Analyst Research Report Snapshot


Belle International (1880 HK, HK$9.95, OP): Upgrade to Outperform




KGI Greater China


08 Jan 2014





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Same-store sales growth stabilizing 4Q13 footwear same-store sales (SSS) up 1.3%, sportswear SSS up 5%, slightly better than the respective 1.3% & 4.5% in 3Q13 Growth likely driven by volume on larger promotions, while margin slightly under pressure 2013F, 2014F & 2015F earnings cut by 3.5%, 4.7% & 3.7% to reflect slightly slower sales growth and higher margin pressure; target price trimmed to HK11.00 (2014 PE of 15x); upgrade to Outperform We believe the worst is over for Belle, though we still see headwinds for the sector. The company will remain in slow but steady recovery in the next couple of years. We have cut our target price to HK$11.00 from HK$11.25, based on the same multiple of 15x PE for 2014, which is at the low end of its average historical PE range. We use a lower multiple as we see only moderate sales recovery. With the shares down around 50% from early 2013, Belle’s valuation, currently a PE of 13x, now looks attractive. We upgrade our rating to Outperform from Neutral.

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