buy investment highlights
TRANSCRIPT
For ratings definitions and other important disclosure, refer to
the Disclosure Section at the end of this report.
March 7, 2012
Free float (%) 81.1%
driver August 4 2011
growth July 13, 2011
June 13, 2011
Investment Highlights
We are optimistic on Midwest retail sales: The retail sales in Shanxi is
benefit from Western Development and inland consumption stimulus
policies. The GDP per capita reached 33000 in 2011 and the income
growth was around 5% faster than national average. By the end of 2011
Century Ginwa runned 8 department stores and 5 supermarket mainly in
Xian and Xinjiang.
We expect the impact from online sales to be limited on Midwest
retailers: The inland retailers, especially high-end department stores is
less effect from online sales given lower network penetration rate,
consumer’s habits and undeveloped logistics. In addition, the unit price
for inland online sales is much lower than Eastern areas.
Comparing with other peers, Century Ginwa has more favorable
location: 70% of revenue was contributed from Bell Tower store and
Hi-tech store that both located at city center. And Saigo store is just
located at the same place as Xian government where new metro line 2
just passed by.
We initiate coverage of Century Ginwa with a “BUY” rating with
PT at HK$ 0.75.The company started fast expansion since 2010 and the
leverage effect is expected to be enlarged as new stores breakeven. We
expect the core stores will maintain 30%-40% growth in next two years.
The revenue is expected to reach HK$1.13 billion in 2011 with EPS at
HK$ 0.06.
Financial Summary
Turnover Growth (%) N.A 29% 62% 38% 35%
Net Profit (HKD m) -31.7 119.7 295.1 419.0 582.4
Net Profit Growth (%) N.A N.A 146% 42% 39%
EPS (HKD) 0.01 0.04 0.06 0.09 0.12
CFO per share(HKD) 0.16 0.11 0.09 0.08 0.06
P/E (x) 53.98 11.00 7.63 5.37 3.87
P/B (x) 2.75 2.70 2.18 1.77 1.43
Dividend per share(HKD) 0 0 0 0 0
Source: Bloomberg, Guosen Securities (HK) #EPS based on year end number of shares
Century Ginwa (162.HK)
Key Data
“”“”
2008 5%
2010 2011
8.87 4.2 2011
15
30-40% 2011 11.3
60% 0.062 HK$0.75
(Y/Y,%) N.A 29% 62% 38% 35%
(HKD m) -31.7 119.7 295.1 419.0 582.4
(Y/Y,%) N.A N.A 146% 42% 39%
(HKD) 0.01 0.04 0.06 0.09 0.12
(HKD) 0.16 0.11 0.09 0.08 0.06
(x) 53.98 11.00 7.63 5.37 3.87
(x) 2.75 2.70 2.18 1.77 1.43
(HKD) 0 0 0 0 0
#
2012 3 7
1.85 76.4%
60% Best MineralBM
12.3 Best Mineral, 68.9
31.1% 2008 8 11
2010 2011 8.87 4.2
2011
2008 5%
2010 9
2005
15-20
201012 ( 6000
20111 10.3 250006
20116 4.2
2012 3 7
2012 3 7
5.7 3.1
6000
9 50 15
2011 1.4 2.3
0162.HK 6
2012 3 7
11.5
7:
2.8 2.24 36% 15
2011 8.15 2
45% 5 2011 1.9
3 57% 55%
42,000 - 2005 2006
92,000 92,00026,000)2010 2010
52,000 - 2009 2010
15,000 - 2009 2010
16,000 - 1998 2011
27,000 8,000 2005 2011
31,000 2011
80,000 2012
115,000 2012
2012 3 7
2011 30-40%
2011 11.3 60%
2.1 0.062 2011 12 0.75
2012 3 7
2.37.6 10.8
3
2012 3 7
-604,653 – -306,857 -401,724
-44,524 -160,951 34,493 -22,693
-529,336 -1,519 168,171 347,135
-10,495 -30,188 -48,449 -52,070
-539,831 -31,707 119,722 295,065
5,341 29,123 45,243 54,292
-545,172 10,168 74,479 240,773
(HKD) -0.5362 0.0088 0.0432 0.0622
2012 3 7
138,115 84,686 88,505 115,101
120,367 26,664 8,982 --
-- 706,913 767,427 1,590,584
-- 706,913 767,427 1,688,233
138,115 84,686 88,505 115,101
2012 3 7
Stock Ratings:
BUY: A return potential of 10 % or more relative to overall market within 6 – 12 months.
NEUTRAL: A return potential ranging from -10% to 10% relative to overall market within 6 – 12 months.
