See the last page for disclaimer Page 1 of 7

中

外

运

输

Eq

uit

y R

ese

arc

h

Eq

uit

y R

ese

arc

h R

ep

ort

证 券

研 究

报 告

Co

mp

an

y R

ep

ort

股

票

研

究

公

司

报

告

证

券

研

究

报

告

[Tab

le_I

nfo1

]

消

费

行

业

-日

用

品

Co

ns

um

er

Sec

tor-

Ho

use

ho

ld P

rod

uc

ts

[Tab

le_I

nfo2

]

维

达

国

际

Vin

da

In

tern

ati

on

al

(03

33

1 H

K)

[Table_Title] Company Report: Vinda International (03331 HK) Barney Wu 吴宇扬

(86755) 2397 6680

公司报告： 维达国际 (03331 HK) wuyuyang@gtjas.com

1 February 2019

[Table_Summary] Sales Recovered Significantly, Upgrade to "Accumulate" 销售复苏显著，上调至“收集”

Vinda's 2018 results were in line with expectations. Vinda’s 2018 sales grew

10.3% YoY to HK$14,879 million, while sales volume grew 2%-3% YoY. Due to

strong online sales, Vinda’s 4Q18 sales growth rebounded from 3Q18, up 8.4%

YoY, while organic growth achieved 11.5% YoY. As pulp prices remained high in

2018, Vinda’s gross margin still suffered, down 1.5 ppt YoY to 28.1%. Its 4Q18

operating margin improved 2.4 ppt QoQ due to cost-saving efforts. Vinda’s 2018

net profit rose 4.6% YoY to HK$649 million, but 2H18 net profit was down 22.7%

YoY to HK$232 million due to sluggish performance in 3Q18.

Product mix upgrade has become the main driving force. Vinda's tissue

sales recovered greatly in 4Q18, especially in online channels as Vinda's

promotion activities worked. It achieved the highest sales during the Double

Eleven festival on every e-commence platform. The Company's high-end

products reported double-digit growth, which will be the major driver for its sales

growth. Pressure from pulp prices was relieved considerably, which may favor

recovery in its gross margin. Personal care will be rooted deeply in mainland

China as local production lines are established.

Vinda's revenue growth is back on track, which will be driven by product mix

upgrade and sales volume recovery. We expect that major tissue manufacturers

will focus on making profit first to recover the financial statement in the short

term, instead of starting a new round of price war. Despite China's uncertain

macro economy, tissue paper demand is still solid enough. We expect that the

Company will strengthen its market position in high-end markets. Therefore we

have upgraded Vinda’s rating to "Accumulate" and raise TP to HK$15.00,

which represents 21.1x 2019 PER, 17.1x 2020 PER and 13.3x 2021 PER.

