/ thematic-hk

FIFA World Cup Beneficiaries – HK Stocks

With the FIFA World Cup kicking off we decided to have a look at which Hong Kong listed companies might be involved.

We took a few keywords and ran them across the universe of annual reports from the latest earnings season.

As expected, the majority of companies were involved via sponsorship. We've categorised the results into

  • Sponsors
  • No impact
  • Direct impact on sales

For the companies that paid for sponsorship it's hard to quantify what kind of top-line impact this will have for them. Even for the direct beneficiaries it's only going to be a single data point to model top-line growth. As such, the major conclusion is that none of the companies will really have a major imapct as a result of the World Cup. Nevertheless, it was interesting to see which companies see at the World Cup as a brand or sales opporunity.

Results

No Impact

0102 Summit Ascent

Summit Ascent run a casino, Tigre de Cristal in the Russian Far East, Siberia. As part of their growth outlook they mention "We expect awareness of the Russian Federation as a tourist destination to only continue to grow when hosting the '2018 FIFA World Cup Russia' this summer." While tourism will no doubt rise, given that all of the stadiums are in European Russia it's unlikely that Siberia will benefit much from the rise in tourism, at least as a direct result of the World Cup.

0138 CCT Fortis

Fortis are primarily financial services brokerage with a bunch of smaller businesses bolted on. One of these bolt-on businesses is a multimedia company. As part of this they released a mobile football game 'Goal DX' to 'Leverag[e] the momentum and passion for the game of football being driven by the 2018 FIFA World Cup'. Expect minimal impact.

Sponsors

0921 Hisense

Hisense are a manufacturer of household electronics. They are an official sponsor of the 2018 FIFA World Cup. While they prominently place the World FIFA Cup logo on the first page of their annual report, they only make one passing mention of it in the MD&A.

1585 Yadea Group Holdings

Yadea are a manufacturer of electric scooters and bicycles. They are a regional sponsor for the 2018 FIFA World Cup. Regional sponsorship is a new sponsor catgegory that FIFA introduced this year. The five regions are North America, South America, Europe, Middle East & Africa, and Asia. As such, Yadea are the regional sponsor for Asia. The benefits are "LED board exposure during the event, access to tickets and brand association rights for Asia region". For reference, since over 90% of the company's revenues are domestic they do not have a breakdown. It's probably close to 100%.

Milk Mafia

The following three companies are a special group as they all have a shareholding relationship with China Mengniu who orchestrated a group sponsorship deal by the looks of things.

2319 China Mengniu Dairy

China Mengniu are a manufacturer and distributer of dairy products in China. They are an official sponsor of the 2018 FIFA World Cup, the benefits of which are:

Four categories comprising a total of 161 products under 27 brands of the Group have been awarded the titles of “Official Drinkable Yogurt of the 2018 FIFA World CupTM”, “Official Pre-packaged Ice Cream of the 2018 FIFA World CupTM” and “Official Milk of the 2018 FIFA World CupTM (for Greater China)”, and “Official Powdered Milk of the 2018 FIFA World CupTM (for Greater China)”. Mengniu is the first dairy product brand to cooperate with FIFA as a global sponsor and also the first food and beverage brand in China to be a global sponsor of the World Cup
––Excerpt from the annual report

They also have a global endorsement deal with Lionel Messi. Curiously, while images of Messi feature very prominently in their annual report (he's on the cover) he's not mentioned by name once.

1117 China Modern Dairy Holdings

China Modern Dairy are a dairy farming and milk production company. 74% of their revenues come from China Mengniu who in 2017 purchsaed 60.76% of the company. One of their room-temprerature milk brands "Fresh", was made the "Official Milk of the 2018 FIFA World Cup"

1230 Yashili International Holdings

Yahsili are a milk powder company. China Mengniu are their largest, and controlling shareholder. Danone are their second largest shareholder. As such, they have four brands of milk powder: their own brand "Yashili", "Reeborne", Danone's brand "Dumex", and the epynomous "Mengniu". These four brands ar are the "Official Milk Powder of the 2018 FIFA World Cup"

1920 Samsonite

Samsonite are a manufacturer of travel goods and own multiple brands i nthe segment. They are the odd one out of all the sponsors here as they don't directly sponsor the World Cup. They do, however, have Christiano Ronaldo as their brand ambassador for the brand 'American Tourister'.

Direct Impact on Sales

1070 TCL Multimedia

TCL are a manufactuer of consumer electronics. Similar to Samsonite, TCL sponsor another superstar, Neymar Jr as their global brand ambassador. However, in addition to the sponsorship they also expect TV sales to jump as a direct result of the FIFA World Cup. They also mention the Winter Olympics and Asian Games as being catalysts for increased TV sales.

2166 Smart Core Holdings

Smart Core are a manufacturer of Integrated Circuits (IC). The majority of their sales come from ICs that power LCD TVs. Similar to TCL, they expect TV sales to jump this year, in part thanks to the FIFA World Cup. As such, they expect sales of their chips to get a boost too.

8279 AGTech Holdings

AGTech are a lottery operator in China. Sports betting in China has been a major growth area for the industry with a 24% year-on-year increase last year. It now accounts for 49% of the total lottery market and they expect the FIFA World Cup to boost this yet again.

0008 PCCW

PCCW are a telecoms operater in Hong Kong. They own the exclusive broadcast rights to 2018 FIFA World Cup in Hong Konga and will distribute it through their paid IPTV brand Now TV, in addition to their newly launched terrestrial broadcaster Viu TV. Expect stronger Now TV sales as a result.

Bonus

0005 HSBC

HSBC turned up in the screen because of a US Department of Justice investigation regarding FIFA;

The DoJ is investigating whether multiple financial institutions, including HSBC, permitted the processing of suspicious or otherwise improper transactions, or failed to observe applicable AML laws and regulations

Not quite a benfeciary of the world cup, but impacted by FIFA nevertheless!

Summary

Sponsors

0921 Hisense - official sponsor of WC
1585 Yadea Group - regional sponsor WC
1117 China Modern Dairy - milk mafia
1230 Yashili International - milk mafia
2319 China Mengniu Dairy Company - milk mafia, official sponsor of WC
1920 Samsonite - sponsor Christiano Ronaldo but not the WC

No Impact

0102 Summit Ascent - casino in Siberia
0138 CCT Fortis - mobile football game

Direct impact on sales

0008 PCCW - TV rights in Hong Kong
8279 AGTech Holdings - expect WC betting to boost sales
1070 TCL Multimedia - expect higher TV sales thanks to WC
2166 Smart Core Holdings - IC for TVs, expect higher sales

Bonus

0005 HSBC Holdings - investigated by DoJ for FIFA involvement


Possbily our biggest takeaway is that FIFA are masters of creating niche categories for their sponsors;

  • Official Drinkable Yogurt of the 2018 FIFA World Cup
  • Official Pre-packaged Ice Cream of the 2018 FIFA World Cup
  • Official Milk of the 2018 FIFA World Cup
  • Official Powdered Milk of the 2018 FIFA World Cup

Who knew!

FIFA World Cup Beneficiaries – HK Stocks
Share this

Subscribe to Deep River Research