1、 Asia Pacific Strategy Input costs pressuresidentifying the weak links Strategy | Strategy Figure 1: PPI-CPI inflation differentials APAC includes China, India, Indonesia, Japan, Taiwan and Thailand. Source: CEIC, Credit Suisse Input cost inflation inflicting significant damage. Input cost inflation
2、 is inflicting significant damage on Asian earnings. We find that cost pressures are less serious than in Europe but bigger than in the US. The outlook for 1Q pressures is fairly flat, but 2Q should see renewed margin contraction. Commodity pricing, rather than wages, is the main problem. Margin tre
3、nds beyond 2Q will in large part depend on commodity price moves. Luckily, if commodities correct, Asian margins could recover quickly. Japan, Philippines most sensitive among markets. Our analysis finds that commodities importers in general and especially Japan and Philippines are sensitive to inpu
4、t cost inflation. Commodity exporters Indonesia, Australia and Malaysia appear resilient. Our existing positions already Overweight the three resilient markets, Underweight Japan and give a Market Weight to Philippines. Utilities, Consumer, Industrials and downstream Materials most sensitive among s
5、ectors. Our analysis finds that Utilities, Consumer, Industrials and downstream Materials are the most sensitive non-financial sectors, while IT and Energy stand out as resilient. We are Overweight three sectors with minimal cost pressuresBanks, IT and Materialsand are Underweight Utilities and Cons
6、umer Staples. Sensitive stocks. Our analysts and strategists have identified 30 stocks that are sensitive to input cost pressures and that we rate as Underperform or Neutral. Consistent with our top-down analysis, overrepresented sectors include downstream Materials (cement, asphalt, petrochems, pol
7、yester, packaging), Utilities, Food, FMCG, Industrials, Transport (airlines, taxis) and Retail Trade. -10-50510152025Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22ppUSEUAPAC5 May 2022 Equity Research Asia Pacific DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,
8、ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the obj
9、ectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Research Analysts Dan Fineman 66 2 614 6218 dan.finemancredit- Kin Nang Chik 852 2101 7482 kinnang.chikcredit- 每日免费获取报告1、每日微信群内分享7+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、行研报告均为公
10、开版，权利归原作者所有，起点财经仅分发做内部学习。扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。 5 May 2022 Asia Pacific Strategy 2 Focus charts Figure 2: YoY change in APAC cash gross margins Figure 3: Margins weakest in AxJ markets with biggest increase in PPI inflation Source: Refinitiv Datastream, Credit Suisse Taiwan excluded due to ex
11、port orientation of most non-financials. Source: Refinitiv Datastream, CEIC, Credit Suisse Figure 4: Cash gross margins Figure 5: YoY change in cash gross margin Source: Refinitiv Datastream, Credit Suisse Source: Refinitiv Datastream, Credit Suisse Figure 6: PPI-CPI differentials Figure 7: YoY chan
12、ge in cash gross margin Monthly data unavailable for Hong Kong and Australia. Source: CEIC Source: Refinitiv Datastream, Credit Suisse -0.6-0.4-0.20.00.20.40.60.81.01.21.41.61Q202Q203Q204Q201Q212Q213Q214Q21ppChinaHong KongIndonesiaIndiaKoreaMalaysiaPhilippinesSingaporeThailand-4-2024681012141618-2-1
13、01234YoY change in 2021 PPI inflation (pp)Change in EBITDA margin in 2021 (pp)24%26%28%30%32%34%36%38%40%1Q202Q203Q204Q201Q212Q213Q214Q21USEUAPAC-6-4-20246810ChinaIndonesiaIndiaJapanKoreaMalaysiaPhilippinesThailandTaiwanpp1Q212Q213Q214Q21-4%-2%0%2%4%6%8%10%12%14%16%SingaporeTaiwanJapanChinaIndiaMala
14、ysiaKoreaThailandPhilippinesIndonesia4Q21 averageJan-Feb 22 average-25-20-15-10-50510Communication ServicesConsumer DiscretionaryConsumer StaplesEnergyHealth CareIndustrialsInformation TechnologyMaterialsReal EstateUtilitiesUtilities ex Kepcopp1Q212Q213Q214Q215 May 2022 Asia Pacific Strategy 3 Input
15、 cost pressures: Identifying the weak links A significant toll taken Input cost pressures are exacting a significant toll on Asian non-financial earnings. We consider cost inflation the most important factor behind deteriorating margins in 2H21 and expect another leg down in 2Q. Although Asia is hol
16、ding up better than Europe where exposure to Russian energy is ultra-high, Asia is suffering more than the US where commodities are a smaller part of cost structures. Asian margin trends after 2Q will likely continue to depend largely on commodity pricing. In contrast to the US, wage pressures are n
17、ot an issue for Asia. Because wage pressures are minimal, Asian margins could recover quickly if commodities corrected, or margins could worsen if commodities rally further. The most sensitive markets As might be expected given the importance of commodities for cost pressures, commodity exporters In
