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Tourists’ shopping spree • China outbound travelling could increase to 16% of

population in 5 years (2013: 7%), when more citizens in lower-tier cities afford to travel abroad. As PRC consumption overflows further to foreign tourist markets, HK retailers might need to expand overseas to better capture growth.

• Among various product categories, jewellery retailers could grow the fastest in medium-term amid rising wealth of smaller cities. They also enjoy relatively higher defensiveness against online competitors.

• We have recently upgraded Chow Sang Sang and Luk Fook to BUYs in view of their attractive valuation, firm yield, improving SSSG outlook and sound growth prospects. We also like Samsonite, Time Watch, Haier, GOME and Sitoy that could post solid results in near-term.

• Recovery of department stores could take time. Perhaps Golden Eagle’s grand opening of flagship store II by Sep14, and New World Dept Store’s >5% yield might attract some attention, especially given current bargained valuation.

Chinese tourists to drive growth. At present, only 2% of China population could afford to take an outbound trip beyond Hong Kong & Macau. As PRC affluence boom, we project China to generate c.18% CAGR (2013-18F) in outbound tourist spending to USD300bn to take up 20% of global tourist expenditure (2012:10%). HK & Macau‘s importance to PRC tourists could lessen gradually along with the cities’ limited capacity to take up more tourists, and liberalized restrictions for Chinese visitors elsewhere. As such, either tourist infrastructures will need to be enhanced in HK & Macau, or HK-based retailers would have to reach out further to key overseas tourist markets to tap growth.

Jewelleries stage the strongest demand. The jewellery industry could score the best 5-year CAGR of c.17% among key segments in China (source: Euromonitor). Overall, jewellery sales in the PRC are expected to more than double to >RMB1,000bn by 2018, with at least another RMB130bn added consumption of Mainland tourists in overseas markets. Other discretionary segments including luxury, cosmetics, apparels, 3C products, etc. could also grow decently at a milder momentum.

E-commerce to sustain exponential growth. Online plays achieved 53% CAGR in 2011-2013 with a penetration of 7.7% in China. While the sector sees robust growth potentials, its expansion could continue to skew more towards home appliance and apparel products. Most leading retailers across these product categories also possess their own e-channels, while any aggressive pricing or promotions from online operators could be near-term risks.

HSI: 23,239

ANALYST Mavis HUI +852 2863 8879 [email protected] Mark LI +852 2971 1935 [email protected]

Recommendation & valuation

T arget M k t PE PECompany Pric e Pric e Ups ide Rec om Cap 14F 15F

HK $ HK $ % HK $bn x x

Cosmet ic s ret ailersBonjour (653 HK) 1.2 1.36 13 Hold 4.1 13.1 12.0L'Occitane# (973 HK)* 17.8 n.a. n.a. NR 26.3 20.0 17.7Sa Sa# (178 HK) 5.91 5.61 (5) Hold 16.8 16.5 14.6Depart men t s t o resGolden Eagle (3308 HK) 9.21 11.45 24 Buy 16.6 10.2 9.0Intime Retail (1833 HK)* 7.28 n.a. n.a. NR 16.2 11.9 10.8Lifesty le^ (1212 HK) 15.08 16.21 7 Hold 24.6 10.7 9.6NW Dept Store^ (825 HK) 3.13 3.98 27 Buy 5.3 7.9 7.1Parkson Retail (3368 HK) 2.27 1.90 (16) F V 6.3 19.5 17.4Springland (1700 HK) 3.23 3.68 14 Hold 8.0 8.2 7.5F ood ret ailBeijing J ingkelong (814 HK) 1.89 2.45 30 Hold** 0.8 10.0 9.0Lianhua (980 HK) 4.48 4.43 (1) Hold 5.0 27.6 23.7Sun Art Retail (6808 HK)* 8.67 n.a. n.a. NR 82.7 21.9 19.3Wumart Stores (1025 HK) 6.8 7.00 3 Hold 8.7 15.0 13.7G lobal b rands & O EM manu f ac t u rersPrada# (1913 HK) 54.45 60.00 10 Hold 139.3 21.7 18.9Samsonite (1910 HK) 25.9 28.75 11 Buy 36.5 21.5 18.1Sitoy Group (1023 HK) 5.26 6.44 22 Buy 5.3 10.9 9.6Home app lianc e operat o rsGOME (493 HK) 1.26 1.55 23 Buy 21.4 14.2 12.3Haier Electronics (1169 HK) 21.4 25.67 20 Buy 57.4 16.5 13.7Wat ch & J ew elleriesChow Tai F ook# (1929 HK)* 11.3 n.a. n.a. NR 113.0 14.8 12.7Chow Sang Sang (116 HK) 19.76 23.71 20 Buy 13.4 10.8 9.6Hengdeli^ (3389 HK) 1.37 1.41 3 Hold 6.6 9.9 8.8Luk F ook#^ (590 HK) 23.2 30.75 33 Buy 13.7 8.6 7.5Oriental Watch#^ (398 HK) 1.81 1.57 (13) F V 1.0 35.8 31.0Emperor Watch (887 HK)* 0.52 n.a. n.a. NR 3.6 11.1 9.1Time Watch (2033 HK) 1.14 1.82 60 Buy 2.4 8.3 7.2

* Consensus; # FY14: FY15; FY15: FY16 ^ Core EPS; ** Under review Source: Thomson Reuters, DBS Vickers

Based on closing prices as at 10 Jul 2014

DBS Group Research . Equity 15 July 2014

China / Hong Kong Industry Focus

Consumer Sector Refer to important disclosures at the end of this report

Industry Focus

Consumer Sector

Table of Contents

China consumption power 3

Exploding tourism flow 4

Shaping the retail sector: on the move abroad 6

Mainland retailers also benefits from tourism 9

Impacts from online plays 11

Medium-term developments 13

Near-term views 14

Stock Profiles 20

Appendix 41

Industry Focus

Consumer Sector

China consumption power

Income levels across China continue to explode, along with the government’s goal to rebalance economic growth towards consumption. In 2009-2012, household income registered a 16% CAGR in 1st- and 2nd-tier cities to reach >RMB8,800 per month, and an even stronger momentum of 23% CAGR in 3rd- and 4th-tier cities to reach >RMB5,900 monthly income. We expect on-going wage hikes should stay relatively faster in the lower tier cities, so that their consumption patterns could increasingly align closer with the 1st-tier cities.

PRC: Household monthly income CAGR (2009-2012)

5,635

3,172

5,961

8,836

0

2,000

4,000

6,000

8,000

10,000

1st & 2nd-tier cities 3rd & 4th-tier cities

2009 2012

CAGR = 16%

CAGR = 23%

RMB

Source: GroupMChina.com

At present, disposable income per capita in China is estimated to post a sound CAGR of 11.6% for 2013-2015F. Such growth momentum outweighs major economies in the world by far, including the US (2.7%) and Germany (2.3%). Over the medium-term, China should remain in a good position to experience swift improvements in consumption affordability across all cities.

Disposable personal income CAGR (2013-2015F)

11.6%

2.7% 2.3%0.7% 0.6%

-1.8%-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Chi

na US

Ger

man

y

UK

Japa

n

Fran

ce

Source: Trading Economics, IMP

More importantly, a total of 92 cities in China already possess >1m urban population, with another 171 cities maintaining 0.5-1m urban population. The number will also increase further as urbanisation rate rises from 54% in 2013 to 60% in 2018 (source: Chinese Academy of Social Sciences).

In fact, such a large amount of cities with >1m residents in China should be the highest across all nations globally, including the largest US economy that has <10 such cities. As the volume is already in place, rising income levels across large numbers of Chinese citizens will, no doubt, raise overall PRC consumer spending.

Urban consumption power by city-tier in China

Cit y T ier

Cit y T ier

Number of

Cit ies

% Urban Populat ion

A v erage Urban

Populat ion(‘000)

Per Capit a Consumpt ion

(RM B)

1 1a 4 84% 13,052 31,031

1b 18 79% 4,263 24,846

2 2a 30 67% 1,887 23,080

2b 39 77% 1,044 20,1663 3a 67 69% 708 16,390

3b 104 54% 447 15,2704 4a 168 44% 307 12,178

4b 227 41% 244 7,8895 5a 445 27% 176

5b 1,195 21% 60

Source: China Business Handbook 2013, US Comm. Service

Industry Focus

Consumer Sector

Details of 1st- and 2nd-tier cities in China

1a Beijing, Shanghai, Guangzhou, Shenzhen1b Tianjin, Hangzhou, Nanjing, Chongqing, Chengdu,

Qingdao, Wuhan, Zhengzhou, Changsha, Changchun, Harbin, Dalian, Sheny ang, J inan, F uzhou, Xiamen, Xi'an, Kunming

2a Suzhou, Nanchang, Shijiazhuang, Changzhou, Z ibo, Ningbo, Hefei, Wuxi, Wenzhou, Yantai, Taizhou, Dongguan, Shantou, Zhuhai, Haikou, Nanning, F oshan, Baotou, Tangshan, Hohhot, Anshan, J ilin, Lanzhou, Urumqi, Taiy uan, Yinchuan, Xining, Guiy ang, etc.

2b Yangzhou, Daqing, Huai'an, Guilin, Zhongshan, J iaxing, Weihai, Zhenjiang, Liny i, Huizhou, Nantong, Xuzhou, Luoy ang, Weifang, Xiany ang, Quanzhou, Sany a, Shaoxing, Ordos, Yancheng, J ining, J inhua, Dongy ing, Ma'anshan, Langfang, Wuhu, Handan, Huzhou, Yiwu, Xiangfan, Qinhuangdao, Xingtai, J injiang, J iangmen, etc.

Source: China Business Handbook 2013, US Commercial Service, Yicai.com

While local consumption remains crucial, we could not overlook tourism development for Mainland Chinese travellers, as tourist expenditure is also gaining more weight. In 2009, tourist spending of both domestic and outbound Chinese travellers was equivalent to 12.5% of private consumption in China. By 2013, the ratio already ascended to 16.2%, and stays on track to expand further.

Tourist expenditure as percentage of private consumption in China (2009-13)

12.5%13.7% 14.2%

15.3%16.2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2009 2010 2011 2012 2013

Source: CEIC, China Tourism Academy

Specifically, the 32% CAGR of outbound tourist spending in 2009-2013 outshined domestic spending’s 20% CAGR by far. As household affluence continues to improve in China, while consumers are becoming more sophisticated, we expect increasingly more new Mainland Chinese travellers to spend in overseas markets ahead.

2009-13 CAGR for tourist number & tourist spending

12%

20%20%

32%

0%

5%

10%

15%

20%

25%

30%

35%

Tourist number CAGR Tourist spending CAGR

Domestic tourism Outbound tourism

Source: China National Tourism Administration, China Tourism Academy, Meadin.com

Exploding tourism flow

Last year, China reinforced its position as the top source-market for global tourism, in terms of both dollar amount spent and tourist numbers. Total PRC outbound tourist spending reached USD129bn, versus >USD80bn from the Americans or Germans, respectively.

PRC: Outbound tourist spending

USD bn

73

102

129

42 55

30.7% 32.2%

16%

40.5%

26.2%

0

20

40

60

80

100

120

140

2009 2010 2011 2012 2013

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Tourist spending Growth y-o-y

09 ~ 13 CA GR 32%


Apart from (i) rising income levels across China, other driving forces for outbound travelling include (ii) easier access overseas as more countries lower their barriers of entry for Chinese visitors, and (iii) more flexible issuance of residence permits for Chinese investors abroad. Besides, (iv) overcrowded domestic travelling within China during the long holidays, and (v)

Industry Focus

Consumer Sector

pollution, food scandals, etc. in the PRC also make overseas travel increasingly more appealing to Chinese citizens.

PRC: Outbound tourist number as percentage of total tourist number

2.2%2.4%

2.6%2.7%

2.9%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2009 2010 2011 2012 2013


PRC: Outbound tourist spending as percentage of total tourist spending

18% 19% 20% 22% 23%

82% 81% 80% 78% 77%

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013

Outbound tourist spending Domestic tourist spending


PRC outbound travelers reached 98m in 2013, yet this represented merely 7% of China population. Within this group, about 30m tourists could afford to travel beyond Hong Kong and Macau, translating into just c.2% of total population, while these outbound tourists were also predominantly coming from the tier-1 cities (source: China Outbound Tourism Research Institute). Comparing to S. Korea’s outbound travelers that represented 30% of population in 2013, the US’ 25% of population, and Hong

Kong’s c.4 times of population (already excluded visits to the PRC) last year, China’s outbound tourism posts a spectacular path of growth over the medium-term.