维达 2018 年业绩符合预期。维达 2018 年销售额同比增长 10.3%至 148.79 亿港币，销售量同

比增长 2%-3%。因为强劲的线上销售，维达 2018 年第 4 季度销售增速较第 3 季度明显反弹，

同比上升 8.4%，有机增长为 11.5%。因木浆价格在 2018 年维持高位，维达毛利率仍然受损，

同比下降 1.5 个百分点至 28.1%。公司第 4 季度经营利润率环比改善 2.4 个百分点，因为费用

节省的努力。维达 2018 年净利润同比增长 4.6%至 6.49 亿港币，但因为第 3 季度疲弱的表现，

2018 年下半年净利润同比下降 22.7%至 2.32 亿港币。

产品结构升级成为主要增长动力。因为营销活动开始起作用，维达纸巾销售在 2018 年第 4 季

度大幅复苏，尤其是在线上渠道。其双十一销售在各大电商平台上都取得最高销量。公司高

端产品取得双位数增长，其将成为销售增长的主要动力。木浆价格的压力明显减轻，有利于

维达毛利率的复苏。随着当地生产线的建成，个护业务将在中国大陆扎根更深。

维达的收入增长将重回正轨，其主要将受到产品结构改善以及销售复苏的驱动。我们预计主要

的纸巾生产商将在短期内更加注重实现盈利和修复报表而不是重启新一轮的价格战。尽管中

国宏观经济充满不确定性，纸巾的需求仍然足够稳定。我们预计公司将强化其在高端市场的

地位。因此，我们上调公司评级至“收集”，上调目标价至 15.00 港元，相当于 21.1 倍，17.1

倍和 13.3 倍 2019 年，2020 年和 2021 年市盈率。

[Table_Rank] Rating: Accumulate

Upgraded

评级： 收集 (上调)

[Table_Price] 6-18m TP 目标价: HK$15.00

Revised from 原目标价: HK$12.00

Share price 股价: HK$13.680

Stock performance

股价表现

(25.0)

(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

Aug-16 Nov-16 Feb-17 May-17 Aug-17

% of return

HSI Hengan International

[Table_PriceChange] Change in Share Price

股价变动

1 M

1 个月

3 M

3 个月

1 Y

1 年

Abs. %

绝对变动 % 14.3 24.8 (5.8)

Rel. % to HS Index

相对恒指变动 % 6.3 15.0 8.7

Avg. Share price(HK$) 平均股价（港元）

13.4 12.8 13.5

Source: Bloomberg, Guotai Junan International.

[Table_Profit] Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE

年结 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率

12/31 (HK$ m) (HK$ m) (HK$) (△ %) (x) (HK$) (x) (HK$) (%) (%)

2017A 13,486 621 0.526 (12.0) 26.0 7.316 1.9 0.190 1.4 8.0

2018A 14,879 649 0.544 3.4 25.1 7.309 1.9 0.200 1.5 7.4

2019F 16,497 848 0.709 30.3 19.3 8.461 1.6 0.248 1.8 9.0

2020F 18,116 1,046 0.876 23.6 15.6 9.132 1.5 0.307 2.2 10.0

2021F 19,587 1,344 1.125 28.4 0.0 10.111 0.0 0.394 0.0 11.7

[Table_BaseData] Shares in issue (m) 总股数 (m) 1,194.9 Major shareholder 大股东 SCA 52.0%

Market cap. (HK$ m) 市值 (HK$ m) 16,346.2 Free float (%) 自由流通比率 (%) 26.0

3 month average vol. 3 个月平均成交股数 (‘000) 350.2 FY19 Net gearing (%) FY19 净负债/股东资金 (%) 43.7

52 Weeks high/low (HK$) 52 周高/低 (HK$) 16.000 / 11.000 FY19 Est. NAV (HK$) FY19 每股估值（港元） 16.1

Source: the Company, Guotai Junan International.

(30.0)

(25.0)

(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

Jan-18 May-18 Jul-18 Oct-18 Jan-19

% of return

HSI Vinda International

Co

mp

an

y R

ep

ort

See the last page for disclaimer Page 2 of 7

[Table_RightMar1]

1 F

eb

rua

ry 2

01

9

[Table_RightMar2]

Vin

da

In

tern

atio

na

l 维

达国

际 (0

33

31

HK

)

[Table_PageHeader] Vinda International (03331 HK)

Vinda’s 2018 Annual Results Review

Vinda's 2018 results were in line with expectations. In 2018, Vinda international’s ("Vinda" or the "Company") revenue grew

10.3% YoY to HK$14,879 billion, while organic revenue growth recorded 7.8% YoY increase. The Company's sales growth was

mostly contributed to price hike, while its sales volume only grew at 2%-3%. In 2H18, the Company's sales in tissue and

personal care both reported slower growth compared to 1H18 due to sluggish sales in 3Q18. But thanks to strong sales during

the Double Eleven festival and higher promotion expenses to counter competition, Vinda’s sales growth in 4Q18 rebounded

significantly from 3Q18, up 8.4% YoY, while organic growth achieved 11.5% YoY. The Company experienced robust sales

growth in the 2018 Double Eleven festival, which surged 50% YoY. Vinda’s online sales continued to expand in 2018, up 31.3%

YoY. Its sales contribution from online channels rose from 21% in 2017 to 25% in 2018. Vinda's star products which have high

margin, such as Vinda Deluxe, Vinda Ultra Strong and Tempo, delivered double-digit growth in 2018.

