New World Dept Store
Awaiting fruitful returns from accelerated expansion
Price Target : 12-month HK$5.29
• 1H FY12 net profit up 12.1% to HK$330m, in line with our expectation. Excluding disposal gain and revaluation of inv. properties, core profit rose 8% to HK$284m.
• Interim DPS up 15% to HK$0.098; a 49% payout (1H FY11: 50%).
• Management reiterates its target of mid-teens SSSG for FY12. GFA expansion will also accelerate to 10-20% CAGR in next 5 years, versus 9-10% in FY09-11. While trading at 1.2x FY12 PEG and 6% discount to our TP, we maintain HOLD.
Revenue grew 32.9% y-o-y to HK$1.7bn and core profit rose 7.9% to HK$284m in 1H FY12. During the period, same-store sales growth (SSSG) of 17% was driven by increases in traffic flow (up >7%), average ticket size (up >7% to HK$483) and RMB (up c.2%), with stores in Beijing registering the best growth, followed by Wuhan, Shanghai, while Shenyang underperformed. VIP sales accounted for c.51% of total sales and membership grew 23% to >2.39m members. The company also opened self-operated Mianyang Store and acquired Channel One Shopping Mall and Lanzhou Managed Store, lifting total gross floor area (GFA) by 10.6% to 1.35m sm. As of Dec11, there were 35 self-operated stores and 4 managed stores.
1H FY12 concessionaire rate dropped slightly by 0.2ppt to 18.4%, amid strong SSSG of c.30% for hard luxuries that offer lower concessionaire rates, and higher proportion of low-margin supermarket sales following injection of Beijing Stores. Overall, losses from newer stores with age <3 years reached c.HK$30m.
2M12 SSSG reached a high single-digit rate amid seasonality distortion from an early Chinese New Year. For full-year of FY12, management targets at mid-teens SSSG and a stabilized concessionaire rate at c.18.5%. The company also plans to lift total GFA by 10-20% CAGR. Besides, key cost ratios (in terms of sales proceeds) could edge down as new stores gradually mature, with FY12 staff costs to decline to 3.7% (1H FY12: 3.9%) and rentals to drop to 6% or below by FY13 (1H FY12: 6.1%).
Source/Extract/Excerpts/来源/转贴/摘录: DBS Vickers Research
Publish date: 29/02/12