绝对保密 Consumer Discretionary (OUTPERFORM) Walter WOO (852) 9845 6974 / 3761 8776
[email protected] Jan 2020 Contents Part 1 Investment summary and Top picks Part 2 Positive on 2020E, led by faster income and wealth growth Part 3 Outperform: Appliances, Luxury, Tourism and Sportswear Part 4 Market-perform: Catering, Apparel and Textiles & Exports Part 5 Valuation table 1 Investment summary and Top picks • Industry trend : Positive on 2020E, led by faster income and wealth growth – 2019 retail sales growth slowed again, but quality picks continue to outperform (Sports, Catering and Appliances). – Positive on 2020E demand, thanks to accelerated income and wealth growth. – Home Appliance & Furniture (+ve) to recover in 2020E, derived by property completion cycle and wealth effect. – Luxury goods (+ve)’s growth should be decent in 2020E, thanks to premiumization. – Tourism (+ve)’s growth (ex-HK/Macau) accelerated in 2019 and should be fast in 2020E (includes HK/ Macau). – Sportswear (+ve) leaders shall keep on outperform and gain shares in 2020E by product and branding upgrades. • Top picks : Haier Electronics, Midea, Prada, Samsonite, Li Ning, Lifestyle – Haier Electronics (1169 HK, NR, at 13x FY20E P/E): 1) potential privatization, 2) premiumization (accelerated growth from Casarte), and 3) low base last year. – Midea (000333 CH, BUY, TP: RMB75.33, on 18x FY20E P/E): 1) excellent and diversified product mix, 2) meaningful exposure in small appliance and 3) rightly placed incentives. – Prada (1913 HK, BUY, TP: HK$ 31.39, on 37x FY20E P/E): 1) better sales growth despite drag from HK, 2) greater efforts in marketing (e.g.