Gross margin was still under pressure due to pulp price hike. As pulp prices remained high in 2018, Vinda’s gross margin

still suffered, down 1.5 ppt YoY to 28.1%, though it has greatly raised its ASP. Due to more promotional activities in 4Q18, the

gross margin of the Company continued to contract in 4Q18, down 0.8 ppt QoQ to 26.3%. Due to pressure from high input

costs, the Company has been effectively working on expense control. Its operating margin improved 2.4 ppt QoQ in 4Q18,

mainly resulting from the save in SG&A expenses. Overall, Vinda’s 2018 shareholders’ profit increased 4.6% YoY to HK$649

million, in line with our expectation and market consensus. In 2H18, Vinda's shareholders' profit declined 22.7% YoY to HK$232

million, mainly due to the great fall in gross margin.

Table-1: Vinda’s 2018 Annual Results Review

Income Statement

HK$ million 2017 2018 YoY 2H17 2H18 YoY

Tissue 10,908 12,111 11.0% 5,835 6,184 6.0%

Personal Care 2,578 2,767 7.3% 1,343 1,360 1.3%

Revenue 13,486 14,879 10.3% 7,178 7,544 5.1%

COGS (9,486) (10,692) 12.7% (5,105) (5,535) 8.4%

Gross profit 4,000 4,187 4.7% 2,074 2,009 -3.1%

Other income/gains 62 (27) 142.8% 46 (31) 167.1%

Selling and marketing costs (2,352) (2,380) 1.2% (1,263) (1,216) -3.8%

Administrative expenses (727) (759) 4.3% (382) (385) 0.9%

Operating profit 984 1,020 3.7% 475 377 -20.7%

Finance income, net (187) (216) 15.3% (97) (111) 14.5%

FOEX (27) (6) -77.0% (16) 4 -123.8%

Profit before income tax 769 798 3.7% 362 269 -25.6%

Income tax (149) (148) -0.1% (62) (37) -40.5%

Net profit 621 649 4.6% 300 232 -22.7%

EPS 0.526 0.544 3.4% 0.251 0.194 -22.8%

Gross margin 29.7% 28.1% -1.5 ppt 28.9% 26.6% -2.3 ppt

- Tissue 29.6% 27.6% -2.0 ppt 28.8% 25.9% -2.9 ppt

- Personal Care 29.9% 30.4% 0.5 ppt 29.3% 30.0% 0.7 ppt

Operating margin 7.3% 6.9% -0.4 ppt 6.6% 5.0% -1.6 ppt

Net margin 4.6% 4.4% -0.2 ppt 4.2% 3.1% -1.1 ppt Source: the Company, Guotai Junan International.

Co

mp

an

y R

ep

ort

See the last page for disclaimer Page 3 of 7

[Table_RightMar1]

1 F

eb

rua

ry 2

01

9

[Table_RightMar2]

Vin

da

In

tern

atio

na

l 维

达国

际 (0

33

31

HK

)

[Table_PageHeader] Vinda International (03331 HK)

Figure-1: Vinda's Quarterly Revenue & Growth Figure-2: Vinda's Quarterly Gross Margin and Operating

Margin

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

Vinda's tissue sales recovered significantly in 4Q18, especially in online channels. Vinda's promotional activities worked

in 4Q18, which was a strong quarter for its tissue sales. Though Vinda emphasized more on profitability and management of

supply chain during the 2018 Double Eleven festival, it still achieved the highest sales on every e-commence platform. The

Company's online sales surged 50% during the 2018 Double Eleven festival, maintaining the high growth rate. According to

maijia.com, Vinda’s tissue sales topped in Taobao and Tmall during 4Q18. Even in December, Vinda’s performance was still

strong compared to other months (excluding November) and its competitors. According to China Household Paper Association

and internal estimates, China’s online tissue sales increased 28.1% YoY from RMB5,481 million in 2017 to RMB7,020 million in

2018, indicating that customers are still shifting from offline channels to online channels. Vinda’s online sales reported higher

growth than industry growth.