While it is apparent that tourist development possesses enormous growth potentials, we try to gauge the pace of expansion momentum over the medium-term. By expecting 6% income CAGR for 1st- and 2nd-tier cities, and 16% income CAGR for 3rd- and 4th-tier cities, we should already see some 300m urban PRC citizens to start attaining similar consumption power as in tier-1 cities now. With at least a half of this new group to likely begin traveling outbound, this already translates into >20% CAGR in the volume of PRC outbound tourists over the next 5 years.

Timeframe of consumption power expansion

Cit y T ier

Urban Consumpt ion

Pow er in 2013 (RM B)

T o t al Urban Popu lat ion (m)

Earliest T ime T o St art Reac h ing

T ier- 1 L ev el

1 >24,846 128.9 n.a.

2 20,166 - 23,080 97.3 Slightly over 1 y ear

3 15,270 - 16,390 93.9 Less than 3 y ears

4 7,889 - 12,178 107 Less than 5 y ears

5 n.a. 150 n.a.

c.300m population

Note: Expected income CAGR: 6% for Tier 1&2 cities; 16% for Tier 3-4 cities

Source: China Business Handbook 2013, US Commercial Service, DBS Vickers

Given the strong volume growth, even should we see any slight decline in tourist spending per capita, we believe an 18% CAGR in outbound tourist spending from China should be achievable over 2013-2018F.

Industry Focus

Consumer Sector

PRC: Outbound tourist spending per capita

USD

881957

1,033

1,2261,311 1,288

0

200

400

600

800

1,000

1,200

1,400

2009 2010 2011 2012 2013 1Q14

09 ~ 13 CA GR 10%


The UNWTO projects a 4% CAGR for global tourist spending up to 2024F. Comparing to such a mild trend, it is likely that PRC outbound tourist spending will continue to outperform, with its c.US$300bn expenditure by 2018 (based on 18% CAGR) to increasingly dominate the international tourism market, taking up >20% global tourist consumption.

China outbound tourist spending as percentage of global tourist consumption expenditure (2010-2018F)

5.9%7.0%

9.5%11.1%

13.0%15.0%

17.0%18.9%

20.7%

0%

5%

10%

15%

20%

25%

2010

2011

2012

2013

2014

F

2015

F

2016

F

2017

F

2018

F

Source: UN World Tourism Organization, FT China Confidential, DBS Vickers

Shaping the retail sector: on the move abroad

The exponential growth of Mainland tourist spending in overseas markets should favour retailers there, as nearly half of their expenditure will likely be spent on shopping. The main reasons for purchasing merchandises abroad include better product quality, pricing (especially with tourists’ VAT claims abroad), and service levels. Most of all, PRC tourists have this long-endowed believe that certain merchandises offered in China could still be fake or imitated products, while items bought overseas, particularly for luxury and high ticket-size products, should be more authentic in nature.

Breakdown of outbound visitor spending

0

4,000

8,000

12,000

16,000

Shop

ping

Tran

spor

tatio

n

Acc

omm

odat

ion

Food

Ente

rtai

nmen

t

Oth

ers

RMB45%

8%9%9%14%15%

Source: FT China Confidential (2013)

PRC tourists: Reasons for buying goods overseas

0

10

20

30

40

50

60

Gen

uine

Hig

hqu

ality

Trus

t in

the

orig

in

Che

aper

Bett

erse

rvic

e

Oth

er

%

Source: KPMG Surveys, Feb 2014 (Sample size: c.10,200)

Industry Focus

Consumer Sector

In the past, the majority of outbound PRC tourists (2012: 68%) visited Hong Kong and Macau amid the close proximity of these cities. Last year, the ratio was 61%. We could expect to see a gradual decline in the importance of HK and Macau as destinations for outbound travellers from China, as more countries liberalize travel restrictions for Mainland Chinese. PRC outbound travellers also increasingly become interested to explore new travel destinations. The capacity of Hong Kong and Macau to accommodate mounting PRC visitor numbers might also potentially peak out in the medium-term, or at least the tension between local Hong Kong residents and Mainland visitors could possibly discourage more travellers to come.

PRC: Outbound tourist number by destination (2012)

Thailand2.7%

Malaysia1.6%

USA2.1%

Singapore1.4%

South Korea3.6%

Taiwan3.2%

UK0.5%

France0.4%

Germany0.5%

Russia1.0%

Australia0.9%

Macau25.9%

Others11.9%HK

42.0%

Japan2.4%

Source: CEIC

Effectively, selected countries had already been seeing much faster growth in PRC visitor numbers during recent years, as compared to Hong Kong and Macau. During 2010-2012, Chinese tourists registered a 53% CAGR in visitor numbers to Thailand, 39% to Taiwan, 31% to Malaysia, 28% to the US, and 27% to S. Korea. Besides, a recent BCG survey also revealed that PRC outbound travellers’ view on Hong Kong and Macau as favourite tourist destinations had dropped sharply to 12% in 2013, from 45% in 2012.

PRC outbound tourists: 2010-12 CAGR by destination

11%14%15%15%16%16%16%

19%23%23%

26%26%

49%

-0.2%

-20% 0% 20% 40% 60%

JapanRussia

UKGermanyMalaysia

MacauAustralia

FranceSingapore

HKSouth Korea

TaiwanUSA

Thailand

Source: CEIC

PRC: Outbound tourists’ favourite destinations

201245%

35%

20%

Hong Kong & Macau Asia (others) Other regions

2013

12%

44%

44%

Source: BCG

A quick estimate would draw to 47m Mainland tourists coming to Hong Kong by 2016 should we assume a 5% CAGR, or as many as >70m Mainland visitors should a 20% CAGR be assumed. Non-PRC tourists had been growing by 4% CAGR over the past 5 years and we do not expect such growth rate to change much over the medium-term. However, current infrastructure set up is already approaching maximum utilization. For example, the highest amount of carry capacity per hour per direction of the Mass Transit Railway (MTR) in Hong Kong is c.85,000 passengers for the Kwun Tong Line, Tsuen Wan Line and Island Line, as well as c.82,500 passengers for the East Rail Line, while their peak hour occupancy rates already reached about 70% for Kwun Tong Line, Tsuen Wan Line and Island Line, and 71% for the East Rail Line (source: HKSAR Government, 2014).

Industry Focus

Consumer Sector

There are on-going projects to enhance transportations across China, Hong Kong & Macau. Bigger developments include (i) the HK-Zhuhai-Macau Bridge that could complete by end-2016, with the Legislative Council’s expectation of 55,850-69,200 daily passengers (or 9,200-14,000 daily vehicles) to enter or exit Hong Kong; and (ii) the High Speed Railway (HK section) to commence operations by 2H17, with each direction delivering 10,000 pessengers per hour, and Legislative Council’s estimate of c.99,000 daily passengers for both directions. Nevertheless, all these estimated passenger volume might not be possibly accommodated without better internal transportation networks and complementary facilities within both Hong Kong & Macau, especially in the prime city area.

This year, there has been increasing tension between Mainland tourists and Hong Kong citizens, urging the Hong Kong government to explore into various options that could help catering for rising visitor arrivals. No conclusion has yet been arrived, while recent rumours direct to the reduction in number of entrants allowed per tourist visa granted to 52 times a year (existing: unlimited no. of entrants).

Perhaps there could also be other alternatives to help alleviating problems arising from overcrowding tourists. For instance, building monorail in the city centre, and establishing shopping hubs in the rural regions or nearby the border area between Hong Kong and China. Without any new, value-added plans to fine-tune Hong Kong tourist policies or any supporting facilities for visitors, we will likely see a significant dip in the percentage of outbound PRC tourists visiting Hong Kong & Macau ahead, perhaps down to c.45% of total PRC outbound travellers in just 3 years (2013: 61%).

PRC tourist arrivals in HK: Sensitivity analysis

2013: 40.7 m CAGR 2014F 2015F 2016F 2017F 2018F 5% 42.8 44.9 47.2 49.5 52 10% 44.8 49.3 54.2 59.7 65.6 15% 46.9 53.9 62 71.3 82 20% 48.9 58.7 70.4 84.5 101.4

Source: CEIC, DBS Vickers

Aside from rising tension between Mainland tourists and HK residents as well as the increasing congestions, we also see pull factors for PRC tourists to travel elsewhere. These could include better price tags found in some overseas countries. An example could be the Chanel Handbag, selling at a 13% cheaper price in France/Italy/Germany versus Hong Kong. Besides, more experienced travellers could also crave for exotic travel destinations to fulfil their interests, and probably a sense of prestige amongst peers too.

Price comparison: Chanel classic flap handbag (medium size)

6,51

5

6,15

7

6,04

7

6,03

9

5,92

7

5,88

6

5,57

4

5,26

8

5,14

4

4,90

0

4,82

6

4,82

6

4,82

6

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Aus

tral

ia

Chi

na

S. K

orea

Sing

apor

e

Taiw

an

Japa

n

Hon

g K

ong

UK

Can

ada

US

Fran

ce

Ger

man

y

Italy

USD

Source: Chanelprices.com

Nowadays, most international markets are already offering far more attractive retail rents in their prime shopping districts as compared to Hong Kong. Say, Central London (e.g. Regent Street, Oxford Street) and Paris (e.g. Avenue des Champs-Élysées) are now charging c.50% lower rentals versus Hong Kong’s prime shopping areas of Russel Street (Causeway Bay) and Canton Road (Tsim Sha Tsui). While Sydney’s CBD and Tokyo’s Ginza area even offer c.80% lower average rent than Hong Kong’s most prosperous districts. Perhaps retailers in Hong Kong, whom Mainland tourists are familiar with, should explore further to locate some of their stores in these overseas main shopping districts ahead. They might well capture faster growth from Mainland tourists’ consumption in these overseas markets, as well as enjoying better unit rent.

Industry Focus

Consumer Sector

Comparison of prime retail rents in major shopping districts

M ark et s 2012 2013 ExamplesHong Kong 4,335 4,334 Russel Street, Canton Road and

Queen's Road Central

New York 2,970 3,300 F ifth Avenue

Paris 1,080 1,452 Avenue des Champs-Ély sées

London 1,126 1,356 Central London, Croydon and Eastern Oxford Street

Zurich 853 961 Bahnhofstrasse

Sydney 1,015 871 Central Business District; George and Pitt streets

Tokyo 975 850 Ginza

Moscow 739 739 Tverskaya

Melbourne 849 732 CBD

Beijing 662 681 Sanlitun and Guomao districts

Source: CBRE

HK-based retailers like Luk Fook and Sa Sa are already operating some stores overseas, and they continue to explore further whenever the right opportunities arise. Selected China-based companies have also headed off overseas, including Maotai liquor that acquired a distribution network in Europe to speed sales to Chinese moving or travelling abroad; and UnionPay cards pushing for overseas retailers that most Chinese tourists now visit. We believe such a trend has just started, with a lot more to be expected along the way.

Mainland retailers also benefits from tourism

Aside from robust growth in outbound tourism, domestic travelling within Mainland China had also achieved a decent 20% CAGR during 2009-2013. Domestic tourist spending represented >12% PRC private consumption expenditure last year, and such ratio continues to trend upwards. While Mainland Chinese could ultimately opt for more outbound travelling ahead, many of them will still do domestic trips within the PRC in the medium-term as they are more affordable. Although the desire for shopping could be relatively lower than travelling abroad as retail price tags would be similar across China under the same tax system, travellers could still spare some budgets for souvenirs, regional and/or seasonal products, designer labels, discounted items, etc.

