[20081114] Apparel : Belle (1880) "SSS Growth Declined Significantly in
Pls see attached the full PDF research report, below is a highlight:
Key Points:
¨ SSS growth slid in October. Footwear and sportswear had much lower SSS growth of 5% and zero respectively after golden week, slowing revenue growth overall. This is mainly because: 1) weaker economic condition impacted the retail market; 2) warm weather delayed the sale of new arrivals for winter. If it continues, full year earnings may not be able to meet our expectation.
¨ 2009: slower expansion of mature brands and limited near-term contribution from newly-acquired brands yield a slower top line outlook. On the one hand, the rapid expansion in 07~08 has left little space for mature brands to grow. On the other hand, the operation of newly acquired brands means more uncertainties as the weak consumption sentiment may make department stores reluctant to introduce new brands. Belle is expected to focus more on operating efficiency improvement (such as by closing unprofitable stores).
¨ We revise down our 2008 net profit growth estimate to 27.6%, which means an HoH net profit growth decline from 36% to 22% in 2H08. We also revise down 09~10 assumptions for store expansion (+10% new stores per year) and organic growth (4%). After revision the 2008, 2009 and 2010 net growth forecasts are 28%, 18% and 14%.
¨ Maintain BUY but watch short-term risks. Belle is now trading at 10.7x P/E for 2008E, middling among peers. We are still positive on its leading position in domestic footwear and sportswear distribution and its power to outperform in upcycles, but as a large player in a relatively small sub-sector, it faces short-term growth pressure.
 belle1880_081114_oct sss declined(us).rar (122.65 KB)
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发表于 2008-11-14 12:47
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