Figure-3: Online Sales of Tissue Paper in Taobao and

Tmall

Figure-4: Online Sales of Tissue Paper in Taobao and

Tmall

Source: Maijia.com. Source: Maijia.com.

Product mix upgrade has become the main driving force. During 4Q18, market competition in the tissue paper industry was

still intense. In order to drive top-line growth and counter competition, Vinda has launched more promotional activities and

offered discounts in 4Q18. Looking forward in 2019, in the case of declining pulp prices, Vinda is mostly likely to maintain price

or cut down slightly. Therefore, the driving force of top-line growth in 2019 will not come from price hikes as like in 2018. We

expect that the product mix upgrade will be the main driving force for the Company's sales growth. In 2018, its high-end

products such as Vinda Deluxe, Vinda Ultra Strong and Tempo all reported strong growth. For example, the sales of Tempo

increased more than 40% YoY growth in 2018, as its high quality has gained customer trust.

Increased concentration is still the long-term trend. We have noticed that some small tissue paper manufacturers

recovered in 2018 by selling super cheap products in Pinduoduo, which indicating that there is still strong demand for tissue

paper from Chinese consumers as the per capita consumption of tissue in China was 6.6 kg in 2018, much lower than

developed countries. We believe that increased concentration is still the long-term trend as the cheap products sold on

2,559

3,1073,022

3,3693,1043,204

3,367

3,8123,7813,553

3,413

4,131

17.8%

11.3%

7.4%

16.1%

7.0%6.7%

11.0%9.1%

11.7%

8.1%

3.0%

11.5%

0%

5%

10%

15%

20%

25%

30%

35%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

HK$ mnRevenue

YoY Growth

YoY Organic Growth

30.6%31.9%

31.6%

32.4%30.4%

30.6%

30.0%27.9%

28.5%31.0%

27.1%26.3%

9.3%8.9%7.7%7.8%

9.5%6.7%7.4%

5.9%8.8%8.8%

3.7%6.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

Gross margin Operating margin

-100%

0%

100%

200%

300%

400%

500%

600%

0

500

1,000

1,500

2,000

2,500

3,000

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

Total online sales

Top-4's sales

Total online sales YoY Growth

Top-4's sales YoY growth

RMB million

0

50

100

150

200

250

300

350

400

450

500

Jun-1

5

Aug

-15

Oct-1

5

Dec-1

5

Feb

-16

Ap

r-16

Jun-1

6

Aug

-16

Oct-1

6

Dec-1

6

Feb

-17

Ap

r-17

Jun-1

7

Aug

-17

Oct-1

7

Dec-1

7

Feb

-18

Ap

r-18

Jun-1

8

Aug

-18

Oct-1

8

Dec-1

8

Vinda

Breeze (Gold Hongye)

Mind Act Upon Mind (Hengan)

C&S

RMB million

Co

mp

an

y R

ep

ort

See the last page for disclaimer Page 4 of 7

[Table_RightMar1]

1 F

eb

rua

ry 2

01

9

[Table_RightMar2]

Vin

da

In

tern

atio

na

l 维

达国

际 (0

33

31

HK

)

[Table_PageHeader] Vinda International (03331 HK)

Pinduoduo has not replaced tdemand for high quality products from middle-class families. Due to an enlarging middle class and

urbanization, the market share of major tissue brands is still on a rising trend. On the other hand, the macro slowdown has not

delayed the shutdown of some outdated capacity as tissue paper manufacturers have a small-scaled employee base which has

less impact on the economy. In 2018, there was capacity of around 1.4 million tons shut down by the government, in line with

