HSBC: China Food & Beverage
Distribution is essential; branding differentiates
Consumer Staples
October 2012


As Chinese consumers become wealthier, they are growing more
selective. China’s F&B companies have spotted this trend – which
we expect to catch on fast in the next decade – and are increasingly
adopting strategies to leverage both distribution and branding. We
initiate coverage of the sector with an Overweight rating on Tingyi
(TP HKD29.0), Underweights on UPC (TP HKD7.0) and Tsingtao
(TP HKD35.0), an Underweight (V) on China Mengniu Dairy (TP
HKD19.7), and a Neutral on Want Want (TP HKD10.6).



Contents
Summary 1
Valuation and rating 4
The income evolution 12
Company section 27
Tingyi 28
Uni-President China 37
Tsingtao Brewery 48
Mengniu Dairy 57
Want Want 68
Appendix 76
Disclosure appendix 80
Disclaimer 84