay Area, Chengdu-Chongqing and commercial property developer and operator, middle Yangtze River. Meanwhile, the Group successfully focusing on the development, operation, established its presence in 20 cities including Beijing, sales, leasing and management of complexes Shanghai, Tianjin, Shenyang, Yantai, Jinan, Hangzhou, and commercial properties in the PRC. Chengdu, Xi’an, Chongqing, Qingdao, Wuhan, Kunming, Sanya, Changsha, Suzhou, Xiamen, Nanchang, Wuxi and COFCO Corporation, the ultimate controlling shareholder Anshan in mainland China and Hong Kong. It possesses or of Joy City Property Limited, is one of the 49 major state- manages 23 Joy City urban complexes, 3 Joy Breeze projects owned enterprises under the administration of the Central and premium investment properties at prime locations in Government of China, and has been selected as one of the first-tier cities, including Beijing COFCO Plaza, Hong Kong Fortune Global 500 for more than 26 consecutive years COFCO Tower and Beijing COFCO • Landmark Tower, since 1995.
    [Show full text]
  • China's Food Safety in 2012
    China’s Food Safety in 2012 Assessing the Increased Risks SUN Xi August 2012 China’s Food Safety in 2012 | August 2012 2 Table of Contents Executive Summary................................................................3 Introduction......................................................................4 Assessing Food Safety Risks at Chinese Companies......6 Exposure........................................................................................6 Preparedness................................................................................6 Investor Engagement on Food Safety Risks...................6 Summary of Findings ................................................ 7 Company Analysis by Sector .................................. 10 A. Assessment of listed food production companies . 10 B. Assessment of listed food processing companies . 12 C. Assessment of listed food distributors and retailers . 15 D. Assessment of listed restaurants and hotels ..................... 15 Annex One ................................................................17 Food safety regulators and regulations in China.....................17 Mandatory internal inspection and record system..................17 Food recall system improved......................................................18 Good Manufacturing Practice (GMP)......................................18 Food safety focus of work in 2012..............................................18 Annex Two ................................................................19 Endnotes ...................................................................19
    [Show full text]
  • China Food & Beverage Monthly
    China / Hong Kong Monthly Chart Book China Food & Beverage Monthly Refer to important disclosures at the end of this report Page 1 DBS Group Research . Equity 11 Jan 2017 Diverging material trends Soft grain prices to keep feedstock costs low HSI: 22,745 Dairy prices could rise, but pork prices should retreat ANALYST Potential pressure from sugar and PET prices on beverage players Alice HUI, CFA +852 2971 1960 Grain prices remain favourable. Despite prior concerns on [email protected] impact from La Nina in 2016, production volume for grains (corn, Alison Fok +852 2971 1938 soybean) remained robust. According to USDA, global corn [email protected] production is expected to rise in FY17F. This, coupled with the cessation of the Chinese government’s corn reserve purchasing Mavis HUI+852 2863 8879; system since late 2016, would likely continue to put pressure on [email protected] corn prices. Corn prices in China have fallen by another 4.4% Eric YEE, CFA +86 21 6888 3360 m-o-m in January 2017, after dropping some 24% in 2016. As [email protected] corn makes up a large portion of meat and dairy upstream players’ raw material costs (est. 60-70% of total), lower corn F&B peer table prices should bode well for their margins. Meanwhile, prices of other grains such as soybean will also likely see limited upside as Price Target Upside Rec Mkt FY17 a result of a change in acreage planting in China (a shift from HK$ Price % Cap PE (x) lower-margin corn to other grains with better margins), as well HK$ (US$m) as stable global production volume growth, according to USDA.
    [Show full text]
  • An Assessment of Environmental and Social Transparency of Food Related Companies Currently Listing in Hong Kong Stock Exchange
    An assessment of Environmental and Social transparency of food related companies currently listing in Hong Kong Stock Exchange October 2017 Hong Kong 1 Executive Summary Oxfam Hong Kong seeks to better understand opportunities to engage with companies in Hong Kong. Oxfam Hong Kong commissioned CSR Asia to conduct a benchmarking exercise to assess the Environmental and Social transparency in the food, beverages, and agricultural products sectors in Hong Kong. The aims of this exercise were: To assess food companies’ Environment and Social transparency To summarise the Environment and Social transparency of selected companies. To assess what companies are doing to create more inclusive business models relating to both products and value chains, and to engage with issues associated with access to food products for poor people. To make recommendations on the business case for food companies to implement responsible business policies In total, 61 companies were benchmarked in this study. Data was compiled from publicly available information published in 2015 including corporate websites, annual reports and sustainability reports. Overall, the level of disclosure by the 61 companies is relatively low and indeed they were failed. Only 3 companies achieved over 30 points and 55 of the companies scoring below 20 points. This may seem disappointing at first but it should be recognized that the GRI indicators are very comprehensive and that most companies in Hong Kong are a long way from being able to report on them. Companies demonstrated weak performance in both categories in which the average score of social and environment are 12.5 and 8.7 respectively.