2017. Even Vinda will shutdown 30,000 tons of outdated capacity in Xinhui.

Pressure from pulp prices relieved considerably. Due to slower demand growth and high channel inventory, global pulp

prices witnessed sharp decline at the end of 2018. As at 18 January 2019, YTD Canada long fiber price and YTD Brazil short

fiber price decreased 15.9% YoY and 19.5% YoY, respectively. Looking forward, we expect that pulp prices may not regain

upward momentum. 1) The capacity utilization of global wood pulp production decreased below 90% in 2018, indicating looser

supplies. 2) China's port inventories remain high, putting pressure on pulp prices. 3) The poorer profitability of Chinese tissue

manufacturers reduced the upside potential of pulp prices. We expect that pulp prices may be favorable to tissue

manufacturers in 2019 compared to 2018. The decreased pulp prices are expected to favor Vinda's 2Q18 results since the

Company has 4 months inventory of pulp including on ships.

Figure-5: Global Pulp Prices Figure-6: Average Price of Imported Pulp

Source: Wind, Guotai Junan International. Source: China Customs, Guotai Junan International.

Personal care will root deeply in mainland China. The Company's sales performance in personal care was disappointing in

2H18, which only delivered 1.3% YoY growth, as the Company is waiting for the local production of its personal care products

in mainland China. Vinda has strong market position in the incontinence products market but the market size is pretty small due

to relevant consumption habits have not formed. On the other hand, Vinda has not achieved a breakthrough in the baby diaper

and sanitary napkin market. The Company will make more effort on tapping into the market of diapers and napkins, where

existing competitors have a solid foundation.

Earnings Forecast Assumptions and Revisions

We have revised up our earnings forecasts. We have slightly revised up our forecast revenue in 2019 and 2020 by 0.2% and

0.7%, with consideration of RMB appreciation, steady sales volume growth and flat price. We have slightly revised up 2019 and

2020 gross margin by 0.1 ppt and 0.1 ppt, respectively, due to stabilizing pulp prices. We expect that SG&A to ratio may be

maintained if market competition has not intensified, and FOREX loss will narrow significantly. Overall, we have revised up our

earnings forecasts in 2019 and 2020 by 10.9% and 7.9%, respectively.

400

500

600

700

800

900

1,000

Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18

USD/ton Bleached Sof twood Pulp: Harmac (Canada)

Bleached Hardwood Pulp: Ria Cell (Brazil)

(20%)

(10%)

%

10%

20%

30%

40%

500

550

600

650

700

750

800

850

Jan-1

6

Ap

r-16

Jul-1

6

Oct-1

6

Jan-1

7

Ap

r-17

Jul-1

7

Oct-1

7

Jan-1

8

Ap

r-18

Jul-1

8

Oct-1

8

USD/ton Average price of import pulp YoY growth

Co

mp

an

y R

ep

ort

See the last page for disclaimer Page 5 of 7

[Table_RightMar1]

1 F

eb

rua

ry 2

01

9

[Table_RightMar2]

Vin

da

In

tern

atio

na

l 维

达国

际 (0

33

31

HK

)

[Table_PageHeader] Vinda International (03331 HK)

Table-2: Earnings Estimates Revisions

NEW OLD CHANGE

2019F 2020F 2021F 2019F 2020F 2019F 2020F

Revenue 16,497 18,116 19,587 16,345 17,985 0.9% 0.7%

Gross profit 4,829 5,424 5,928 4,769 5,362 1.2% 1.1%

Operating profit 1,257 1,502 1,668 1,149 1,387 9.4% 8.3%

Net profit 848 1,046 1,344 764 956 10.9% 9.4%

EPS (HK$) 0.709 0.876 1.125 0.64 0.8 10.8% 9.4%

Gross margin 29.3% 29.9% 30.3% 29.20% 29.80% 0.1 ppt 0.1 ppt

Operating margin 7.6% 8.3% 8.5% 7.00% 7.70% 0.6 ppt 0.6 ppt

Net margin 5.1% 5.8% 6.9% 4.70% 5.30% 0.4 ppt 0.5 ppt Source: Guotai Junan International.

