Macquarie Research : Pan-Asian Hunting Stocks -Demographics: Old and Young

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Pan-Asian Hunting Stocks
Demographics: Old and Young
The focus article investigates the investment opportunities on offer resulting from
two Pan-Asian demographic developments; the growth of the elderly population
in most countries and the growth in the youth demographic in some.
Thematic investing is about earnings expectations three-to-five years out as
compounding turns today’s exciting growth opportunities into material business.
Page two shows the performance of each of eight thematic baskets.
The table below sets out the principal themes and some of the historical and
prospective articles for each of the themes.

Themes and Pan-Asian Hunting Stocks articles
Themes Hunting Stocks articles
Energy, resource, food,
and water security
 Soft commodities (February 2011)
 Asian Military Matters (September 2010)
 Satiating Asia’s thirst for water (April 2010)
 A new Asian dawn for nuclear power (February 2010)
 Rare metals (December 2008)
Clean energy/clean cars  Clean energy in the Asia Pacific (October 2008)
Making money in China  Japan and China monthlies
 Japanese paper industry (August 2009)
Transnational Cos  Cross-border steel investing (November 2010)
 Evolution of the LCD-TV supply chain in Asia (July 2010)
 Global Survivors: The next big theme (5 Feb 2009, Japan Strategy Weekly)
 Cross-border consuming (June 2008)
Demographics  Old and Young (March 2011)
Source: Macquarie Research, March 2011
Focus article: Demographics – the Old and the Young
With this report we launch the demographics over-arching thematic. Asia’s
demographic trends are detailed over pages 6-13.
Healthcare is the obvious beneficiary of the “old”, but which industry can take
advantage of the “young”? We believe the answer is to be found in crime rate
trends and the potential for growth for security service companies.
Companies involved in healthcare across Asia are listed over pages 14-16.
Amongst the larger market cap companies we recommend two healthcare
equipment companies: Terumo (4543 JP, ¥4,470, Outperform, TP: ¥5,900,
Yukihiro Goto) and Olympus (7733 JP, ¥2,388, Outperform, TP: ¥2,800, Yukihiro
Goto) and one pharmaceutical company: Dr. Reddy's Laboratories (DRRD IN,
Rs1,581.15, Outperform, TP: Rs1,840.00, Abhishek Singhal)
Companies involved in security services across Asia are discussed over pages
39-47. Secom (9735 JP, Not Rated) is the Pan-Asian leader in security services.
We recommend Aeon Delight (9787 JP, ¥1,507, Outperform, TP: ¥2,150, Robert
Burghart) because of 1) the growth potential for the security service business, 2)
its business diversification into facility management 3) the geographical
expansion strategy as one of the group companies of the Aeon Group.