18、donesia, Australia and Malaysia are displaying low or positive margin sensitivity, while commodity importers Japan, Singapore and Philippines are showing the greatest sensitivity, though we note that the large financials weighting in Singapore largely protects that market. Our findings largely align
19、 with our current market weightings. We are Overweight Australia, Indonesia and Malaysia among others, Underweight Japan and Market Weight Philippines. Although we are Overweight Singapore, we favour banks over non-financials. The most sensitive sectors Our analysis finds Utilities, Consumer, Indust
20、rials and downstream Materials as most sensitive to input cost inflation. Asian utilities often cannot pass through higher energy costs quickly, and consumer firms have likely had more trouble than usual passing on higher costs due to still-weak consumer demand in the region. Downstream Materials st
21、ocks also have suffered. Upstream Materials and Energy are gainers, while IT is insensitive. Our existing sector weightings are largely consistent with the margin trends. We are Underweight Utilities and Consumer Staples and Market Weight Discretionary and Industrials. Our biggest Overweight is Bank
22、s, which are not subject to commodity price inflation, while we are also slightly Overweight IT. Our Overweight in Materials is biased towards upstream. The main discrepancy from our input cost inflation analysis is our Market Weight in Energy. The most sensitive stocks Our analysts and strategists
23、have identified 30 stocks that are sensitive to input cost pressures and that we rate as Underperform or Neutral. Consistent with our top-down analysis, overrepresented sectors include downstream Materials (cement, asphalt, petrochems, polyester, packaging), Utilities, Food, FMCG, Industrials, Trans
24、port (airlines, taxis) and Retail Trade. 5 May 2022 Asia Pacific Strategy 4 A significant toll taken Input cost pressures are taking a significant toll on Asia. Although the problem may be peaking, input costs will likely continue to hurt earnings and consensus revisions through 2Q. Big problem at p
25、resent There are signs that input costs contributed considerably to recent earnings weakness. Margin pressures are clearly an issue. YoY expansion of cash gross margins began to fall in 3Q last year, and margins fell YoY in 4Q (Figure 8). Margin pressures have explained a significant part of the neg
26、ative turn in EPS revisions in 2H21 (Figure 9). Figure 8: YoY change in APAC cash gross margins Figure 9: Margin pressures explain much of EPS cuts Source: Refinitiv Datastream, Credit Suisse Source: Refinitiv Datastream, Credit Suisse In theory, margin pressures could be the result of weak selling
27、prices, but inflation trends indicate that the cost side is the problem. PPI inflation rose sharply last year, especially in 2H. Notably, margins in AxJ performed well while PPI inflation was negative in 2020 but weakened in 2021 as PPI inflation turned increasingly positive (Figure 10). In general,
28、 markets with bigger increases in PPI saw bigger contractions in margins (Figure 11). Figure 10: Margins contracted once PPI inflation turned positive Figure 11: Margins weakest in AxJ markets with biggest increase in PPI inflation Source: Refinitiv Datastream, CEIC, Credit Suisse Taiwan excluded du
29、e to export orientation of most non-financials. Source: Refinitiv Datastream, CEIC, Credit Suisse -0.6-0.4-0.20.00.20.40.60.81.01.21.41.61Q202Q203Q204Q201Q212Q213Q214Q21pp-0.6-0.4-0.20.00.20.40.60.81.01.21.41.6-15%-10%-5%0%5%10%2Q203Q204Q201Q212Q213Q214Q21ppMSCI APAC QoQ EPS revisions (LHS)YoY chang
30、e in APAC gross profit margin (RHS)-4-2024681012-1.0-0.50.00.51.01.52.01Q202Q203Q204Q201Q212Q213Q214Q21%ppYoY change in AxJ gross profit margin (RHS)AxJ PPI inflation (RHS)ChinaHong KongIndonesiaIndiaKoreaMalaysiaPhilippinesSingaporeThailand-4-2024681012141618-2-101234YoY change in 2021 PPI inflatio
31、n (pp)Change in EBITDA margin in 2021 (pp)5 May 2022 Asia Pacific Strategy 5 Commodities, not wages, the problem Asias cost pressures differ from those in the US. Whereas wages are becoming problematic in developed markets, in Asia, wage growth has eased since the pandemic (Figures 12 and 13). Subdu
32、ed or falling growth in SG&A expenses also points to a lack of wage pressures (Figure 14). In any case, wages form a smaller part of P&Ls in Asia than in DMs. We can safely conclude that rising input pricing, especially for commodities, explains most of Asias margin pressures. Figure 12: US wage gro
33、wth Figure 13: Selected AxJ market wage growth Source: CEIC Includes China, HK SAR, Indonesia, Singapore, Taiwan, and Thailand. Weighted by 2020 GDP. Source: CEIC, Credit Suisse Figure 14: YoY growth in SG&A expenses Source: Refinitiv Datastream, Credit Suisse 0%1%2%3%4%5%6%2010201120122013201420152
34、016201720182019202020210%2%4%6%8%10%12%14%20102011201220132014201520162017201820192020-20%-10%0%10%20%30%40%50%60%1Q202Q203Q204Q201Q212Q213Q214Q21ChinaJapanAxJ ex-China5 May 2022 Asia Pacific Strategy 6 Stability in 1Q, but 2Q deterioration likely There are indications that 1Q resultsonce they are a
