Tale of China consumer

When I started investing back in 2003, that was the time when more China companies came to Singapore to list. Fast forward to now, SGX already has many China companies. Although these companies are mainly mid and small cap, they do offer investor in Singapore way to diversify and participate in China growth story. We can observe that for the past few years, China has became part of our life. Goods were "made in China", companies all trying to expand into China, newspaper also dedicated a section for China news.

The China story is unlikely to subdue anytime soon. A big population couple with rising middle class, it offers a unique opportunity for investor everywhere to profit from there. There are many reports and news which shows us the potential of it. You can do a search for this. >> Search I seriously believe the story and thinks that it is a multi year growth story which looks like a straight line.

If we firmly believe in the China consumer power, what are the companies on SGX that we can depends on? Following is a list of China consumer stock which has strong brand equity, good track record to ride on this trend. Analyst forecast is taken into account for the growth projection. Valuation is not being discussed, as the market fluctuation would present good entry opportunity and you should already have in mind your entry price.

Hongguo

• China no 3 ladies shoe maker. As you might know, ladies change many pair of shoes a year, it is a big business. For the past 3 years, they have been growing at more than 20% a year. A sound management with good track record. Going forward, the opening of more stores and joint venture would continue to drive the earning.
• UBS forecast EPS for FY07 to be RMB0.28, that would be about SGD0.056. In my opinion, the growth rate would be stable at 20% above
  

China Hongxing

• China sport shoe maker which has been growing more than 50% a year for the past few years. The share price has been multiplied for a few times already. Recent result shows strong growth and margin expansion. Aggressive new store opening, upcoming Beijing Olympic games which drive sports goods demand and higher selling price should see higher earning forward.
• CIMB-GK forecast earnings CAGR of 50% for FY07-09. Forecast FY07 EPS SGD0.037.

Synear food

• China food company selling freeze products and dumpling. Gross profit margin about 30% with aggressive capacity expansion plan and strong brand. Despite rising raw material price, the company is able to raise price to compensate for that. The company is riding on the growing per-capita consumption of frozen processed food in China.
• CLSA forecast 2006 to 2011 five-year EPS CAGR to grow at 20%

Hsu Fu Chi

• Manufacturer and distributor of confectionery products – namely, candies, cake and cookies and sachima. The Group is a leading player in China’s candy industry; according to Euromonitor, it has a sugar confectionery market share of about 4.1% in 2005. A stable business with strong and popular brand - “Hsu Fu Chi”
• DBS project that the Group’s EPS will grow by about 13% and 16% in 08F and 09F, respectively.
  

China Lifestyle

• China jelly dessert maker which owns the Labixiaoxin brand (second in China jelly market). With capacity expansion, new joint venture with Super Coffeemix and Malaysia Cocoaland and expansion of distribution point, it should drive the growth in coming years.
  
• DBS project earnings CAGR of 25% over FY06 – FY09F on the back of the doubling of capacity by FY08F.