Shanghai Jahwa Alert:A new strategic plan to be announced in March

New chairwoman elected

    Shanghai Jahwa (Jahwa) hosted shareholders’ conference on 12 Decemberand Ms Zhang Dongfang has been elected as the chairwomen of the board.

    Ms Zhang announced a few new initiatives, leveraging on her more than 20years of experience in the FMCG industry and her knowledge with Jahwa’sbrand. The new initiatives are R&D lead, brand as momentum driver, channelinnovation, and supply enhancement. She also mentioned that managementwill announce a new mid-to-long term strategic plan during the company’sdistribution conference in March 2017.

    She believes that Jahwa’s fundamentals are quite strong given its stable brandcompetitiveness, solid customer base, mature channel infrastructure and loyaldistributors. The exposure to emerging channels remains a weakness, and thusmore resources will be allocated to resolve this issue.

    Ping An’s representative commented that Jahwa is a long-term investment forthe company and it hopes that under the leadership of Ms Zhang Jahwa willaccelerate its restructuring.

    Deutsche Bank view

    To recap, Jahwa’s core NP has experienced 18%/45% decline for 2015/9M16,falling behind the company’s guidance and market expectations. Thus, themarket has expected the new chairwoman to come up with a new strategyand help turn around Jahwa. Ms. Zhang was the executive director and CEO ofVinda International (3331.HK) from 2011 to 2015. Prior to Vinda, she workedwith Firmenich as the managing director of the Greater China market.

    We are waiting for the company’s new strategic plan before drawing anyconclusions. We believe that investors are at the sideline too. In our view, atthe current stock price, Jahwa is fairly valued.