subject: Lehman To Li & Fung "overweight" Rating On The Target To Increase - Lehman, Li & [print this page] "Overweight" rating, target price from 32.35 yuan (Hong Kong dollar, the same below) increased to 35.3 yuan, equivalent to 28 times price-earnings ratio in 2008.
Lehman Brothers said its U.S. retail research team published a report on Monday, said after the Thanksgiving holiday, that last Friday, as retailers investigation, that the holiday season, a relatively strong start. The report pointed out that all of the retail survey, Kohl's seems the most busy, many customers continued to flow all day. Lehman Brothers said it particularly encouraged by Li & Fung, Li & Fung because Kohl's is the largest customer, accounting for annual sales of more than 15%.
More than 50,000 shops selling ShopperTrakR CT Company, the annual Thanksgiving holiday sales growth of 8.3%. As the Thanksgiving and Christmas retail sales accounted for 20% of annual sales, orders for next year's spring and summer the main index, so better than expected sales, which means next year's orders on Li & Fung has a positive impact on growth. Lehman Brothers from the Li & Fung Management Layer was informed by the natural order has been scheduled to increase from spring next year, and maintain a healthy trend. American retailers have adopted a more cautious Purchase Mode, that is, more small batch orders, instead of large bulk purchases, so that the transparency of the controversial orders, but orders can now suspicious of Li & Fung from the buffer. Overall, in the United States Consumption Slow background, Lehman is expected to Li & Fung turnover growth of 22% next year, of which 12% of natural growth, the remaining 10% of deals announced this year to bring the relative turnover of natural growth this year expected 18%, while 22% came from acquisitions.
Lehman Brothers continues to believe that the U.S. consumer slowdown on the impact of Li & Fung should not overreact. When the consumer slowdown when the market consensus, the bank does not agree with Li & Fung growth prospects will be off track, no intention to change positive view of the Li & Fung. Overall, Lehman that the market seems to be too much emphasis on the macroeconomic changes, while ignoring a number of factors are relatively healthy development. Li & Fung can help maintain the growth of the hidden factors including the continuing value of the acquisition transaction; Li & Fung from 2004 began implementing the strategy, the implementation of six acquisitions this year. In addition, Li & Fung market share growth is accelerating due to increased permeability, and the cross-sell existing customers more opportunities. Access to new customers, the global trend of consolidation and outsourcing market, Li & Fung will be beneficial.
Li & Fung also through multi-channel optimization Business model , Including the United States high-margin business, such as the property of and licensed brands; and Health , Beauty and cosmetics purchases of new business also grew strongly. In addition, Li & Fung is the potential release of the European market will help diversification to reduce reliance on the U.S. market. Lehman Brothers expects the proportion of U.S. sales this year, 65% to 55% in 2010 to fall below the proportion of European sales by 23% this year, in 2010 to 30%.
Down cycle in the consumer, the retailer than the buoyant market conditions, more emphasis on cost reduction, I believe that Li & Fung have greater access to new customers and grow its core private label business (accounting for more than half of group turnover). Tough market environment, or encourage existing customers rationalize the procurement Network , Including the reduction of small Proxy Of the number, to focus on several major agent; or outsourced by the proportion of force to save more costs. Other positive factors include, Li & Fung announced annual results in March next year, at the same time revealed a new three-year plan, expected to be more emphasis on profitability, rather than the current three-year plan, more concerned about turnover, reflecting management's interest Feng future with confidence. In addition, Li & Fung is also the beneficiaries of continued inflation.
In last Friday and this week two days, Li & Fung shares rise about 11%, but lower than November 1 of the high (39.3 million), still 22% of the distance, mainly due to the adjustment of the overall market and on worries over U.S. recession. Current stock price is equivalent to 24.3 times 2008 price-earnings ratio, or PE G0.9 times, Lehman Brothers that the valuation is not high. Earnings per share based on accelerated growth, strong merger and acquisition opportunities, and optimize business model, Li & Fung Trading should be at a premium. Li & Fung
Lehman Brothers raised its net profit forecast 13.9% this year, and from 08 to 09-year forecast of 1%, to reflect the most recent 1.4 billion sale of property transactions, 449 million sale proceeds, and that 08 to 09, interest income increased; expected a net profit next year, Li & Fung was 3.68 billion yuan and 42.9 billion, trades at 28.4 times and 24.3 times.
by: gaga
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