德意志银行-xx消费品-china consumer staples stock picks in new environment-a top-down method-20170718-deutschebank.pdfVIP

Deutsche Bank Markets Research Asia Industry Date Hong Kong China Consumer 18 July 2017 Consumer Staples Industry Update Mark Yuan Anne Ling Stock picks in new environment - a Research Analyst Research Analyst (+852 ) 2203 6181 (+852 ) 2203 6177 top-down method mark.yuan@ anne.ling@ Three key trends create a new normal for staples Key Changes We identify three new-normal trends in the consumer staples sector in 2017: 1) Company Target Price Rating volume growth is stabilizing, with no further decline but no rebound either; 2) 1117.HK 1.80 to 1.70(HKD) - raw material price tailwinds are turning into headwinds; and 3) premiumization Source: Deutsche Bank trends continue. We believe companies that can launch new products, improve their efficiency by restructuring, and upgrade their product mix should Top picks outperform. Our top picks are Mengniu, Moutai, Dali, and Yili. China Mengniu Dairy (2319.HK),HKD15.48 Buy The new normal: no volume growth, no cost tailwinds, consumers trading up Dali Foods (3799.HK),HKD4.55 Buy After three years of volume declines since 2014, the major FB category has