    [Show full text]
  • COFCO Meat Holdings 1610.HK, 1610 HK the Pen Is Full
    Completed 04 Dec 2016 03:54 PM HKT Disseminated 05 Dec 2016 12:15 AM HKT Asia Pacific Equity Research 05 December 2016 Initiation Neutral COFCO Meat Holdings 1610.HK, 1610 HK The pen is full. Initiate coverage at Neutral Price: HK$1.64 Price Target: HK$1.90 We initiate coverage of COFCO Meat with a Neutral rating and a Dec-17 China price target of HK$1.90. A subsidiary of COFCO Group, COFCO Meat operates Consumer a vertically integrated value chain including feed & hog production, slaughtering, AC production and sale of fresh pork and processed meat products. Near-term Ebru Sener Kurumlu earnings benefits from high hog prices and benign input costs (we expect COFCO (852) 2800-8521 Meat to post a profit in FY16E vs a loss in FY15), and ongoing market-share [email protected] Bloomberg JPMA KURUMLU <GO> gains given the fragmented market should sustain strong volumes. But the company is likely to face some earnings volatility over the next two years as George Hsu profits are very sensitive to hog prices, which peaked in 1H16. Although we see (852) 2800-8559 [email protected] 15% potential upside to our price target, we are concerned about downside risks to Shen Li, CFA estimates should hog prices soften beyond our base estimates. (852) 2800 8523 Investment positives: (1) Near-term earnings benefits from cyclically high [email protected] hog prices and benign input costs: i) China hog prices were in an upcycle Daisy Lu since mid-2015, reaching a cyclically high level in 1H16; ii) input costs are (852) 2800-8593 benign, with corn prices down and the hog-to-corn ratio at a cyclically high [email protected] level in 2016.
    [Show full text]
  • Cofco International Limited
    The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares of China Agri-Industries Limited described below. In particular, this announcement is not an offer of securities for sale in Hong Kong, the United States or elsewhere. Securities may not be offered or sold in the United States absent registration or an exemption from registration. COFCO INTERNATIONAL LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 506) ANNOUNCEMENT PROPOSED MAJOR AND CONNECTED TRANSACTION INVOLVING ACQUISITION AND DISPOSAL OF ASSETS PROPOSED SPIN-OFF AND SEPARATE LISTING OF CHINA AGRI- INDUSTRIES LIMITED ON THE MAIN BOARD OF THE STOCK EXCHANGE OF HONG KONG LIMITED CONTINUING CONNECTED TRANSACTIONS SPECIAL DIVIDEND ADOPTION OF THE NEW SHARE OPTION SCHEME AND ADJUSTMENT OF THE EXISTING SHARE OPTION SCHEME ADOPTION OF THE CHINA AGRI-INDUSTRIES LIMITED SHARE OPTION SCHEME CHANGE OF COMPANY NAME INCREASE OF AUTHORISED SHARE CAPITAL OF THE COMPANY APPOINTMENT OF NEW EXECUTIVE DIRECTOR Page 1 SUMMARY • On 8 October 2006, the Company entered into the Master Sale and Purchase Agreement with COFCO, COFCO (HK) and China Agri, pursuant to which the Group agreed to acquire from COFCO (HK) the entire issued share capital and shareholders’ loans of each of Jumbo Team and Full Extent, respectively, subject to certain conditions.
    [Show full text]
  • Stock Guide 20 Nov
    20 Nov. 2009 Stock Guide 20 Nov. 2009 Stock Guide provides a clear and structured profile of some of the companies we have HSI 19,95422,643 been monitoring recently. It is a one-stop collection of company profiles that puts HSCEI 11,26013,470 comprehensive information at your fingertips for quick and easy reference. Performance (%) 1m 3m 12m For further information, each profile is cross-referenced against our recent in-depth Performance (%) 1m 3m 12m company reports and other research. HSI 6.12.0 13.713.5 (2.6)76.7 HSCEI 1.04.0 11.819.6 107.65.1 Stocks will be added to Stock Guide on a regular basis. HSI Performance HSI Performance (HK$bn) (HK$bn) Contents 35,000 250 35,00030,000 250 200 61 Degrees (1361.HK) 2 30,000 3 25,000 200 AMVIG (2300.HK) 8 25,00020,000 150 20,000 150 Anta (2020.HK) 14 15,000 100 China Foods (506.HK) 19 15,00010,000 100 50 10,0005,000 China Green (904.HK) 24 50 China High Speed Transmission (658.HK) 30 5,0000 0 0Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 0 China Mengniu (2319.HK) 36 Oct 07 Apr 08 Oct 08 Apr 09 Oct 09 China Singyes Solar Technologies Holdings Limited (750.HK) 42 Turnover HSI China WindPower Group Ltd. (182.HK) 48 Turnover HSI China Yurun (1068.HK) 54 Closing 12,960 Clear Media (100.HK) 60 Closing 21,264 52W high/low Comba (2342.HK) 66 26,387/10,676 Sources:52W high/low Bloomberg and Sun Hung Kai22 Financial,620/11 ,344 Coslight Technology Limited (1043.HK) 72 Dachan Food (3999.HK) 78 Dongxiang (3818.HK) 84 HSCEI Performance Dynamic Energy (578.HK) 90 Dynasty Fine Wines Group (828.HK) 96 Eagle Nice (2368.HK)
    [Show full text]
  • China Consumer Staples
    Deutsche Bank Markets Research Industry Date 14 November 2014 China Consumer Asia Staples Hong Kong Consumer Winnie Mak Research Analyst (+852) 2203 6178 [email protected] F.I.T.T. for investors The discretionary side of staples From 'needs' to 'wants' Noodles and drinks can be fashionable if consumers want it that way. Chinese consumers have had most of what they need, so we look into the discretionary side of consumer staples, i.e., what and how they want the beer and tea to be served. We think something new and/or chilled will help companies to put a stop on de-rating in 2015, and to prepare for the recovery ahead. ________________________________________________________________________________________________________________ Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should 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) 148/04/2014. Deutsche Bank Markets Research Asia Industry Date Hong Kong 14 November 2014 Consumer China Consumer FITT Research Staples Winnie Mak Research Analyst The discretionary side of staples (+852) 2203 6178 [email protected] From 'needs' to 'wants' Companies Featured Noodles and drinks can be fashionable if consumers want it that way. Chinese consumers have had most of what they need, so we look into the discretionary Hengan Intl. (1044.HK),HKD82.00 Buy side of consumer staples, i.e., what and how they want the beer and tea to be 2013A 2014E 2015E served.
