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KGI Alert: Poya (5904.TW/5904 TT, OP) : Robust SSSG nudges Nov sales growth to 35% YoY




KGI Greater China


06 Dec 2013





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What’s new Poya’s November sales increased a whopping 34.9% YoY to NT$634mn, driven by accelerating same store sales growth (SSSG). We expect the strong momentum to carry into next year as the company continues to upgrade its stores, which has driven customer traffic and per ticket sales. Implications November sales up 35% YoY. Poya reported November sales of NT$634mn, up 2.4% MoM and 34.9% YoY thanks to robust SSSG. We expect the strong momentum to continue through the year-end and into 2014 as the firm continues to upgrade stores to the new fourth-generation format. Accumulated sales in January-November rose 14.5% YoY, while October-November total sales achieved 70% of our 4Q13 revenue forecast. With stronger business in an otherwise slow quarter, we expect 4Q13 sales to beat our forecast by some 5% and see upside to our margin estimate of 38.6% as higher sales will lead to more rebates from supply vendors. Store upgrade drives substantial SSSG. Poya’s efforts to convert its retail outlets to the new fourth-generation format have yielded favourable results. According to management, year-to-date SSSG was 5.4%, extending a strong recovery from 3.5% in 1Q-3Q13, 2.5% in 1H13 and 0.7% in 1Q13. We think the company’s extensive retail network, which has grown to the current 86 outlets from 74 in end-2012, combined with a comprehensive product offering, allow it to enjoy a price edge over peers, while at the same time providing customers with a one-stop shopping experience. Valuation & action While Poya’s share price has surpassed our 12-month target price of NT$191, we expect the stock to remain an investor favourite in the consumer space in light of robust SSSG and continued margin expansion. We are currently reviewing our financial forecasts. We reiterate our Outperform rating on the counter. Risks Increasing market competition; rising rental and personnel expenses.

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