DMG & PARTNERS RESEARCH, June 6
REGIONAL consumer stocks under our coverage sprang no surprises in Q1 2013, with 6 per cent above, 68 per cent within and 26 per cent below expectations.
These counters stretched their gains to an average 19 per cent YTD, taking their valuations close to an all-time high of around 18 times P/E. Similarly, there were little surprises from Singapore consumer companies except for Eu Yan Sang International ("buy", $0.88). Its Q3 2013 earnings surged 54 per cent y-o-y to $8.4 million, with 9M13 earnings at $13.4 million, hitting our previous full-year forecast. Results exceeded expectations, as its Australian operations turned around faster than anticipated while losses from its China operations narrowed.
However, other retailers saw mixed fortunes. Earnings from domestic grocery retailer Sheng Siong Group ("neutral", $0.69) jumped 31 per cent y-o-y due to better margins while those of fashion retailer FJ Benjamin Holdings ("neutral", $0.27) plunged by 68 per cent y-o-y on softer timepiece sales to the Chinese. Super Group ("neutral", $4.88) also disappointed as its Myanmar distributors opted to stay light on inventory due to riot concerns.
In the Singapore consumer space, we like Eu Yan Sang and OSIM ("buy", $2.22). Investors may also want to consider Sheng Siong and Super for their strong free cash flow generating characteristics.
Telecommunications sector
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