发帖
雷达卡
China Packaging Industry
Serving a billion customers daily
We initiate sector coverage with a BUY rating on CPMC Holding shares:
Our target price of HK$10.1 implies 25% upside potential. We see two key
drivers ahead for CPMC: 1) new product lines, which include two‐piece
beverage cans and cutting-edge paper and plastic packaging; and 2) new
clients, which in CPMC’s case include the potential for client referrals
from parent company COFCO (not listed). COFCO is one of China’s largest
food manufacturers and also one of its biggest importer/exporters of
perishable goods.
► Fast growth ahead: We believe China packaging industry sales will
grow 18%/year from 2010-14F. Within the sector, we expect sales of
metal packaging to see 20%/year growth over the same period. The
key factor driving this sales growth is increasing consumer
consumption. This, in turn, is being driven by 1) favorable
macroeconomic factors; 2) demographics; 3) the emergence of
modern, broad distribution channels, 4) changing consumer behavior
and lifestyles; and 5) government policies.
► Consolidation inevitable in 2010-12: The China packaging industry is
extremely fragmented. Like the China beer industry, we believe
consolidation is inevitable. We expect many leading players to
continue expanding via mergers and acquisitions with smaller, local
players.
► Cost inflation manageable: While price increases for key raw materials
such as tinplate, aluminum, plastics and paper board are assured, we
believe the leading players can effectively manage cost inflation
through 1) strong bargaining power, and 2) advanced technology.
BUY CPMC shares: Our target price of HK$10.1 is derived from forward
PER and DCF methodologies. We forecast CPMC will post 2010 EPS of
RMB0.28 and 2011 EPS of RMB0.37. Our estimates imply a 33% earnings
CAGR from 2009–12.
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