PRC Domestic tourist spending

RMB bn

1,265

1,931

2,271

2,628

896

1,562

16.40%

23.5%

17%

23.6%

17.6%15.7%

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 1Q14

0%

5%

10%

15%

20%

25%


09 ~ 13 CA GR 20%


Domestic tourism as % of private consumption expenditure

10.2%11.1% 11.4%

11.9% 12.4%

0%

2%

4%

6%

8%

10%

12%

14%

2009 2010 2011 2012 2013

Source: CEIC, China Tourism Academy

Additionally, there are increasingly more foreign travellers visiting China, which is currently the 3rd most visited country in the world. In 2013, a total of 129m visitors to the PRC had brought in USD52bn tourist income (source: travelchinaguide.com), equivalent to 12% of PRC domestic tourist expenditure. The top-5 tourist sources for China include S. Korea, Japan, Russia, the US and Vietnam. Key cities that overseas visitors are most interested in last year included Beijing, Shanghai, Xian, Guangzhou, Guilin, Shenzhen, Hangzhou, Chongqing, Chengdu, Kunming, etc.

Industry Focus

Consumer Sector

According to the WTO, by 2020, China will become the largest tourist country. Tourist receipts in China should not be overlooked, as a part of the spending could also flow to PRC retail operators.

All in, we remain hopeful for the retail market of China, and believe selected industries could sustain sound growth ahead. Aside from expectations of gradually strengthening tourist spending within the PRC, rising household affluence also prompt domestic demand, especially on discretionary merchandises. As affordability improves, higher ticket items like jewelleries and other luxury goods should remain in the flavour. As Mainland Chinese trades up, cosmetics & personal care products, as well as apparel & footwear merchandises could also see growth. More alcohol consumption could be expected, while selected home appliances including 3C products will also be in good demand. Euromonitor projects that all these segments should sustain nearly 10% or even higher CAGR in the next 5 years (2013-2018F).

Sales CAGR by category (2013-18F)

16.8% 15.1%

11.7% 11.7% 11.0% 10.2% 9.9%

0%

3%

6%

9%

12%

15%

18%

Jew

elle

ries

Luxu

ry g

oods

Cos

met

ics

& p

erso

nal

care

Pack

aged

foo

d, s

oft

drin

ks &

alc

ohol

s

Mod

ern

groc

ery

reta

ilers

App

arel

& f

ootw

ear

Hom

e ap

plia

nces

Source: Euromonitor

Focusing on the jewellery industry given its outperforming growth in medium-term, jewellery sales in the PRC are expected to more than double from RMB470bn (source: ResearchMoz) to >RMB1,000bn by 2018, representing c.2ppt bigger share of the retail sales pie. Besides, jewellery consumption by Mainland tourists in overseas markets could also reach at least RMB130bn, against an estimated >RMB60bn level in 2013. Other discretionary segments including luxury, cosmetics, apparels, 3C products, etc. could also grow decently in both the PRC market as well as key tourist markets abroad, but likely at a milder momentum than jewellery sales.

Trends for retail sales breakdown

Apparels & footwear18.0%

Others37.1%

Food & beverage23.4%

Electronics & home

appliances14.2%

Jewelleries4.7%

Cosmetics2.6%

2013

Others34.6%

Food & beverage24.0%

Apparels & footwear18.2%

Electronics & home

appliances14.1%

Jewelleries6.3%

Cosmetics2.8%

2018F

Note: Above designated size enterprises only.

Source: CEIC, Euromonitor, DBS Vickers

Industry Focus

Consumer Sector

Impacts from online plays

Consumption power of Mainlanders continues to boom, and retailers would not be the only channel to tap growth. Another obvious winner would be E-commerce operations, which achieved a 53% CAGR in 2011-2013 to reach RMB1.8bn sales, at a strong penetration rate of 7.7% last year. Medium-term growth is projected to sustain at a sound CAGR of 25% for 2013-2017F.

China E-commerce market size

RMB bn

785

1,841

2,420

3,119

3,790

4,450

1,320

70% 68%

39%

22%17%31% 29%

0

1,000

2,000

3,000

4,000

5,000

2011 2012 2013 2014F 2015F 2016F 2017F

0%

10%

20%

30%

40%

50%

60%

70%

80%

Market size (LHS) Growth y-o-y (RHS)

Source: iResearch

In fact, online operators have seen a swift development in China. Globally, the Chinese E-commerce market penetration of 7.7% already came 4th, behind an 8% in the US, 9.5% in Germany, and 10.3% in the UK last year.

E-commerce penetration comparison (2013)

10.3%9.5%

8.0% 7.7%

5.0% 5.0%

0%

2%

4%

6%

8%

10%

12%

UK

Ger

man

y

US

Chi

na

Net

herla

nds

Fran

ce

Source: iResearch, Forrester Research, IMF, CEIC

Successful Chinese online plays will likely maintain double-digits’ growth over the medium-term, given high transparency on price tags and better shopping convenience. They sometimes also provide selected products originating from overseas markets to satisfy consumers looking for fashion and trends. At present, China Customs requires all mail orders to cap value at RMB8,800m for goods coming from Hong Kong/Macau and Taiwan, and at RMB1,000 for merchandises from other countries, with import tariff below RMB50 to be waived.

With more attention directing to O2O (offline-to-online), and selected retailers also running their own E-commerce platforms, their E-business could also see some progress. Nevertheless, pure online operators such as Tmall and JD.com continue to dominate the B2C market in China.

Industry Focus

Consumer Sector

Drivers for online purchase

9%

10%

12%

15%

33%

34%

47%

47%

55%

74%

0% 20% 40% 60% 80%

Comfortableshopping at home

High quality andlong durability

Recommended byothers

Popular andfamous

Uniqueness

Better range, andvariety

Easier to makecomparisons

American/Europeanorigin

Less timeconsuming

Better deals, lessexpensive


China B2C market share (2013)

Tmall50%

JD.com23%

Others10%

VIPShop3% Tencent B2C

3%Amazon China

2%Suning

2%

Dangdang2%

Yihaodian2%

GOME Online2%

Vancl1%

Source: iResearch

While the development of E-commerce continues to flourish, online sales do encounter some short-comings. A survey by KPMG confirms that a majority of 78% Mainland consumers will worry about the authenticity of products sold by China-based E-platforms, while 70% of them also concerned about not being able to try the goods before purchasing them. As such, there are always certain merchandises that would be less receptive to the online business model, with the more homogenized and/or less expensive products to better leverage on E-commerce ahead.

Concerns when purchasing online

11%

11%

16%

18%

37%

41%

48%

55%

70%

78%

0% 40% 80% 120%

Few luxury brands available online

Limited product availability

Delivery timing concerns

Payment safety concerns

Return process is too complicated

After sales service is notguaranteed

Display is different from the onlineversion

Not sure of the size

Can't try the goods beforepurchase

Authenticity is not guaranteed


In terms of product categories, electronics & home appliances continued to be well traded via B2C platforms given their more ‘commoditized’ product nature, and took up 44% of online sales in China last year. Apparels, especially for those with mass to mid-end market positioning, also sold well over the Internet and took up a 26% share. With this in mind, the home appliances and apparels (& footwear) retailers could continue to face a more competitive landscape from online players as compared to other retail segments, such as jewelleries and luxuries whereby ticket sizes are higher and product authenticity is more crucial.

China B2C sales breakdown (2013)

Electronics & home

appliances44%

Apparels26%

Others21%

Baby products

4%

Cosmetics3%

Publications2%

Source: iResearch

Industry Focus

Consumer Sector

Medium-term developments

Following discussion on the development of PRC tourism, growth prospects across various product segments, as well as the potential impacts from online plays, we see the following medium to longer-run prospects:

(i) HK retailers that also operate in overseas tourist markets could enjoy lower unit rents, and potentially capturing the exponential growth in PRC outbound tourist expenditure ahead.

(ii) Decent domestic tourism growth in the PRC, together with foreign travellers’ spending in China could increasingly contribute to PRC consumption growth. Thus, it is also worthwhile to maintain PRC operations.

(iii) Among discretionary merchandises, retail sales of jewelleries in China are projected to see the highest CAGR of 16.8% in the coming 5 years. This could add at least RMB600bn jewellery sales in China by 2018F, with another c.RMB100m additional consumption from PRC outbound tourists in overseas markets during the period, offering ample growth potentials for jewellery retailers.

(iv) Luxury/global products are also estimated to post a 15.1% CAGR in 2013-2018F. As Mainland Chinese trades up, cosmetics & personal care products, as well as apparel & footwear merchandises could also see growth, and selected home appliances including 3C products could be in good demand. All these segments should sustain c.10-12% CAGR in the next 5 years.

(v) The E-commerce market in China should sustain a strong CAGR of 25% in the coming 4 years. Online plays should affect home appliance retailers the most, followed by apparels & footwear. Other segments should see lesser effects.

Overall, with an equal weighting to compare a) benefits from tourism development, b) growth prospects across various product segments, and c) rivalry from online plays, our medium-term top preference would be jewellery retailers, followed by luxury / global groups.

DBSV Industry Ranking

Rank ings based on:

J ew elleries

Luxury /Global Groups

Cosmet ics Department Stores

F ood Retail

A pparelsHome appliances

(1) Booming T ourism Benef it s, (2) Grow th Potent ials, (3) Impact s f rom online play s

Source: DBS Vickers

Industry Focus

Consumer Sector

Near-term views

We have currently spotted the following potential catalysts across companies that we have featured in this report:

(i) Benefits from M&As or joint ventures:

- Samsonite has already scored 3 acquisitions this year, including Lipault for EUR20m (Jan), Speck Products for USD85m (May), and the proposed acquisition of Gregory Mountain for USD85m (Jun). The company expects all 3 deals to be earnings accretive on 2015 basis. Coupled with our expectations of sequential improvement in sales momentum for its core US market, and better outlook for Asian performance by 2H14, we continue to like the stock.

- Haier has also formed a joint venture with Alibaba earlier to focus on enhancement of its logistics division, of which the latter is set to ultimately invest HK$1.8bn for a 34% stake of the JV. This could potentially create a positive chain effect for its other divisions ahead. Its on-going downstream business extension could also prompt further re-rating potentials.

(ii) Expansion of product production capacity:

- All major jewellery retailers, including Chow Tai Fook (CTF), Chow Sang Sang and Luk Fook, have enhanced their production facilities in recent years. They include Chow Sang Sang’s Shunde Plant (investment: HKD220m) that commenced operations since 1H13 with continual efforts to raise operating efficiency over time; CTF’s new Wuhan Jewellery Park (investments: HK$2.6bn), with its first stage of production to kick start by Sep 2014; as well as Luk Fook’s Nansha Plant II (investments: >HK$200m) that should start operations by end-2014. All these should help beefing up product capabilities and production efficiency.

- CTF has also proposed in Jun 2014 to acquire Hearts of Fire (HOF) for USD150m, with plan to introduce at least half of HOF collections into CTF’s stores upon completion of acquisition, thus enhancing its product offerings further.

- Sitoy, the world’s largest handbag manufacturer specializing in luxury products, has also completed construction of its new Yingde Plant (Phase 2) in recent months. Aside from ladies handbags, the company’s new plant helps expanding production capacity for luggage products that offer similar margins. Such development should also ride well on the flourishing PRC tourism development.

(iii) Same-store sales growth (SSSG) - we try identifying retailers that could see a low-base effect on SSSG, and could more easily achieve better sales momentum in the coming 6-12 months. Faster sales momentum could also help enhancing operating leverage and dilute fixed costs:

- The obvious picks here could be jewellery retailers, given the segment’s an average of over 5% negative SSSG in the last 12 months, mainly attributable to “gold rush” effects from last year. Thus, they should have a higher chance for SSSG rebound. Their higher ticket size versus most other retail operators should also bring even better operating leverage whenever sales growth recommences. More normalized product-mix towards higher margin gem-set jewelleries could also help supporting group profitability.

- Chinese department stores’ SSSG has been affected by performance of their concessionaires, which include jewellery retailers. As such, most of them saw negative SSSG in 2Q14E. Department stores’ average SSSG over the last 12 months was about -1%. Sales rebound could be seen in the coming 12 months, yet the recovery could be much slower than jewellery plays.

- SSSG of cosmetics retailers like Sa Sa and Bonjour could see a slight improvement driven by sales volume growth. While the popularity of Korean products that sells at lower average price-lines than Japanese and Western products could continue to dilute this year’s average ticket sizes.

- Home appliance retailer GOME had started to stage a performance recovery since 2Q13. Latest SSSG should stabilize following the ramp up over past few quarters. Impending results for 2Q14 could likely stage firm earnings recovery, while medium-term outlook could also depend on the aggressiveness of online players, especially given the recent listing (or proposed listing) of JD.com and Alibaba Group (e.g. JD.com initiated price wars across home appliance products in mid-2012).