SELL: A negative return of 10% or more relative to overall market within 6 –12 months.
Sector Ratings:
BUY: The sector will outperform the overall market by 10% or higher within 6 –12 months.
NEUTRAL: The sector performance will range from -10% to 10% relative to overall market within 6 –12 months.
SELL: The sector will underperform the overall market by 10% or lower within 6 – 12 months.
Interest disclosure statement
The analyst is licensed by the Hong Kong Securities and Futures Commission. Neither the analyst nor his/her associates
serves as an officer of the listed companies covered in this report and has no financial interests in the companies.
Guosen Securities (HK) Brokerage Co., Ltd. and its associated companies (collectively “Guosen Securities (HK)”) has
no disclosable financial interests (including securities holding) or make a market in the securities in respect of the listed
companies. Guosen Securities (HK) has no investment banking relationship within the past 12 months, to the listed
companies. Guosen Securities (HK) has no individual employed by the listed companies.
Disclaimers
The prices of securities may fluctuate up or down. It may become valueless. It is as likely that losses will be incurred
rather than profit made as a result of buying and selling securities.
The content of this report does not represent a recommendation of Guosen Securities (HK) and does not constitute any
buying/selling or dealing agreement in relation to the securities mentioned. Guosen Securities (HK) may be seeking or
will seek investment banking or other business (such as placing agent, lead manager, sponsor, underwriter or proprietary
trading in such securities) with the listed companies. Individuals of Guosen Securities (HK) may have personal
investment interests in the listed companies.
This report is based on information available to the public that we consider reliable, however, the authenticity, accuracy
or completeness of such information is not guaranteed by Guosen Securities (HK). This report does not take into
account the particular investment objectives, financial situation or needs of individual clients and does not constitute a
personal investment recommendation to anyone. Clients are wholly responsible for any investment decision based on
this report. Clients are advised to consider whether any advice or recommendation contained in this report is suitable for
their particular circumstances. This report is not intended to be an offer to buy or sell or a solicitation of an offer to buy
or sell the securities mentioned.
This report is for distribution only to clients of Guosen Securities (HK). Without Guosen Securities (HK)’s written
authorization, any form of quotation, reproduction or transmission to third parties is prohibited, or may be subject to
legal action. Such information and opinions contained therein are subject to change and may be amended without any
notification.
2012 3 7
6-1210%
6-1210%
6-1210%
March 7, 2012
Free float (%) 81.1%
driver August 4 2011
growth July 13, 2011
June 13, 2011
Investment Highlights
We are optimistic on Midwest retail sales: The retail sales in Shanxi is
benefit from Western Development and inland consumption stimulus
policies. The GDP per capita reached 33000 in 2011 and the income
growth was around 5% faster than national average. By the end of 2011
Century Ginwa runned 8 department stores and 5 supermarket mainly in
Xian and Xinjiang.
We expect the impact from online sales to be limited on Midwest
retailers: The inland retailers, especially high-end department stores is
less effect from online sales given lower network penetration rate,
consumer’s habits and undeveloped logistics. In addition, the unit price
for inland online sales is much lower than Eastern areas.
Comparing with other peers, Century Ginwa has more favorable
location: 70% of revenue was contributed from Bell Tower store and
Hi-tech store that both located at city center. And Saigo store is just
located at the same place as Xian government where new metro line 2
just passed by.
We initiate coverage of Century Ginwa with a “BUY” rating with
PT at HK$ 0.75.The company started fast expansion since 2010 and the
leverage effect is expected to be enlarged as new stores breakeven. We
expect the core stores will maintain 30%-40% growth in next two years.
The revenue is expected to reach HK$1.13 billion in 2011 with EPS at
HK$ 0.06.