35、ll inwill show some signs of more stable margins. Data from markets with full March data shows flat PPI inflation (Figure 15). Chinas PPI-CPI differential fell in 1Q, while the gap for the rest of APAC markets with full data was flat (Figure 16). Figure 15: PPI inflation of selected APAC markets Fig
36、ure 16: PPI-CPI inflation differentials peaked in 1Q Includes China, India, Indonesia, Japan, Taiwan and Thailand. Source: CEIC, Credit Suisse Includes China, India, Indonesia, Japan, Taiwan and Thailand. Source: CEIC, Credit Suisse 2Q, however, should see another round of margin pressure. Given tha
37、t much of the spike in commodity pricing occurred after the war began on 24 February, average PPIs and input pricing for 2Q should be higher than in 1Q (Figure 17). Figure 17: CRB spot index Source: CEIC The outlook beyond 2Q should largely depend on commodity pricing. If prices stay stable or ease,
38、 margins should gain some relief. -2%0%2%4%6%8%10%12%Jan-21Mar-21May-21Jul-21Sep-21Nov-21Jan-22Mar-22-10-5051015Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22ppChinaSelected APAC markets ex-China420470520570620670Jan-21Mar-21May-21Jul-21Sep-21Nov-21Jan-22Mar-225 May 2022 Asia Pacific Strateg
39、y 7 Middling impact compared with DMs Compared with western markets, the impact of input cost pressures appears middling. Margins have weakened more than in the US but much less than in Europe (Figure 18). Inflation trends seem to have determined the pattern. Asias PPI-CPI differential has widened m
40、ore than in the US but much less than in Europe (Figure 19). Figure 18: Cash gross margins Figure 19: PPI-CPI inflation differentials Source: Refinitiv Datastream, Credit Suisse APAC includes China, India, Indonesia, Japan, Taiwan and Thailand. Source: CEIC, Credit Suisse We believe the following fa
41、ctors explain Asias middling positioning globally: 1. Asian firms tend to have lower pricing power than US peers and have higher contributions of commodities to cost structures. 2. Low dependence on Russian energy has given Asia a less severe PPI situation than Europe. Going forward, the balance bet
42、ween commodities pricing and wage pressures in the US could determine whether Asian margins can outperform those of US peers. If commodities stabilize while US wage pressures remain high, Asia could outpace the US. The lack of wage pressures could enable Asian margins to recover quickly were commodi
43、ties to correct. One way or the other, Asian margins will likely prove more volatile than for the US due to the greater sensitivity to commodity pricing. 24%26%28%30%32%34%36%38%40%1Q202Q203Q204Q201Q212Q213Q214Q21USEUAPAC-10-50510152025Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22ppUSEUAPAC
44、5 May 2022 Asia Pacific Strategy 8 The most sensitive markets Our analysis finds that Japan, Philippines and Singapore non-financials are facing the biggest cost pressures, while the three net commodities exportersAustralia, Indonesia and Malaysiaare best protected. Our analysis focuses on two appro
45、aches. First, we look at cost and margin trends in reported earnings of covered non-financials. Second, we examine PPI inflation trends for clues as to what to expect for results in 1Q22 and beyond. Margin pressure trouble spots Margin trends point to all markets other than the commodity exporters a
46、s facing significant input cost pressures. Full-year margin trends paint a somewhat comforting picture. All markets other than China, India, Singapore and Australia enjoyed expansion in cash gross margins, and almost all the gains were significant (Figure 20). Figure 20: Change in cash gross margins
47、 2020-21 Source: Refinitiv Datastream, Credit Suisse Full-year data, however, can be deceiving. Given the big bounce in revenues from the 2020 pandemic lows, it would have been surprising had margins not improved. If we look at trends for the markets with rich quarterly datai.e., all other than Hong
48、 Kong, Singapore and Australiathe picture darkens. Although the biggest increases have come this year, oil and other commodities were already rising over most of 2021 before the Ukraine war, so margins in affected markets should have displayed greater pressures over the course of the year. As expect
49、ed, all APAC markets except the two net commodities exportersIndonesia and Malaysiasaw deterioration either 3Q-4Q or 4Q alone (Figure 21). Three big net commodities importersThailand, India and Philippinesstand out for substantial deterioration of margins into negative territory. Two other commoditi
50、es exportersJapan and Koreahad better terminal points but also suffered substantial deterioration. On the positive side, the two net commodities exportersIndonesia and Malaysiasaw fairly steady or high margin gains. China margins contracted every quarter but at a fairly constant pace. Taiwan is a bi