- On the other hand, luxury watches also see an average of c.3% negative SSSG in past 12 months, largely due to the PRC government’s anti-corruption campaign which still lingers. Thus, we prefer to stay conservative and do not bet on a swift recovery for this segment yet. Food retailers also remain unexciting in terms of sales momentum, with sustained cost pressure from rising staff salaries also potentially affecting their margin trends.

Industry Focus

Consumer Sector

(iv) Exposure to fast-growing lower-tier cities:

- Time Watch operates Tian Wang retail chain that ranks No. 1 in the domestic watch segment of China. Its strong focus to tap the 3rd- and 4th-tier cities has helped to sustain sound 3-year sales CAGR at >20%. The company’s roll-out of its online platform since 2Q13 has also continued to fuel robust divisional growth.

(v) Valuation:

- Jewellery plays like Chow Sang Sang and Luk Fook only trade at a high single-digit prospective PE while offering solid yield of 3.5% to 4.7%.

- Time Watch also offers attractive valuation at 7.2x forward PE and 4.2% yield, along with strong fundamental performance and >20% ROE. Despite its relatively shorter listing track record in Hong Kong of 1+ year, the company could well be a hidden jewel.

- Most department store operators trade at 8-12x prospective PE, with average sector PE of merely 9x versus 14x 1Q09 (the global crisis). While upcoming 1H14 results should be broadly disappointing given negative SSSG in 2Q14 and operating deleverage, selected players do offer sound yield of >5%. Companies like Golden Eagle should also see its latest megastore, Nanjing Xinjiekou II (grand opening in Sep 2014), to start paying off in the coming 1-2 years.

Yield plays under our coverage (FY14 dividend yield)

6.7

5.7

5.5

5.4

4.7

4.2

4.2

4.1

3.7

3.5

0

1

2

34

5

6

7

8

Beijin

g Jin

gkel

ong

NW

Dep

t St

ore

Sprin

glan

d

Bonj

our

Luk

Fook

#

Sa S

a#

Tim

e W

atch

Sito

y G

roup

Life

styl

e

Cho

w S

ang

Sang

%

#: FY3/15

Source: DBS Vickers

Industry Focus

Consumer Sector

Same-store sales growth trend (jewellery retailers)

-50%

-30%

-10%

10%

30%

50%

70%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14E

y-o-y%

Robust growth for jewellery retailers due to gold rush

Source: DBS Vickers

Same-store sales growth trend (other retailers)

-10%

-5%

0%

5%

10%

15%

20%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14E

y-o-y%

Luxury watches Cosmetics (HK/Macau only)Department stores (China only) Home appliance retail (GOME only)Food retail

Source: DBS Vickers

Industry Focus

Consumer Sector

Peers comparison

T arget M k t PE PE Y ield ROEPrice Price Recom Cap F iscal 14F 15F 14F 14F

Company Name Code HK$ HK$ US$m Yr x x % %Cosmet ics ret ailersBonjour* 653 HK 1.2 1.36 Hold 528 Dec 13.1 12.0 5.4 56.8L'Occitane# 973 HK 17.8 n.a. NR 3,392 Mar 20.0 17.7 1.8 14.8Sa Sa*# 178 HK 5.91 5.61 Hold 2,168 Mar 16.5 14.6 4.2 41.1A v erage 16.5 14.8 3.8 37.6

Department st oresGolden Eagle* 3308 HK 9.21 11.45 Buy 2,140 Dec 10.2 9.0 2.9 23.8Intime Retail 1833 HK 7.28 n.a. NR 2,095 Dec 11.9 10.8 3.4 11.3Lifesty le*^ 1212 HK 15.08 16.21 Hold 3,170 Dec 10.7 9.6 3.7 21.8NW Dept Store*^ 825 HK 3.13 3.98 Buy 681 Jun 7.9 7.1 5.7 9.7Parkson Retail* 3368 HK 2.27 1.90 FV 814 Dec 19.5 17.4 2.3 4.6Springland* 1700 HK 3.23 3.68 Hold 1,028 Dec 8.2 7.5 5.5 15.7A v erage 11.4 10.2 3.9 14.5

F ood retailBeijing J ingkelong* 814 HK 1.89 2.45 Hold** 100 Dec 10.0 9.0 6.7 3.7Lianhua* 980 HK 4.48 4.43 Hold 647 Dec 27.6 23.7 0.0 4.2Sun Art Retail 6808 HK 8.67 n.a. NR 10,672 Dec 21.9 19.3 2.3 15.7Wumart Stores* 1025 HK 6.8 7.00 Hold 1,124 Dec 15.0 13.7 3.3 12.1A v erage 18.6 16.4 3.1 8.9

G lobal brands & OEM manufacturersPrada*# 1913 HK 54.45 60.00 Hold 17,978 Jan 21.7 18.9 2.1 21.3Samsonite* 1910 HK 25.9 28.75 Buy 4,704 Dec 21.5 18.1 2.1 17.5Sitoy Group* 1023 HK 5.26 6.44 Buy 680 Jun 10.9 9.6 4.1 26.3A v erage 16.1 14.0 3.1 25.3

Home appliance operatorsGOME* 493 HK 1.26 1.55 Buy 2,756 Dec 14.2 12.3 2.8 7.4Haier Electronics* 1169 HK 21.4 25.67 Buy 7,397 Dec 16.5 13.7 0.6 28.1A v erage 15.3 13.0 1.7 17.8

Watch & J ew elleriesChow Tai Fook# 1929 HK 11.3 n.a. NR 14,581 Mar 14.8 12.7 2.8 19.2Chow Sang Sang* 116 HK 19.76 23.71 Buy 1,726 Dec 10.8 9.6 3.5 14.9Hengdeli*^ 3389 HK 1.37 1.41 Hold 848 Dec 9.9 8.8 3.0 9.1Luk Fook*#^ 590 HK 23.2 30.75 Buy 1,764 Mar 8.6 7.5 4.7 19.7Oriental Watch*#^ 398 HK 1.81 1.57 FV 133 Mar 35.8 31.0 0.8 1.3Emperor Watch 887 HK 0.52 n.a. NR 462 Dec 11.1 9.1 2.5 7.1Time Watch* 2033 HK 1.14 1.82 Buy 306 Jun 8.3 7.2 4.2 20.7A v erage 14.2 12.3 3.1 13.1

# FY14: FY15; FY15: FY16

^ Core EPS

** Under review

Note: Closing price on 10 Jul 2014

Source: Thomson Reuters, *DBS Vickers

Industry Focus

Consumer Sector

Segmental PE bands

HK & China Retailers Apparel & footwear

50

100

150

200

250

300

350

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Index (Rebased 1 Jan 09 = 100)

8x

12x

16x

20x

24x

0

100

200

300

400

500

600

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

4x

9x

14x

18x

23x

Index (Rebased 1 Jan 09 = 100)

Cosmetics retailers Department stores

0

200

400

600

800

1,000

1,200

1,400

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14

7x

12x

Total Market Cap (Rebased 1 Jan 09 = 100)

21x

25x

21x

40

90

140

190

240

290

340

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14


9x

14x

18x

23x

27x

Source: Thomson Reuters, DBS Vickers (excluding new listings)

Industry Focus

Consumer Sector

Segmental PE bands (continued)

Food retailers Global players

50

100

150

200

250

300

350

400

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14


16x

23x

30x

36x

43x

0

50

100

150

200

250

300

350

400

450

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14

Total market cap (Rebased Jan 08 = 100)

5x

10x

15x

20x

25x

Hard luxury retailers Home appliances

0

200

400

600

800

1,000

1,200

1,400

1,600

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14

3x

7x

12x

16x

20x


0

200

400

600

800

1,000

1,200

1,400

1,600

Jan-

09A

pr-0

9Ju

l-09

Oct

-09

Jan-

10A

pr-1

0Ju

l-10

Oct

-10

Jan-

11A

pr-1

1Ju

l-11

Oct

-11

Jan-

12A

pr-1

2Ju

l-12

Oct

-12

Jan-

13A

pr-1

3Ju

l-13

Oct

-13

Jan-

14A

pr-1

4Ju

l-14


6x

9x

13x

16x

20x

Source: Thomson Reuters, DBS Vickers (excluding new listings)

Industry Focus

Consumer Sector

Stock Profiles

STOCK PROFILES

Industry Focus

Consumer Sector

Beijing Jingkelong (814 HK Equity, HK$1.89, Hold (Under Review), Target Price HK$2.45) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 9,205 9,629 10,225 10,948EBITDA 567 500 531 567Pre-tax Profit 230 143 152 167Net Profit 105 57 62 69Net Pft (Pre Ex.) 105 57 62 69EPS (RMB) 0.25 0.14 0.15 0.17EPS (HK$) 0.32 0.17 0.19 0.21EPS Gth (%) (50.0) (45.7) 9.4 10.3Diluted EPS (HK$) 0.32 0.17 0.19 0.21DPS (HK$) 0.12 0.12 0.13 0.12BV Per Share (HK$) 4.98 5.02 5.08 5.16PE (X) 5.9 10.9 10.0 9.0P/Cash Flow (X) nm 9.7 1.9 2.9P/Free CF (X) nm nm 17.9 nmEV/EBITDA (X) 5.7 7.1 7.7 7.6Net Div Yield (%) 6.6 6.6 6.7 6.6P/Book Value (X) 0.4 0.4 0.4 0.4Net Debt/Equity (X) 1.1 1.2 1.4 1.4ROAE (%) 6.4 3.5 3.7 4.1

Earnings Rev (%): Nil NilConsensus EPS (RMB): 0.15 0.17Other Broker Recs: B: 0 S: 0 H: 2

Issued Capital - H shares (m shs) 182 - Non H shrs (m shs) 230H shs as a % of Total 44Total Mkt. Cap (HK$m/US$m) 779 / 100Major Shareholders

Chaoyang Auxillary (%) 40.6 Other domestic shareholders (%) 15.2

Major H Shareholders (%) JPMorgan Chase & Co. (%) 13.0 Commonwealth Bank of Australia (%) 12.9 Schroders Plc (%) 11.0 Templeton Asset Management Limited (%) 10.1 Prudential plc (%) 7.0

H Shares-Free Float (%) 46.1Avg. Daily Vol.(‘000) 896

Income Statement (RMB m) Balance Sheet (RMB m)

FY Dec 2012A 2013A 2014F 2015F FY Dec 2012A 2013A 2014F 2015F

Turnover 9,205 9,629 10,225 10,948 Net Fixed Assets 1,897 1,502 2,070 2,129Cost of Goods Sold (7,823) (8,304) (8,812) (9,431) Invts in Assocs & JVs 0 0 0 0Gross Profit 1,383 1,325 1,412 1,518 Other LT Assets 480 980 995 1,010Other Opg (Exp)/Inc (1,013) (1,038) (1,113) (1,200) Cash & ST Invts 490 602 85 (64)Operating Profit 369 287 300 318 Inventory 1,536 1,481 1,601 1,713Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 1,399 1,658 1,623 1,738Associates & JV Inc 0 0 0 0 Other Current Assets 712 927 870 932Net Interest (Exp)/Inc (140) (143) (148) (151) Total Assets 6,515 7,150 7,243 7,458Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 2,537 2,128 2,128 2,128Pre-tax Profit 230 143 152 167 Other Current Liab 1,750 1,937 1,967 2,106Tax (58) (43) (42) (46) LT Debt 200 978 978 978Minority Interest (67) (43) (48) (52) Other LT Liabilities 27 31 32 33Preference Dividend 0 0 0 0 Shareholder’s Equity 1,644 1,655 1,675 1,703Net Profit 105 57 62 69 Minority Interests 356 422 464 510Net profit before Except. 105 57 62 69 Total Cap. & Liab. 6,515 7,150 7,243 7,458EBITDA 567 500 531 567 Sales Gth (%) 6.6 4.6 6.2 7.1 Non-Cash Wkg. Cap 1,896 2,129 2,127 2,277EBITDA Gth (%) (12.2) (11.8) 6.2 6.9 Net Cash/(Debt) (2,247) (2,504) (3,020) (3,169)Opg Profit Gth (%) (20.0) (22.4) 4.5 6.2 Effective Tax Rate (%) 25.2 30.1 27.6 27.6