Upgrade to "Accumulate" and raise TP to HK$15.00. Vinda's revenue growth is back on track, which will be driven by

product mix upgrade and sales volume recovery. The decrease in pulp prices will relieve pressure for tissue manufacturers in

terms of profitability. We expect that major tissue manufacturers will focus on making profit first to improve earnings

performance in the short term, before the start of a new round of price war. Despite China's uncertain macro economy, tissue

paper demand is still solid enough. Tax-curing policy may stimulate higher-than-expected consumption. We expect that the

Company will grasp more market share from small players and strengthen its market position in high-end markets. Therefore

we have upgraded our rating to "Accumulate" and raise TP to HK$15.00, which represents 21.1x 2019 PER, 17.1x 2020 PER

and 13.3x 2021 PER.

Table-3: Peers Comparison

Company Ticker $ Share

Price

Market

Cap

(HK$ mn)

PER (x) PBR (x) ROE (%) Yield

(%)

Gross

Margin (%)

Operating

Margin

(%)

FY19F FY20F FY21F FY19F FY19F FY19F FY19F FY19F

HK Listed Household Products Companies

Vinda 3331 HK HKD 13.68 16,346 19.3 15.6 12.2 1.7 9.3 1.8 29.3 7.6

Hengan 1044 HK HKD 61.25 73,872 15.3 14.1 n.a. 3.4 22.8 4.6 42.7 24.8

Simple Average 17.3 14.9 12.2 2.6 16.0 3.2 36.0 16.2

Weighted Average 16.0 14.4 12.2 3.1 20.3 4.1 40.3 21.7

HK Listed Stable Companies

Dali Foods Group 3799 HK HKD 5.440 74,496 14.7 12.8 n.a. 3.8 27.2 4.1 39.4 21.4

China Resources Beer 291 HK HKD 28.100 91,161 32.6 26.3 n.a. 3.7 12.5 1.2 36.5 9.8

China Mengniu Dairy 2319 HK HKD 24.050 94,461 20.4 17.2 n.a. 2.8 14.2 1.2 38.5 6.3

Tingyi 322 HK HKD 11.020 61,910 19.9 18.0 n.a. 2.5 12.7 2.8 31.5 6.5

Want Want China 151 HK HKD 6.400 79,675 20.1 19.0 17.4 4.3 22.2 2.6 44.9 20.8

Tsingtao Brewery 168 HK HKD 34.800 53,279 24.8 22.7 23.5 2.1 8.9 1.8 38.0 6.7

Simple Average 22.1 19.3 20.5 3.2 16.3 2.3 38.2 11.9

Weighted Average 22.3 19.4 19.8 3.3 16.6 2.2 38.4 12.1

Global Listed Household Products Companies

Johnson & Johnson JNJ US USD 133.08 2,799,840 15.5 14.5 13.6 5.3 30.6 3.0 72.6 33.3

Procter & Gamble PG US USD 96.47 1,893,093 21.7 20.3 19.0 4.5 22.2 3.2 49.6 22.2

Unilever Plc ULVR LN GBp 3,984.50 1,196,220 18.2 16.3 15.2 11.0 63.1 3.9 44.1 19.6

Kimberly-Clark Corp KMB US USD 111.38 302,570 16.7 16.0 15.3 (201.4) (2,139.1) 3.8 33.4 17.8

Kao Corp 4452 JP JPY 7,767.00 273,472 23.4 21.7 19.2 4.0 17.8 1.8 44.9 15.0

Unicharm Corp 8113 JP JPY 3,361.00 150,335 28.7 25.8 21.6 4.2 15.7 0.9 39.6 14.7

Simple Average 20.7 19.1 17.3 5.8 29.9 2.8 47.4 20.4

Weighted Average 18.4 17.1 15.9 6.1 33.7 3.2 57.2 25.8

Source: Bloomberg.

