China Resources Enterprise (HKSE:00291), a conglomerate that focuses partly on retailing food processing and distribution, was among the biggest detractors. The company’s efforts to increase scale through some strategic acquisitions may depress its near-term profitability and return on capital metrics. We continue to believe that the execution risk stemming from integration of some acquired supermarkets and hypermarkets remains manageable. However, the firm may still be challenged by the trend of shoppers increasingly turning to online platforms.
From Matthews Pacific Tiger Fund (Trades, Portfolio)’s Second Quarter 2014 Commentary.