Financial Summary
Turnover Growth (%) N.A 29% 62% 38% 35%
Net Profit (HKD m) -31.7 119.7 295.1 419.0 582.4
Net Profit Growth (%) N.A N.A 146% 42% 39%
EPS (HKD) 0.01 0.04 0.06 0.09 0.12
CFO per share(HKD) 0.16 0.11 0.09 0.08 0.06
P/E (x) 53.98 11.00 7.63 5.37 3.87
P/B (x) 2.75 2.70 2.18 1.77 1.43
Dividend per share(HKD) 0 0 0 0 0
Source: Bloomberg, Guosen Securities (HK) #EPS based on year end number of shares
Century Ginwa (162.HK)
Key Data
“”“”
2008 5%
2010 2011
8.87 4.2 2011
15
30-40% 2011 11.3
60% 0.062 HK$0.75
(Y/Y,%) N.A 29% 62% 38% 35%
(HKD m) -31.7 119.7 295.1 419.0 582.4
(Y/Y,%) N.A N.A 146% 42% 39%
(HKD) 0.01 0.04 0.06 0.09 0.12
(HKD) 0.16 0.11 0.09 0.08 0.06
(x) 53.98 11.00 7.63 5.37 3.87
(x) 2.75 2.70 2.18 1.77 1.43
(HKD) 0 0 0 0 0
#
2012 3 7
1.85 76.4%
60% Best MineralBM
12.3 Best Mineral, 68.9
31.1% 2008 8 11
2010 2011 8.87 4.2
2011
2008 5%
2010 9
2005
15-20
201012 ( 6000
20111 10.3 250006
20116 4.2
2012 3 7
2012 3 7
5.7 3.1
6000
9 50 15
2011 1.4 2.3
0162.HK 6
2012 3 7
11.5
7:
2.8 2.24 36% 15
2011 8.15 2
45% 5 2011 1.9
3 57% 55%
42,000 - 2005 2006
92,000 92,00026,000)2010 2010
52,000 - 2009 2010
15,000 - 2009 2010
16,000 - 1998 2011
27,000 8,000 2005 2011
31,000 2011
80,000 2012
115,000 2012
2012 3 7
2011 30-40%
2011 11.3 60%
2.1 0.062 2011 12 0.75
2012 3 7
2.37.6 10.8
3
2012 3 7
-604,653 – -306,857 -401,724
-44,524 -160,951 34,493 -22,693
-529,336 -1,519 168,171 347,135
-10,495 -30,188 -48,449 -52,070
-539,831 -31,707 119,722 295,065
5,341 29,123 45,243 54,292
-545,172 10,168 74,479 240,773
(HKD) -0.5362 0.0088 0.0432 0.0622
2012 3 7
138,115 84,686 88,505 115,101
120,367 26,664 8,982 --
-- 706,913 767,427 1,590,584
-- 706,913 767,427 1,688,233
138,115 84,686 88,505 115,101
2012 3 7
Stock Ratings:
BUY: A return potential of 10 % or more relative to overall market within 6 – 12 months.
NEUTRAL: A return potential ranging from -10% to 10% relative to overall market within 6 – 12 months.
SELL: A negative return of 10% or more relative to overall market within 6 –12 months.
Sector Ratings:
BUY: The sector will outperform the overall market by 10% or higher within 6 –12 months.
NEUTRAL: The sector performance will range from -10% to 10% relative to overall market within 6 –12 months.
SELL: The sector will underperform the overall market by 10% or lower within 6 – 12 months.
Interest disclosure statement
The analyst is licensed by the Hong Kong Securities and Futures Commission. Neither the analyst nor his/her associates
serves as an officer of the listed companies covered in this report and has no financial interests in the companies.
Guosen Securities (HK) Brokerage Co., Ltd. and its associated companies (collectively “Guosen Securities (HK)”) has
no disclosable financial interests (including securities holding) or make a market in the securities in respect of the listed
companies. Guosen Securities (HK) has no investment banking relationship within the past 12 months, to the listed
companies. Guosen Securities (HK) has no individual employed by the listed companies.
Disclaimers
The prices of securities may fluctuate up or down. It may become valueless. It is as likely that losses will be incurred
rather than profit made as a result of buying and selling securities.
The content of this report does not represent a recommendation of Guosen Securities (HK) and does not constitute any
buying/selling or dealing agreement in relation to the securities mentioned. Guosen Securities (HK) may be seeking or
will seek investment banking or other business (such as placing agent, lead manager, sponsor, underwriter or proprietary
trading in such securities) with the listed companies. Individuals of Guosen Securities (HK) may have personal
investment interests in the listed companies.
This report is based on information available to the public that we consider reliable, however, the authenticity, accuracy
or completeness of such information is not guaranteed by Guosen Securities (HK). This report does not take into
account the particular investment objectives, financial situation or needs of individual clients and does not constitute a
personal investment recommendation to anyone. Clients are wholly responsible for any investment decision based on
this report. Clients are advised to consider whether any advice or recommendation contained in this report is suitable for
their particular circumstances. This report is not intended to be an offer to buy or sell or a solicitation of an offer to buy
or sell the securities mentioned.
This report is for distribution only to clients of Guosen Securities (HK). Without Guosen Securities (HK)’s written
authorization, any form of quotation, reproduction or transmission to third parties is prohibited, or may be subject to
legal action. Such information and opinions contained therein are subject to change and may be amended without any
notification.
2012 3 7
6-1210%
6-1210%
6-1210%