Co

mp

an

y R

ep

ort

See the last page for disclaimer Page 6 of 7

[Table_RightMar1]

1 F

eb

rua

ry 2

01

9

[Table_RightMar2]

Vin

da

In

tern

atio

na

l 维

达国

际 (0

33

31

HK

)

[Table_PageHeader] Vinda International (03331 HK)

Financial Statements and Ratios

[Table_IncomeStatement] Income Statement

Year end 31 Dec (HK$ m) 2017A 2018A 2019F 2020F 2021F

Total Revenue 13,486 14,879 16,497 18,116 19,587

Cost of sales (9,486) (10,692) (11,669) (12,692) (13,659)

Gross profit 4,000 4,187 4,829 5,424 5,928

Selling and marketing costs (2,352) (2,380) (2,706) (2,971) (3,232)

Administrative expenses (727) (759) (866) (951) (1,028)

Other income and expense 62 (27) 0 0 0

Operating profit 984 1,020 1,257 1,502 1,668

Net finance costs (187) (216) (217) (194) 11

FOREX & others (27) (6) 20 0 0

Profit before tax 769 798 1,060 1,308 1,680

Income Tax (149) (148) (212) (262) (336)

Profit after tax 621 649 848 1,046 1,344

Non-controlling Interest 0 0 0 0 0

Shareholders' Profit / Loss 621 649 848 1,046 1,344

Basic EPS 0.526 0.544 0.709 0.876 1.125

[Table_CashFlowStatement] Cash Flow Statement

Year end 31 Dec (HK$ m) 2017A 2018A 2019F 2020F 2021F

PBT 769 798 1,060 1,308 1,680

DD&A 702 0 710 753 784

Change in working capital (371) 0 (2) 236 (361)

Others 350 962 324 317 108

Cash generated from operations 1,450 1,760 2,092 2,614 2,211

Income and interest tax paid (464) (428) (415) (487) (369)

Cash from Operating Activities 986 1,332 1,677 2,126 1,842

Investing activities

Capital expenditure (1,244) (1,173) (1,200) (1,200) (1,200)

Others (33) (11) (23) (19) (18)

Cash from Investing Activities (1,277) (1,184) (1,223) (1,219) (1,218)

Financing activities

Loans changes (422) 206 252 (502) (200)

Dividend paid (203) (239) (208) (245) (173)

Decrease in amounts due to a related

party

0 0 (98) 2 0

Others 324 (23) 0 0 0

Cash from Financing Activities (300) (57) (54) (745) (373)

Net Changes in Cash (591) 91 400 162 251

Foreign exchange effect 110 (51) 11 0 0

Cash at Beg of Year 1,015 535 574 986 1,148

Cash at End of Year 535 574 986 1,148 1,399

Source: the Company, Guotai Junan International.

