Food & Beverage Sector

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DJ MARKET TALK: CPY Keeps China Food & Beverage Sector At Neutral

1514 [Dow Jones] Core Pacific-Yamaichi keeps the China food & beverage sector at Neutral, due to valuation concerns and moderating sales momentum.

It notes, the sector has outperformed the broad market year-to-date due to strong sales/earnings growth and rising average selling prices amid high food prices.

For major Hong Kong-listed stocks within the sector, the average valuation is at 29X and 24X FY11-12 P/Es at current price levels, respectively, it notes, while 3Q11 results reflected moderating sales and margin pressure overall.

It prefers China Mengniu Dairy (2319.HK) for its undemanding valuation and upbeat growth outlook. Mengniu is up 1.3% at HK$26.45.


Source: Dow Jones Newswire

[winston]

vested in Yurun

DJ MARKET TALK: Differentiation Key For China F&B Firms 2012 -DBS

1318 [Dow Jones] "Differentiation is key" for China food and beverages firms in 2012, says DBS Vickers;

It expects companies with decent earnings growth and risk controls in place will become increasingly popular in 2012, and says SOEs like China Foods (0506.HK), Mengniu Dairy (2319.HK), and China Resources Enterprise (0291.HK) stand out in this aspect.

"We expect these three companies to report strong earnings growth while their SOE background could help to ensure that stringent controls in food safety are in place, and also provide better access to sizeable M&A opportunities."

These three stocks are DBS' top sector Buys, while its top Sells are China Yurun Food (1068.HK), Dynasty Wines (0828.HK) and Tsingtao Brewery (0168.HK).

Source: Dow Jones Newswire

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Booze businesses continue a long-term uptrend… Diageo and Brown-Foreman soar to new all-time highs.

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Beverage companies are going strong… Dr. Pepper Snapple, Coca-Cola, and Pepsi shares are all up double digits over the last four months....

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Beware of rising food costs… corn, sugar, and wheat prices are all up 17%-plus over the past month.

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Booze companies are surging… Anheuser-Busch InBev and Diageo soar to new all-time highs.

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DJ MARKET TALK: Tingyi A Buy Among China F&B Names - UOB KayHian

0917 [Dow Jones] UOB KayHian starts coverage on the broader Chinese F&B sector with a Buy rating on Tingyi (0322.HK) and a HK$27.00 target, Hold ratings on both Uni-President China (0220.HK) and Want Want China (0151.HK), while it keeps its contrarian Sell on China Mengniu (2319.HK).

It says that in the wake of food safety issues, Chinese consumers have moved on from making do with basic necessities to focus on product quality, and this trend will extend to lower-income earners residing in lower-tier cities and rural areas as wages rise, which should open up growth opportunities for F&B processors.

Still, soaring demand for safer, higher-quality products is also putting pressure on the entire food supply chain to upgrade.

"Thus, the industry is now faced with the task of raising the bar on food quality even as rising costs are exerting downward pressure on margins."


Source: Dow Jones & Company, Inc.

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Chinese Alcohol Makers

Chinese alcohol makers listed in the mainland tumbled further after the official Xinhua news agency reported that Hunan provincial authorities found as much as 1.04 milligrams per kilogram (mg/kg) of plasticisers in samples of Jiugui Liquor's products.

Plasticisers are additives that increase the fluidity of a material, but are also toxic chemicals that can cause damage to men's reproductive health and cause early female puberty when consumed over a long period.

This according to Xinhua, was more than three times above the health ministry's 0.3 mg/kg limit, but was within the 0.495-2.32 mg/kg range the China Alcoholic Drinks Association listed in a statement on Monday, adding that higher-end alcoholic drinks contain higher levels of plasticiser.

Jiugui's Shenzhen shares stayed suspended, as they have been since Monday, but major players in the Chinese white spirits, or baijiu, sector deepened a downward spiral on the month.

Wuliangye Yibin is set for a sixth-straight loss, diving 4.4 percent to its lowest since July 2010. It has now slumped 18.1 percent in November, set for its worst monthly showing in more than four years.

Bigger rival, Kweichow Moutai shed 1.7 percent but went into the midday break off the day's lows, which were also its lowest since April 11.

Moutai was up as much as 28 percent on the year at the end of October, losses of about 13 percent this month have seen this year's gains cut to just more than 11 percent.

Shares of baijiu makers have been on the backfoot since last month on worries over high inventory levels and fears that strong anti-corruption moves would sap demand for the expensive bottles often used as gifts to local government officials.


Source: Reuters

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Rising food prices are still a major threat… corn, wheat, and oat prices are all up 25%-plus over the past six months.

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Get ready for "record-breaking" prices on some your favorite foods this year

Meat prices are rising faster than any other food group

Source: Bloomberg

http://thecrux.com/get-ready-for-record ... this-year/