Cash Flow Statement (RMB m) Segmental Breakdown (RMB m) / Key Assumptions

FY Dec 2012A 2013E 2014F 2015F FY Dec 2012A 2013A 2014F 2015F

Pre-Tax Profit 230 143 152 167 Revenues (RMB m) Dep. & Amort. 197 213 231 249 Retail - Hypermarket 1,188 1,182 1,261 1,421Tax Paid (66) (49) (48) (52) Retail - Supermarket 3,012 2,954 3,052 3,244Assoc. & JV Inc/(loss) 0 0 0 0 Retail - Convenience 324 326 333 316(Pft)/ Loss on disposal of FAs 5 0 0 0 Retail - Dept Store 50 55 59 64Chg in Wkg.Cap. (465) (243) (1) (153) Total 9,205 9,629 10,225 10,948Other Operating CF (19) 0 0 0 Key Assumptions – Number of stores Net Operating CF (117) 64 335 211 Hypermarkets 10.0 12.0 14.0 16.0Capital Exp.(net) (277) (300) (300) (300) Supermarkets 78.0 78.0 81.0 84.0Other Invts.(net) 32 0 0 0 Convenience Stores 160.0 187.0 198.0 209.0Invts in Assoc. & JV 0 0 0 0 Dept Stores 2.0 2.0 2.0 2.0Div from Assoc & JV 0 0 0 0 Total No. of Stores 250.0 279.0 295.0 311.0Other Investing CF (22) 15 10 7 Net Investing CF (266) (285) (290) (293) Div Paid (124) (132) (142) (151) Chg in Gross Debt 426 494 (420) 84 Capital Issues 0 0 0 0 Other Financing CF (42) 0 0 0 Net Financing CF 260 362 (562) (68) Currency Adjustments 0 0 0 0 Chg in Cash (124) 140 (517) (149)

Source: Company, DBS Vickers

Industry Focus

Consumer Sector

Bonjour Holdings (653 HK EQUITY, HK$1.20, Hold ,Target Price HK$ 1.36) Forecast & Valuation General Data

FY Dec (HK$ m) 2012A 2013A 2014F 2015FTurnover 2,808 3,039 3,235 3,573EBITDA 313 371 406 460Pre-tax Profit 269 328 362 415Net Profit 222 273 299 342Net Pft (Pre Ex.) 222 273 299 342EPS (HK$) 0.07 0.09 0.09 0.10EPS Gth (%) (7.2) 22.6 1.0 8.9Diluted EPS (HK$) 0.07 0.08 0.08 0.09DPS (HK$) 0.06 0.07 0.06 0.07BV Per Share (HK$) 0.11 0.13 0.20 0.22PE (X) 16.2 13.2 13.1 12.0P/Cash Flow (X) 12.7 12.3 12.0 11.2P/Free CF (X) 15.8 13.7 25.9 13.4EV/EBITDA (X) 10.5 8.7 8.6 7.9Net Div Yield (%) 5.0 6.1 5.4 5.8P/Book Value (X) 11.1 9.0 6.0 5.4Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 72.5 75.4 56.8 48.4 Earnings Rev (%): Nil NilConsensus EPS (HK$): 0.10 0.11Other Broker Recs: B: 1 S: 0 H: 2

At A GlanceIssued Capital (m shrs) 3,411 Mkt. Cap (HK$m/US$m) 4,093 / 528Major Shareholders

IP Chun Heng, Wilson (%) 62.8 Free Float (%) 37.2 Avg. Daily Vol.(‘000) 5,605

Income Statement (HK$ m) Balance Sheet (HK$ m)


Turnover 2,808 3,039 3,235 3,573 Net Fixed Assets 93 79 248 272Cost of Goods Sold (1,483) (1,600) (1,699) (1,872) Invts in Assocs & JVs 0 0 0 0Gross Profit 1,325 1,439 1,536 1,701 Other LT Assets 115 87 104 124Other Opg (Exp)/Inc (1,055) (1,111) (1,173) (1,285) Cash & ST Invts 318 388 472 546Operating Profit 270 328 363 415 Inventory 248 271 278 296Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 116 132 144 162Associates & JV Inc 0 0 0 0 Other Current Assets 26 59 70 83Net Interest (Exp)/Inc 0 0 0 0 Total Assets 915 1,015 1,317 1,484Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 21 34 42 53Pre-tax Profit 269 328 362 415 Other Current Liab 558 577 615 669Tax (47) (55) (63) (73) LT Debt 0 0 0 0Minority Interest 0 0 0 0 Other LT Liabilities 12 6 5 5Preference Dividend 0 0 0 0 Shareholder’s Equity 325 399 655 758Net Profit 222 273 299 342 Minority Interests 0 0 0 0Net profit before Except. 222 273 299 342 Total Cap. & Liab. 915 1,015 1,317 1,484EBITDA 313 371 406 460 Sales Gth (%) 9.6 8.2 6.4 10.5 Non-Cash Wkg. Cap (168) (116) (122) (127)EBITDA Gth (%) (4.4) 18.3 9.6 13.2 Net Cash/(Debt) 297 354 430 493Opg Profit Gth (%) (6.3) 21.6 10.6 14.5 Effective Tax Rate (%) 17.5 16.9 17.5 17.5

Cash Flow Statement (HK$ m) Segmental Breakdown (HK$ m) / Key Assumptions


Pre-Tax Profit 269 328 362 415 Revenues (HK$ m) Dep. & Amort. 43 43 43 44 Wholesaling & retailing 2,505 2,721 2,916 3,235Tax Paid (41) (57) (63) (73) 303 318 318 338Assoc. & JV Inc/(loss) 0 0 0 0

Operation of beauty & health salons

(Pft)/ Loss on disposal of FAs 20 0 0 0 Total 2,808 3,039 3,235 3,573Chg in Wkg.Cap. (15) (19) (15) (18) Segmental profit (HK$ m) Other Operating CF 5 (2) (1) (1) Wholesaling & retailing 215 279 300 332Net Operating CF 282 292 327 367 31 42 42 45Capital Exp.(net) (55) (29) (176) (60)

Operation of beauty &health salons

Other Invts.(net) 0 0 0 0 Total 246 322 342 377Invts in Assoc. & JV 0 0 0 0 Segmental profit Margins (%) Div from Assoc & JV 0 0 0 0 Wholesaling & retailing 8.6 10.3 10.3 10.3Other Investing CF (37) (27) 1 1 10.2 13.3 13.3 13.3Net Investing CF (92) (55) (175) (59)

Operation of beauty & health salons

Div Paid (165) (212) (209) (240) Total 8.8 10.6 10.6 10.6Chg in Gross Debt 21 13 8 11 Key Assumptions – Number of stores Capital Issues (41) 15 164 0 44.0 46.0 49.0 51.0Other Financing CF (18) (8) (30) (6)

Number of beauty & health-care retail outlets

Net Financing CF (203) (192) (67) (235) Number of beauty salons 21.0 20.0 20.0 21.0Currency Adjustments (1) (1) 0 0 Chg in Cash (14) 43 85 74


Industry Focus

Consumer Sector

Chow Sang Sang (116 HK EQUITY, HK$19.76, Upgrade to Buy, Target Price HK$ 23.71) Forecast & Valuation General Data

FY Dec (HK$ m) 2012A 2013A 2014F 2015FTurnover 18,260 25,142 25,243 26,960EBITDA 1,329 1,605 1,720 1,922Pre-tax Profit 1,222 1,512 1,537 1,721Net Profit 985 1,218 1,239 1,387Net Pft (Pre Ex.) 929 1,141 1,239 1,387EPS (HK$) 1.45 1.80 1.83 2.05EPS Gth (%) (10.3) 23.7 1.7 12.0Diluted EPS (HK$) 1.45 1.80 1.83 2.05DPS (HK$) 0.55 0.68 0.69 0.77BV Per Share (HK$) 10.35 11.72 12.86 14.14PE (X) 13.6 11.0 10.8 9.6P/Cash Flow (X) 13.5 15.8 11.3 15.7P/Free CF (X) 18.3 22.6 13.0 19.6EV/EBITDA (X) 11.0 8.9 8.1 7.2Net Div Yield (%) 2.8 3.4 3.5 3.9P/Book Value (X) 1.9 1.7 1.5 1.4Net Debt/Equity (X) 0.2 0.1 0.0 0.0ROAE (%) 14.7 16.3 14.9 15.2 Earnings Rev (%): (4) (7)Consensus EPS (HK$): 1.89 2.20Other Broker Recs: B: 7 S: 1 H: 7

At A GlanceIssued Capital (m shrs) 677 Mkt. Cap (HK$m/US$m) 13,376 / 1,726Major Shareholders

Chow family (%) 56.0 The Capital Group Companies, Inc. (%) 13.0 Schroders Plc (%) 7.0

Free Float (%) 24.0 Avg. Daily Vol.(‘000) 564



Turnover 18,260 25,142 25,243 26,960 Net Fixed Assets 872 1,014 1,111 1,202Cost of Goods Sold (14,828) (20,935) (20,867) (22,232) Invts in Assocs & JVs 22 23 23 23Gross Profit 3,432 4,208 4,376 4,727 Other LT Assets 869 889 908 930Other Opg (Exp)/Inc (2,267) (2,791) (2,866) (3,036) Cash & ST Invts 688 1,035 1,711 1,990Operating Profit 1,165 1,417 1,510 1,692 Inventory 6,602 6,866 7,130 7,901Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 1,022 1,129 1,133 1,210Associates & JV Inc 4 2 2 2 Other Current Assets 351 386 386 386Net Interest (Exp)/Inc (23) (3) 7 9 Total Assets 10,426 11,342 12,402 13,643Dividend Income 20 18 18 18 Exceptional Gain/(Loss) 56 78 0 0 ST Debt 1,295 1,405 1,645 1,888Pre-tax Profit 1,222 1,512 1,537 1,721 Other Current Liab 1,303 1,313 1,316 1,401Tax (233) (288) (293) (328) LT Debt 606 454 477 501Minority Interest (4) (5) (5) (5) Other LT Liabilities 138 152 167 183Preference Dividend 0 0 0 0 Shareholder’s Equity 7,007 7,935 8,706 9,569Net Profit 985 1,218 1,239 1,387 Minority Interests 76 84 92 101Net profit before Except. 929 1,141 1,239 1,387 Total Cap. & Liab. 10,426 11,342 12,402 13,643EBITDA 1,329 1,605 1,720 1,922 Sales Gth (%) 6.4 37.7 0.4 6.8 Non-Cash Wkg. Cap 6,672 7,068 7,333 8,096EBITDA Gth (%) (12.3) 20.8 7.2 11.7 Net Cash/(Debt) (1,213) (824) (411) (398)Opg Profit Gth (%) (15.8) 21.6 6.6 12.0 Effective Tax Rate (%) 19.1 19.1 19.1 19.1



Pre-Tax Profit 1,222 1,512 1,537 1,721 Revenues (HK$ m) Dep. & Amort. 140 168 190 210 Manufacture & retail of 14,861 19,943 20,084 21,295Tax Paid (136) (390) (293) (328) Wholesale of precious 3,244 5,001 4,951 5,446Assoc. & JV Inc/(loss) (4) (2) (2) (2) Securities & futures 30 35 36 38(Pft)/ Loss on disposal of FAs 15 (300) 0 0 Other businesses 125 164 172 180Chg in Wkg.Cap. (265) (157) (272) (770) Total 18,260 25,142 25,243 26,960Other Operating CF 19 17 19 23 Segmental profit (HK$ m) Net Operating CF 990 848 1,179 853 Manufacture & retail of 1,114 1,350 1,420 1,570Capital Exp.(net) (258) (256) (150) (173) Wholesale of precious 32 68 68 75Other Invts.(net) 2 0 0 0 Securities & futures 7 15 16 17Invts in Assoc. & JV 0 0 0 0 Other businesses 45 58 61 64Div from Assoc & JV 21 18 18 18 Total 1,198 1,492 1,565 1,726Other Investing CF (30) (31) (20) (22) Segmental profit Margins (%) Net Investing CF (266) (269) (152) (177) Manufacture & retail of 7.5 6.8 7.1 7.4Div Paid (408) (399) (468) (524) Wholesale of precious 1.0 1.4 1.4 1.4Chg in Gross Debt (322) (235) 159 147 Securities & futures 22.6 43.8 44.8 45.8Capital Issues 0 0 0 0 Other businesses 35.8 35.6 35.6 35.6Other Financing CF 46 375 (58) (36) Total 6.6 5.9 6.2 6.4Net Financing CF (684) (260) (367) (413) Key Assumptions – Number of stores Currency Adjustments 2 0 0 0 Hong Kong and Macau 58.0 58.0 58.0 59.0Chg in Cash 41 320 660 264 China 274.0 296.0 331.0 361.0