[Table_BalanceSheet] Balance Sheet

Year end 31 Dec (HK$ m) 2017A 2018A 2019F 2020F 2021F

Property, plant and equipment 8,740 8,997 10,157 10,604 11,020

Intangible assets 2,914 2,823 2,793 2,708 2,627

Others 1,399 1,462 1,456 1,542 1,675

Total Non-current Assets 13,052 13,282 14,406 14,855 15,322

Cash & Cash Equivalents 535 574 986 1,148 1,399

Inventories 3,048 2,746 3,584 2,953 4,082

Bills receivable 2,310 2,428 2,385 2,901 2,814

Others 29 37 38 40 42

Total Current Assets 5,922 5,785 6,993 7,042 8,337

Total Assets 18,974 19,068 21,399 21,897 23,659

Short-term debts 690 1,023 1,087 959 908

Bills payable 4,494 4,436 5,230 5,353 6,036

Accrued expenses and other payables 4 2 2 2 2

Others 98 189 190 214 250

Total Current Liabilities 5,286 5,649 6,508 6,529 7,197

Net current liabilities 636 136 485 514 1,141

Total assets less current liabilities 13,688 13,418 14,891 15,368 16,463

Long-term debts 3,310 3,005 3,193 2,819 2,669

Loan from a related party 1,236 1,218 1,120 1,122 1,122

Others 1,642 1,684 1,588 1,638 1,712

Total Non-current Liabilities 4,952 4,688 4,781 4,457 4,381

Total Liabilities 10,237 10,338 11,289 10,986 11,578

Share capital 119 119 119 119 119

Reserves 8,617 8,610 9,990 10,792 11,962

Total Shareholders' Equity 8,736 8,730 10,110 10,911 12,082

Minority Interest 0 0 0 0 0

Total Equity 8,736 8,730 10,110 10,911 12,082

[Table_FinancialRatio] Financial Ratios

2017A 2018A 2019F 2020F 2021F

Turnover Growth (%) 11.9 10.3 10.9 9.8 8.1

Gross Profit Growth (%) 4.8 4.7 15.3 12.3 9.3

EBIT Growth (%) -2.4 3.7 23.3 19.5 11.1

Net Profit Growth (%) -5.0 4.6 30.5 23.4 28.4

Gross Margin (%) 29.7 28.1 29.3 29.9 30.3

EBIT Margin (%) 7.3 6.9 7.6 8.3 8.5

Net Margin (%) 4.6 4.4 5.1 5.8 6.9

ROE (%) 8.0 7.4 9.0 10.0 11.7

ROA (%) 3.6 3.4 4.2 4.8 5.9

Inventory turnover days 93.0 98.9 99.0 94.0 94.0

Account receivable days 56.7 53.7 53.3 53.3 53.3

Account payable days 151.6 152.4 151.2 152.2 152.2

Cash conversion cycle -1.9 0.2 1.1 -4.9 -4.9

Current ratio (x) 1.1 1.0 1.1 1.1 1.2

Quick ratio (x) 0.5 0.5 0.5 0.6 0.6

Net gearing (%) 53.8 53.5 43.7 34.4 27.3

Net interest cover (x) 5.3 4.7 5.8 7.8

Net interest

income

Payout ratio (%) 36.1 36.8 35.0 35.0 35.0

Co

mp

an

y R

ep

ort

See the last page for disclaimer Page 7 of 7

[Table_RightMar1]

1 F

eb

rua

ry 2

01

9

[Table_RightMar2]

Vin

da

In

tern

atio

na

l 维

达国

际 (0

33

31

HK

)

[Table_PageHeader] Vinda International (03331 HK)

[Table_CompanyRatingDefinition] Company Rating Definition

The Benchmark: Hong Kong Hang Seng Index

Time Horizon: 6 to 18 months

Rating Definition

Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable.

Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable.

Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral.

Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

[Table_IndustryRatingDefinition] Sector Rating Definition

The Benchmark: Hong Kong Hang Seng Index

Time Horizon: 6 to 18 months

Rating Definition

Outperform 跑赢大市 Relative Performance>5%; or the fundamental outlook of the sector is favorable.

Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral.

Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.

[Table_DISCLOSUREOFINTERESTS] DISCLOSURE OF INTERESTS

(1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for KAISA GROUP (01638 HK),GUOTAI JUNAN I (01788 HK),BINHAI INVESTMENT (02886 HK),VALUE A SHARE (03095

HK),CSOP MSCI (03149 HK),CAM SCSMALLCAP (03157 HK),HAITIANTIAN (08227 HK),CSOP MSCI-R (CNY) (83149 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report.

(4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months.

(5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report.

(6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.

DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction. © 2019 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Tel.: (852) 2509-9118 Fax: (852) 2509-7793 Website: www.gtja.com.hk