    [Show full text]
  • Joy City Property
    Deutsche Bank Markets Research Rating Company Date 20 May 2015 Buy Joy City Property Initiation of Coverage Asia Hong Kong Reuters Bloomberg Exchange Ticker Price at 19 May 2015 (HKD) 2.08 Property 0207.HK 0207 HK HKG 0207 Price target - 12mth (HKD) 4.50 Property 52-week range (HKD) 2.09 - 1.33 HANG SENG INDEX 27,591 Strong recurrent income, upsides Tony Tsang Jason Ching, CFA from SOE reform; initiating with Buy Research Analyst Research Analyst (+852) 2203 6256 (+852) 2203 6205 A fast-growing state-owned landlord; TP HK$4.50; implied upside 116% [email protected] [email protected] Joy City is a 66.8%-owned property flagship of COFCO. Our positive call on Joy City is based on its quality recurrent income base, strong state-owned background (well below-peer interest cost), strong balance sheet, strong Price/price relative organic growth (we expect core net profit growth of 39-66% p.a. in 2015-17 on 5.0 strong revenue growth with improving margins), and strong additional NAV 4.0 and earnings upsides from expected further asset injections from COFCO. 3.0 High-quality IP portfolio providing solid recurrent income with solid growth 2.0 In contrast to most listed Chinese developers (which focus on property sales), 1.0 Joy City focuses primarily on prime-location investment properties that 5/13 11/13 5/14 11/14 generate recurrent income, which in our view should command higher Joy City Property valuation multiples. We see the following unique characteristics: 1) recurrent HANG SENG INDEX (Rebased) income makes up a high % of Joy City’s total revenue; 2) the IPs of Joy City Performance (%) 1m 3m 12m are all located in Tier-1 and major Tier-2 cities, where consumption power is relatively strong, consumers are more mature and oversupply of new Absolute 33.3 41.5 9.5 properties is less serious; and 3) it has a clear IP focus and positioning – Joy HANG SENG INDEX -0.2 11.1 21.5 City Shopping Malls makes up the bulk of Joy City’s IP portfolio (ex hotels).
    [Show full text]
  • Annual Report CORPORATE INFORMATION
    ABOUT SUNAC 融創中國控股有限公司 SUNAC China Holdings Limited (the “Company” or “our Company” and together with its subsidiaries, collectively referred to as the “Group”) is specialised in the integrated development of residential and commercial properties and is one of the leading real estate developers in the PRC. In line with its regional focus and high-end positioning strategy, the Company has developed or is developing many high-quality property projects ranging from high-rise residences, townhouses, retail properties and offices in tier 1 cities, tier 2 cities and surrounding cities of tier 1 cities in the PRC. The Company focuses on high-end property development and management business. Guided by its brand positioning of “Passion for Perfection”, the Company has long been providing high-end products to customers. With the aim of becoming the leader of the real estate industry in China, the Company’s pursuit of high-quality products and services never ends. It is always committed to providing a desirable, elegant life experience to its customers through quality products and services. With its accurate judgment of market trends, keen in-sights into consumer demands and emphasis on high product quality, the Company is ready to adopt cutting-edge concepts at the right time to design and develop its projects, and has created an advanced quality control and supervisory system. 融創中國控股有限公司（「本公司」，連同其附屬公司統稱為「本集團」）為中國的領先房地產發展商之一，專業從事住宅及商 業地產綜合開發。本公司堅持區域聚焦和高端精品發展戰略，在中國的一線、二線及環一線城市已發展或正發展眾多優質物業項 目，項目涵蓋高層住宅、聯排別墅、零售物業、寫字樓等多種物業類型。 本公司專注於高端物業的開發和管理，以「至臻，致遠」為品牌方向，持之以恆的為客戶專注打造高端精品物業，立志成為對高
    [Show full text]