Taiwan 20.0 21.0 21.0 22.0


Industry Focus

Consumer Sector

Golden Eagle (3308 HK EQUITY, HK$9.21, Buy,Target Price HK$11.45) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 3,623 3,660 4,110 4,855EBITDA 1,761 1,823 2,080 2,410Pre-tax Profit 1,648 1,708 1,784 2,028Net Profit 1,218 1,235 1,367 1,549Net Pft (Pre Ex.) 1,218 1,235 1,367 1,549EPS (RMB) 0.63 0.66 0.72 0.82EPS (HK$) 0.79 0.82 0.90 1.02EPS Gth (%) 0.9 4.3 10.1 13.3Diluted EPS (HK$) 0.77 0.82 0.90 1.02DPS (HK$) 0.23 0.23 0.27 0.31BV Per Share (HK$) 3.36 3.46 4.13 4.88PE (X) 11.7 11.2 10.2 9.0P/Cash Flow (X) 9.6 11.1 7.5 6.2P/Free CF (X) 18.9 13.0 nm 58.5EV/EBITDA (X) 7.5 8.5 7.5 6.5Net Div Yield (%) 2.5 2.5 2.9 3.3P/Book Value (X) 2.7 2.7 2.2 1.9Net Debt/Equity (X) CASH 0.3 0.3 0.2ROAE (%) 24.7 23.4 23.8 22.7


At A GlanceIssued Capital (m shrs) 1,801 Mkt. Cap (HK$m/US$m) 16,578 / 2,140Major Shareholders

Roger Wang & ass. (%) 74.7 Free Float (%) 25.3 Avg. Daily Vol.(‘000) 3,178



Turnover 3,623 3,660 4,110 4,855 Net Fixed Assets 4,025 4,034 5,742 7,349Cost of Goods Sold (964) (1,017) (1,119) (1,319) Invts in Assocs & JVs 416 255 0 0Gross Profit 2,659 2,643 2,992 3,537 Other LT Assets 3,332 4,023 4,212 4,461Other Opg (Exp)/Inc (1,102) (1,128) (1,323) (1,644) Cash & ST Invts 4,357 2,924 2,787 2,704Operating Profit 1,557 1,515 1,669 1,893 Inventory 399 354 398 470Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 387 403 453 535Associates & JV Inc 23 113 119 125 Other Current Assets 870 3,081 3,081 3,081Net Interest (Exp)/Inc 68 80 (3) 11 Total Assets 13,787 15,075 16,673 18,600Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 1,079 0 0 0Pre-tax Profit 1,648 1,708 1,784 2,028 Other Current Liab 5,128 5,203 5,772 6,539Tax (430) (473) (417) (479) LT Debt 2,132 4,494 4,494 4,494Minority Interest 0 0 0 0 Other LT Liabilities 150 130 150 172Preference Dividend 0 0 0 0 Shareholder’s Equity 5,295 5,244 6,254 7,392Net Profit 1,218 1,235 1,367 1,549 Minority Interests 3 2 2 2Net profit before Except. 1,218 1,235 1,367 1,549 Total Cap. & Liab. 13,787 15,075 16,673 18,600EBITDA 1,761 1,823 2,080 2,410 Sales Gth (%) 12.6 1.0 12.3 18.1 Non-Cash Wkg. Cap (3,472) (1,365) (1,840) (2,453)EBITDA Gth (%) 4.5 3.5 14.1 15.9 Net Cash/(Debt) 1,147 (1,570) (1,707) (1,791)Opg Profit Gth (%) 1.5 (2.7) 10.1 13.4 Effective Tax Rate (%) 26.1 27.7 23.4 23.6



Pre-Tax Profit 1,648 1,708 1,784 2,028 Revenues (RMB m) Dep. & Amort. 181 194 292 392 Direct sales 1,172 1,245 1,374 1,617Tax Paid (477) (470) (414) (476) Commission income 2,363 2,320 2,633 3,118Assoc. & JV Inc/(loss) 0 0 0 0 Rental income 73 80 87 103(Pft)/ Loss on disposal of FAs 0 0 0 0 Mgt fees 17 16 16 17Chg in Wkg.Cap. 193 (32) 160 264 Total 3,626 3,660 4,110 4,855Other Operating CF (57) (151) 36 30 Key Assumptions Net Operating CF 1,488 1,250 1,858 2,239 Self-operated stores 27.0 26.0 32.0 35.0Capital Exp.(net) (733) (184) (2,000) (2,000) Managed stores 1.0 1.0 1.0 1.0Other Invts.(net) (237) 107 0 0 Total no. of stores 28.0 27.0 33.0 36.0Invts in Assoc. & JV (317) (21) 0 0 Div from Assoc & JV 0 0 0 0 Other Investing CF (433) (2,281) 0 0 Net Investing CF (1,720) (2,378) (2,000) (2,000) Div Paid (367) (353) (410) (465) Chg in Gross Debt 2,975 2,466 0 0 Capital Issues 0 0 0 0 Other Financing CF (946) (2,419) 415 142 Net Financing CF 1,663 (305) 5 (322) Currency Adjustments 0 0 0 0 Chg in Cash 1,431 (1,433) (137) (84)


Industry Focus

Consumer Sector

GOME (493 HK Equity, HK$1.26, Buy,Target Price HK$ 1.55) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 51,097 56,401 63,398 69,907EBITDA (317) 1,591 1,801 2,160Pre-tax Profit (759) 1,195 1,457 1,769Net Profit (728) 892 1,200 1,381Net Pft (Pre Ex.) (763) 892 1,200 1,381EPS (RMB) (0.04) 0.05 0.07 0.08EPS (HK$) (0.05) 0.07 0.09 0.10EPS Gth (%) N/A N/A 34.5 15.0Diluted EPS (HK$) (0.05) 0.07 0.09 0.10DPS (HK$) 0.00 0.04 0.04 0.04BV Per Share (HK$) 1.12 1.18 1.22 1.28PE (X) nm 19.1 14.2 12.3P/Cash Flow (X) 4.1 8.5 8.3 8.0P/Free CF (X) 5.0 10.2 19.9 19.4EV/EBITDA (X) nm 2.3 1.8 1.1Net Div Yield (%) 0.0 3.1 2.8 3.2P/Book Value (X) 1.1 1.1 1.0 1.0Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) (4.7) 5.8 7.4 8.2



Wong Kwong Yu (%) 32.1 Bain Capital Investors, LLC (%) 10.0 Morgan Stanley (%) 7.2 Carmignac Gestion (%) 5.0

Free Float (%) 45.7 Avg. Daily Vol.(‘000) 60,192



Turnover 51,097 56,401 63,398 69,907 Net Fixed Assets 4,379 4,095 5,216 5,868Cost of Goods Sold (44,276) (47,899) (53,714) (59,075) Invts in Assocs & JVs 0 0 0 0Gross Profit 6,821 8,502 9,684 10,832 Other LT Assets 9,010 8,884 8,849 8,865Other Opg (Exp)/Inc (7,632) (7,488) (8,420) (9,271) Cash & ST Invts 13,308 15,423 15,814 16,790Operating Profit (812) 1,015 1,264 1,560 Inventory 7,779 8,221 9,513 10,786Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 0 0 0 0Associates & JV Inc 0 0 0 0 Other Current Assets 3,237 2,702 3,010 3,296Net Interest (Exp)/Inc 18 180 194 209 Total Assets 37,713 39,324 42,402 45,606Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 34 0 0 0 ST Debt 2,434 2,683 2,683 2,683Pre-tax Profit (759) 1,195 1,457 1,769 Other Current Liab 20,433 21,151 23,664 25,982Tax (183) (517) (364) (442) LT Debt 0 0 0 0Minority Interest 213 215 108 54 Other LT Liabilities 171 172 190 208Preference Dividend 0 0 0 0 Shareholder’s Equity 15,064 15,927 16,475 17,343Net Profit (728) 892 1,200 1,381 Minority Interests (395) (610) (610) (610)Net profit before Except. (763) 892 1,200 1,381 Total Cap. & Liab. 37,708 39,324 42,402 45,606EBITDA (317) 1,591 1,801 2,160 Sales Gth (%) (14.6) 10.4 12.4 10.3 Non-Cash Wkg. Cap (9,417) (10,228) (11,141) (11,899)EBITDA Gth (%) N/A N/A 13.2 20.0 Net Cash/(Debt) 10,873 12,739 13,131 14,107Opg Profit Gth (%) N/A N/A 24.6 23.5 Effective Tax Rate (%) N/A 43.3 25.0 25.0

Cash Flow Statement (RMB m)

FY Dec 2012A 2013A 2014F 2015F

Pre-Tax Profit (759) 1,195 1,457 1,769 Dep. & Amort. 494 576 537 600 Tax Paid (347) (326) (364) (442) Assoc. & JV Inc/(loss) 0 0 0 0 (Pft)/ Loss on disposal of FAs FAFAsiaries/Investments (-/+) (23) 23 0 0

Chg in Wkg.Cap. 3,675 758 831 682 Other Operating CF 1,100 (231) (414) (480) Net Operating CF 4,140 1,995 2,047 2,128 Capital Exp.(net) (746) (328) (1,192) (1,252) Other Invts.(net) 8 0 0 0 Invts in Assoc. & JV 0 0 0 0 Div from Assoc & JV 0 0 0 0 Other Investing CF (92) 0 0 0 Net Investing CF (829) (328) (1,192) (1,252) Div Paid 0 0 (240) (276) Chg in Gross Debt (164) 322 1,536 1,416 Capital Issues 0 0 0 0 Other Financing CF (2,503) (27) (1,760) (1,040) Net Financing CF (2,666) 294 (464) 100 Currency Adjustments 10 (13) 0 0 Chg in Cash 654 1,948 391 976


Industry Focus

Consumer Sector

Haier Electronics (1169 HK Equity, HK$21.40, Buy,Target Price HK$ 25.67) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 55,615 62,263 71,306 81,134EBITDA 2,485 2,831 3,538 4,335Pre-tax Profit 2,244 2,638 3,271 3,983Net Profit 1,695 2,037 2,494 3,002Net Pft (Pre Ex.) 1,801 2,037 2,494 3,002EPS (RMB) 0.71 0.85 1.04 1.25EPS (HK$) 0.88 1.06 1.30 1.56EPS Gth (%) 15.6 20.2 22.4 20.4Diluted EPS (HK$) 0.81 0.90 1.11 1.33DPS (HK$) 0.08 0.10 0.13 0.15BV Per Share (HK$) 2.89 4.03 5.22 6.66PE (X) 24.2 20.1 16.5 13.7P/Cash Flow (X) 23.6 18.6 15.5 14.2P/Free CF (X) 32.1 73.8 50.0 46.3EV/EBITDA (X) 14.8 12.5 9.8 7.8Net Div Yield (%) 0.4 0.5 0.6 0.7P/Book Value (X) 7.4 5.3 4.1 3.2Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 35.4 30.7 28.1 26.3



Haier Group Corporation (%) 58.7 Carlyle Group (%) 5.2




Turnover 55,615 62,263 71,306 81,134 Net Fixed Assets 1,324 1,502 2,576 3,331Cost of Goods Sold (46,674) (53,126) (60,663) (68,862) Invts in Assocs & JVs 0 0 0 0Gross Profit 8,941 9,138 10,643 12,272 Other LT Assets 849 1,350 1,514 1,707Other Opg (Exp)/Inc (6,562) (6,511) (7,376) (8,285) Cash & ST Invts 5,368 6,824 7,628 8,699Operating Profit 2,379 2,626 3,267 3,987 Inventory 2,479 2,892 3,565 4,424Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 8,131 9,094 10,372 12,182Associates & JV Inc 0 0 0 0 Other Current Assets 62 220 220 220Net Interest (Exp)/Inc (29) 11 4 (3) Total Assets 18,213 21,881 25,875 30,562Dividend Income 0 0 0 0 Exceptional Gain/(Loss) (106) 0 0 0 ST Debt 40 199 199 199Pre-tax Profit 2,244 2,638 3,271 3,983 Other Current Liab 10,882 12,232 13,715 15,532Tax (537) (548) (712) (887) LT Debt 700 717 837 837Minority Interest (12) (53) (65) (95) Other LT Liabilities 752 676 706 739Preference Dividend 0 0 0 0 Shareholder’s Equity 5,540 7,721 10,014 12,770Net Profit 1,695 2,037 2,494 3,002 Minority Interests 301 337 404 485Net profit before Except. 1,801 2,037 2,494 3,002 Total Cap. & Liab. 18,213 21,881 25,875 30,562EBITDA 2,485 2,831 3,538 4,335 Sales Gth (%) 11.0 12.0 14.5 13.8 Non-Cash Wkg. Cap (209) (27) 442 1,294EBITDA Gth (%) 27.7 13.9 25.0 22.5 Net Cash/(Debt) 4,629 5,909 6,592 7,663Opg Profit Gth (%) 28.2 10.4 24.4 22.0 Effective Tax Rate (%) 23.9 20.8 21.8 22.3

Cash Flow Statement (RMB m) Segmental Breakdown (RMB m)


Pre-Tax Profit 2,244 2,638 3,271 3,983 Revenues (RMB m) Dep. & Amort. 106 204 271 348 Manufacturing of washing machines 13,277 14,222 15,447 16,701Tax Paid (392) (548) (712) (887) Manufacturing of water heaters 4,489 4,358 4,796 5,255Assoc. & JV Inc/(loss) 0 0 0 0 Integrated Channel Services (ICS) 50,769 57,568 67,292 77,987(Pft)/ Loss on disposal of FAs 0 0 0 0 Intersegment eliminations (12,920) (13,884) (16,230) (18,809)Chg in Wkg.Cap. (427) 4 (469) (852) Total 55,615 62,263 71,306 81,134Other Operating CF 209 (89) 278 294 Segmental profit (RMB m) Net Operating CF 1,740 2,210 2,640 2,887 Manufacturing of washing machines 1,105 1,241 1,394 1,557Capital Exp.(net) (463) (1,654) (1,819) (2,001) Manufacturing of water heaters 500 479 561 646Other Invts.(net) 0 0 0 0 Integrated Channel Services (ICS) 735 1,050 1,430 1,813Invts in Assoc. & JV 0 0 0 0 Total 2,341 2,770 3,384 4,016Div from Assoc & JV 0 0 0 1 Segmental profit Margins (%) Other Investing CF (186) 0 0 0 Manufacturing of washing machines 8.3 8.7 9.0 9.3Net Investing CF (649) (1,654) (1,819) (2,000) Manufacturing of water heaters 11.1 11.0 11.7 12.3Div Paid 0 (201) (246) (296) Integrated Channel Services (ICS) 1.4 1.8 2.1 2.3Chg in Gross Debt 83 120 120 120 Total 4.2 4.4 4.7 4.9Capital Issues 83 874 0 0 Other Financing CF (51) 337 109 360 Net Financing CF 115 1,131 (17) 184 Currency Adjustments (8) 0 0 0 Chg in Cash 1,198 1,687 804 1,070


Industry Focus

Consumer Sector

Hengdeli Holdings (3389 HK EQUITY, HK$1.37, Hold ,Target Price HK$ 1.41) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 12,120 13,375 14,517 15,931EBITDA 1,465 1,143 1,229 1,327Pre-tax Profit 1,231 673 814 910Net Profit 855 400 532 596Net Pft (Pre Ex.) 775 506 532 596EPS (RMB) 0.19 0.08 0.11 0.12EPS (HK$) 0.24 0.10 0.14 0.15EPS Gth (%) 5.1 (57.2) 32.7 12.1Diluted EPS (HK$) 0.22 0.10 0.14 0.15DPS (HK$) 0.05 0.03 0.04 0.05BV Per Share (HK$) 1.55 1.46 1.59 1.75PE (X) 5.6 13.2 9.9 8.8P/Cash Flow (X) 19.6 12.8 8.8 9.1P/Free CF (X) nm 17.8 11.7 12.2EV/EBITDA (X) 4.5 6.7 6.4 5.9Net Div Yield (%) 3.6 2.3 3.0 3.4P/Book Value (X) 0.9 0.9 0.9 0.8Net Debt/Equity (X) 0.2 0.3 0.3 0.2ROAE (%) 16.5 7.2 9.1 9.3

Earnings Rev (%): (6) (6)Consensus EPS (RMB): 0.12 0.13Other Broker Recs: B: 2 S: 2 H: 9


Best Growth (BVI) (%) 31.8 The Swatch Group Limited (%) 9.1 LVMH Group (France) (%) 6.0




Turnover 12,120 13,375 14,517 15,931 Net Fixed Assets 1,252 1,695 1,663 1,633Cost of Goods Sold (8,966) (9,732) (10,555) (11,567) Invts in Assocs & JVs 561 138 604 602Gross Profit 3,154 3,644 3,962 4,364 Other LT Assets 863 1,019 1,024 1,030Other Opg (Exp)/Inc (1,834) (2,634) (2,911) (3,210) Cash & ST Invts 2,871 2,286 2,147 2,490Operating Profit 1,320 1,009 1,051 1,154 Inventory 5,570 6,329 6,806 7,396Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 1,369 1,367 1,483 1,628Associates & JV Inc 32 (5) (5) (6) Other Current Assets 0 0 0 0Net Interest (Exp)/Inc (201) (226) (233) (238) Total Assets 12,486 12,833 13,728 14,779Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 80 (105) 0 0 ST Debt 3,622 1,355 1,355 1,355Pre-tax Profit 1,231 673 814 910 Other Current Liab 2,193 2,377 2,577 2,822Tax (285) (204) (203) (227) LT Debt 562 2,696 2,696 2,696Minority Interest (90) (68) (79) (87) Other LT Liabilities 196 221 221 221Preference Dividend 0 0 0 0 Shareholder’s Equity 5,457 5,599 6,131 6,726Net Profit 855 400 532 596 Minority Interests 457 585 749 958Net profit before Except. 775 506 532 596 Total Cap. & Liab. 12,486 12,833 13,728 14,779EBITDA 1,465 1,143 1,229 1,327 Sales Gth (%) 6.6 10.4 8.5 9.7 Non-Cash Wkg. Cap 4,746 5,318 5,713 6,201EBITDA Gth (%) 14.0 (22.0) 7.6 8.0 Net Cash/(Debt) (1,312) (1,765) (1,903) (1,560)Opg Profit Gth (%) 9.0 (23.5) 4.1 9.7 Effective Tax Rate (%) 23.2 30.4 25.0 25.0



Pre-Tax Profit 1,231 673 814 910 Revenues (RMB m) Dep. & Amort. 113 138 183 179 Retail - China (Other than HK) 5,628 5,599 5,984 6,728Tax Paid (376) (238) (203) (227) Retail - HK 3,114 4,173 4,672 5,051Assoc. & JV Inc/(loss) (32) 5 5 6 Retail - Taiwan 215 206 203 212(Pft)/ Loss on disposal of FAs (45) 131 0 0 Wholesale 2,925 3,118 3,352 3,604Chg in Wkg.Cap. (782) (481) (395) (488) Customer service & ancillary business 239 279 306 337Other Operating CF 138 182 197 203 Total 12,120 13,375 14,517 15,931Net Operating CF 246 411 601 582 Segmental profit (RMB m) Capital Exp.(net) (431) (114) (150) (150) Retail - China (Other than HK) 1,905 1,747 1,868 2,106Other Invts.(net) 25 (99) 0 0 Retail - HK 753 1,419 1,612 1,742Invts in Assoc. & JV (226) (370) 0 0 Retail - Taiwan 69 64 63 65Div from Assoc & JV 0 38 35 35 Wholesale 338 327 351 378Other Investing CF 81 75 58 53 Customer service & ancillary business 89 87 69 72Net Investing CF (552) (471) (57) (62) Total 3,154 3,644 3,962 4,364Div Paid (380) (238) (223) (242) Segmental profit Margins (%) Chg in Gross Debt (383) (329) (333) 90 Retail - China (Other than HK) 33.9 31.2 31.2 31.3Capital Issues (10) (56) 0 0 Retail - HK 24.2 34.0 34.5 34.5Other Financing CF 1 59 28 25 Retail - Taiwan 32.2 30.8 30.8 30.8Net Financing CF (772) (564) (528) (127) Wholesale 11.6 10.5 10.5 10.5Currency Adjustments 3 (31) (28) (25) Customer service & ancillary business 37.2 31.2 22.5 21.3Chg in Cash (1,074) (655) (11) 368 Total 26.0 27.2 27.3 27.4 Key Assumptions – Number of stores Retail - China 374.0 384.0 397.0 409.0

Retail - HK 22.0 29.0 30.0 31.0Source: Company, DBS Vickers Retail - Taiwan 56.0 57.0 58.0 60.0

Industry Focus

Consumer Sector

Lianhua Supermarket (980 HK EQUITY, HK$4.48, Hold ,Target Price HK$ 4.43) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 28,988 30,383 31,064 32,623EBITDA 812 459 501 508Pre-tax Profit 666 352 363 414Net Profit 340 53 146 169Net Pft (Pre Ex.) 340 53 146 169EPS (RMB) 0.30 0.05 0.13 0.15EPS (HK$) 0.38 0.06 0.16 0.19EPS Gth (%) (45.8) (84.4) 174.9 16.2Diluted EPS (HK$) 0.38 0.06 0.16 0.19DPS (HK$) 0.19 0.00 0.00 0.00BV Per Share (HK$) 3.80 3.76 3.92 4.11PE (X) 11.8 75.8 27.6 23.7P/Cash Flow (X) nm 2.1 7.2 4.6P/Free CF (X) nm 2.8 nm 14.8EV/EBITDA (X) 2.2 nm nm 0.7Net Div Yield (%) 4.2 0.0 0.0 0.0P/Book Value (X) 1.2 1.2 1.1 1.1Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 10.1 1.6 4.2 4.7


Issued Capital - H shares (m shs) 373 - Non H shrs (m shs) 747H shs as a % of Total 33Total Mkt. Cap (HK$m/US$m) 5,016 / 647Major Shareholders

Shanghai Friendship (%) 55.2 Mitsubishi Corporation (%) 6.7

Major H Shareholders (%) JPMorgan Chase & Co. (%) 10.3 Corornation Global Fund Managers 10.0 The Bank of New York Mellon 9.0 Invesco Hong Kong Ltd (%) 6.2 BNP Paribas Jersey Trust Corporation 5.9

H Shares-Free Float (%) 58.6Avg. Daily Vol.(‘000) 1,248



Turnover 28,988 30,383 31,064 32,623 Net Fixed Assets 3,616 3,426 3,815 3,775Cost of Goods Sold (25,058) (26,021) (26,588) (27,906) Invts in Assocs & JVs 568 579 579 579Gross Profit 3,929 4,363 4,476 4,717 Other LT Assets 9,029 6,477 6,477 6,477Other Opg (Exp)/Inc (3,822) (4,517) (4,696) (4,973) Cash & ST Invts 2,589 4,877 5,010 5,860Operating Profit 107 (155) (220) (256) Inventory 3,056 3,404 3,300 3,464Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 114 77 97 102Associates & JV Inc 154 86 100 113 Other Current Assets 1,833 1,681 1,540 1,597Net Interest (Exp)/Inc 405 421 484 557 Total Assets 20,804 20,521 20,819 21,854Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 2 2 2 2Pre-tax Profit 666 352 363 414 Other Current Liab 16,949 16,782 16,966 17,818Tax (214) (216) (127) (145) LT Debt 0 0 0 0Minority Interest (112) (82) (91) (100) Other LT Liabilities 85 88 52 59Preference Dividend 0 0 0 0 Shareholder’s Equity 3,404 3,371 3,517 3,686Net Profit 340 53 146 169 Minority Interests 365 277 283 288Net profit before Except. 340 53 146 169 Total Cap. & Liab. 20,804 20,521 20,819 21,854EBITDA 812 459 501 508 Sales Gth (%) 5.3 4.8 2.2 5.0 Non-Cash Wkg. Cap (11,946) (11,620) (12,028) (12,656)EBITDA Gth (%) (32.9) (43.5) 9.1 1.5 Net Cash/(Debt) 2,587 4,875 5,008 5,858Opg Profit Gth (%) (79.7) N/A (42.2) (16.3) Effective Tax Rate (%) 32.2 61.5 35.0 35.0



Pre-Tax Profit 666 352 363 414 Revenues (RMB m) Dep. & Amort. 551 528 621 651 Hypermarkets 17,254 18,235 18,637 19,550Tax Paid (280) (212) (124) (142) Supermarkets 9,819 10,152 10,373 10,900Assoc. & JV Inc/(loss) (154) (86) (100) (113) Convenience stores 1,838 1,934 1,989 2,105(Pft)/ Loss on disposal of FAs (64) (13) 0 0 Other Businesses 77 62 65 69Chg in Wkg.Cap. (665) 1,540 277 618 Total 28,988 30,383 31,064 32,623Other Operating CF (61) (168) (484) (557) Operating Profit (RMB m) Net Operating CF (6) 1,941 554 871 Hypermarkets 234 99 104 149Capital Exp.(net) (725) (502) (1,000) (600) Supermarkets 285 295 303 330Other Invts.(net) 0 0 0 0 Convenience stores (24) (86) (89) (94)Invts in Assoc. & JV 0 17 0 0 Other Businesses 28 1 1 1Div from Assoc & JV 137 94 109 124 Total 522 308 320 385Other Investing CF (2,078) 980 484 557 Operating Profit Margins (%) Net Investing CF (2,666) 589 (407) 81 Hypermarkets 1.4 0.5 0.6 0.8Div Paid (224) (78) 0 0 Supermarkets 2.9 2.9 2.9 3.0Chg in Gross Debt 0 0 0 0 Convenience stores (1.3) (4.5) (4.5) (4.5)Capital Issues 0 0 0 0 Other Businesses 36.0 1.1 1.1 1.1Other Financing CF (81) (162) (14) (102) Total 1.8 1.0 1.0 1.2Net Financing CF (305) (241) (14) (102) Key Assumptions – Number of stores Currency Adjustments 0 0 0 0 Hypermarkets 181.0 184.0 188.0 194.0Chg in Cash (2,977) 2,289 133 850 Supermarkets 2,510.0 2,469.0 2,455.0 2,443.0 Convenience stores 2,031.0 1,905.0 1,920.0 1,945.0

Total no. of stores 4,722.0 4,558.0 4,563.0 4,582.0


Industry Focus

Consumer Sector

Lifestyle International (1212 HK Equity, HK$15.08, Hold ,Target Price HK$ 16.21) Forecast & Valuation General Data

FY Dec (HK$ m) 2012A 2013A 2014F 2015FTurnover 5,523 5,955 5,936 6,530EBITDA 2,633 2,934 2,868 3,216Pre-tax Profit 2,755 3,150 2,931 3,246Net Profit 2,057 2,448 2,327 2,586Net Pft (Pre Ex.) 1,873 2,285 2,327 2,586EPS (HK$) 1.23 1.48 1.41 1.57EPS Gth (%) 9.9 19.7 (4.6) 11.1Diluted EPS (HK$) 1.23 1.48 1.41 1.57DPS (HK$) 0.49 0.59 0.56 0.62BV Per Share (HK$) 5.73 6.04 6.89 7.84PE (X) 12.2 10.2 10.7 9.6P/Cash Flow (X) 11.8 10.1 10.0 8.4P/Free CF (X) 15.2 12.2 14.3 12.8EV/EBITDA (X) 10.0 8.8 8.8 7.5Net Div Yield (%) 3.3 3.9 3.7 4.1P/Book Value (X) 2.6 2.5 2.2 1.9Net Debt/Equity (X) 0.0 CASH CASH CASHROAE (%) 22.9 25.1 21.8 21.3 Earnings Rev (%): (1) NilConsensus EPS (HK$): 1.32 1.45Other Broker Recs: B: 7 S: 2 H: 4


Lau Brothers (%) 38.0 Chow Tai Fook (%) 32.0




Turnover 5,523 5,955 5,936 6,530 Net Fixed Assets 4,268 5,211 5,658 6,275Cost of Goods Sold (2,256) (2,395) (2,384) (2,626) Invts in Assocs & JVs 2,798 3,168 3,168 3,168Gross Profit 3,267 3,561 3,552 3,904 Other LT Assets 5,174 5,257 5,257 5,257Other Opg (Exp)/Inc (850) (853) (1,000) (1,111) Cash & ST Invts 10,961 12,015 12,489 13,648Operating Profit 2,417 2,707 2,552 2,794 Inventory 79 80 88 106Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 350 658 656 721Associates & JV Inc 311 381 441 471 Other Current Assets 968 326 326 326Net Interest (Exp)/Inc (157) (102) (62) (19) Total Assets 24,599 26,216 27,643 29,502Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 184 164 0 0 ST Debt 1,257 1,870 1,870 1,870Pre-tax Profit 2,755 3,150 2,931 3,246 Other Current Liab 2,680 3,206 3,200 3,469Tax (498) (480) (451) (505) LT Debt 9,878 9,165 9,165 9,165Minority Interest (200) (222) (154) (155) Other LT Liabilities 302 211 233 256Preference Dividend 0 0 0 0 Shareholder’s Equity 9,549 9,965 11,376 12,943Net Profit 2,057 2,448 2,327 2,586 Minority Interests 933 1,799 1,799 1,799Net profit before Except. 1,873 2,285 2,327 2,586 Total Cap. & Liab. 24,599 26,216 27,643 29,502EBITDA 2,633 2,934 2,868 3,216 Sales Gth (%) 7.6 7.8 (0.3) 10.0 Non-Cash Wkg. Cap (1,283) (2,142) (2,131) (2,316)EBITDA Gth (%) 16.3 11.4 (2.3) 12.2 Net Cash/(Debt) (174) 980 1,454 2,613Opg Profit Gth (%) 17.8 12.0 (5.7) 9.5 Effective Tax Rate (%) 18.1 15.2 15.4 15.6

Cash Flow Statement (HK$ m) Segmental Breakdown (HK$ m)


Pre-Tax Profit 2,755 3,150 2,931 3,246 Revenues (HK$ m) Dep. & Amort. 216 227 315 423 Direct sales of merchandise 3,059 3,269 3,136 3,454Tax Paid (440) (471) (442) (495) 2,219 2,442 2,534 2,789Assoc. & JV Inc/(loss) (311) (381) (441) (471)

Commission income from concessionaire sales

(Pft)/ Loss on disposal of FAs (184) (6) 0 0 Services income 122 124 136 150Chg in Wkg.Cap. (25) 110 (47) 146 Rental income 123 121 130 138Other Operating CF 115 (144) 184 129 Total 5,523 5,955 5,936 6,530Net Operating CF 2,126 2,485 2,501 2,978 Capital Exp.(net) (475) (442) (762) (1,040) Other Invts.(net) (1,347) (533) 0 0 Invts in Assoc. & JV 38 341 0 0 Div from Assoc & JV 0 0 0 0 Other Investing CF (2,548) 67 0 0 Net Investing CF (4,332) (568) (762) (1,040) Div Paid (792) (894) (927) (1,030) Chg in Gross Debt (1,847) (128) 255 255 Capital Issues 6,160 167 0 0 Other Financing CF (303) (721) (184) (129) Net Financing CF 3,218 (1,576) (856) (904) Currency Adjustments 11 37 39 40 Chg in Cash 1,023 377 921 1,074


Industry Focus

Consumer Sector

Luk Fook Holdings (590 HK EQUITY, HK$23.20, Buy,Target Price HK$ 30.75) Forecast & Valuation General Data

FY Mar (HK$ m) 2013A 2014A 2015F 2016FTurnover 13,412 19,215 16,569 18,506EBITDA 1,627 2,373 2,093 2,367Pre-tax Profit 1,530 2,321 1,998 2,266Net Profit 1,266 1,865 1,597 1,811Net Pft (Pre Ex.) 1,271 1,865 1,597 1,811EPS (HK$) 2.15 3.17 2.71 3.07EPS Gth (%) (11.4) 47.3 (14.4) 13.4Diluted EPS (HK$) 2.15 3.17 2.71 3.07DPS (HK$) 0.86 1.27 1.08 1.23BV Per Share (HK$) 10.91 12.97 14.59 16.52PE (X) 10.8 7.3 8.6 7.5P/Cash Flow (X) 32.1 15.4 4.4 9.0P/Free CF (X) 54.3 19.5 4.7 10.6EV/EBITDA (X) 7.7 5.3 4.9 4.0Net Div Yield (%) 3.7 5.5 4.7 5.3P/Book Value (X) 2.1 1.8 1.6 1.4Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 21.1 26.5 19.7 19.8

Earnings Rev (%): Nil NilConsensus EPS (HK$): 2.79 3.16Other Broker Recs: B: 8 S: 1 H: 12

At A GlanceIssued Capital (m shrs) 589 Mkt. Cap (HK$m/US$m) 13,667 / 1,764Major Shareholders

Wong Wai Sheung (%) 42.2 Templeton Asset Management Ltd. (%) 6.9



FY Mar 2013A 2014A 2015F 2016F FY Mar 2013A 2014A 2015F 2016F

Turnover 13,412 19,215 16,569 18,506 Net Fixed Assets 705 749 777 807Cost of Goods Sold (10,582) (15,001) (12,654) (14,077) Invts in Assocs & JVs 7 7 7 7Gross Profit 2,830 4,214 3,916 4,429 Other LT Assets 164 285 271 271Other Opg (Exp)/Inc (1,301) (1,905) (1,886) (2,125) Cash & ST Invts 1,187 1,819 4,240 5,075Operating Profit 1,529 2,309 2,029 2,303 Inventory 4,955 6,225 5,182 5,688Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 514 501 432 482Associates & JV Inc (1) 0 1 1 Other Current Assets 29 0 0 0Net Interest (Exp)/Inc 6 12 (32) (39) Total Assets 7,562 9,586 10,909 12,330Dividend Income 0 0 0 0 Exceptional Gain/(Loss) (5) 0 0 0 ST Debt 0 568 682 818Pre-tax Profit 1,530 2,321 1,998 2,266 Other Current Liab 1,004 1,230 1,500 1,641Tax (260) (454) (380) (431) LT Debt 0 0 0 0Minority Interest (3) (2) (20) (23) Other LT Liabilities 80 89 69 69Preference Dividend 0 0 0 0 Shareholder’s Equity 6,425 7,641 8,594 9,731Net Profit 1,266 1,865 1,597 1,811 Minority Interests 53 58 65 71Net profit before Except. 1,271 1,865 1,597 1,811 Total Cap. & Liab. 7,562 9,586 10,909 12,330EBITDA 1,627 2,373 2,093 2,367 Sales Gth (%) 12.6 43.3 (13.8) 11.7 Non-Cash Wkg. Cap 4,495 5,496 4,114 4,529EBITDA Gth (%) 1.7 45.9 (11.8) 13.1 Net Cash/(Debt) 1,187 1,251 3,559 4,257Opg Profit Gth (%) 0.2 51.0 (12.1) 13.5 Effective Tax Rate (%) 17.0 19.5 19.0 19.0



Pre-Tax Profit 1,530 2,321 1,998 2,266 Revenues (HK$ m) Dep. & Amort. 98 64 63 63 Retailing - HK, Macau & overseas 9,920 14,514 12,018 13,046Tax Paid (320) (454) (380) (431) Retailing - PRC 1,014 1,650 1,410 1,575Assoc. & JV Inc/(loss) 1 0 0 0 Wholesaling (incl manufacturing) 2,028 2,433 2,382 2,952(Pft)/ Loss on disposal of FAs 1 0 0 0 Licensing 451 618 759 933Chg in Wkg.Cap. (864) (1,032) 1,384 (416) Others 0 0 0 0Other Operating CF (21) (13) 31 38 Total 13,412 19,215 16,569 18,506Net Operating CF 425 886 3,096 1,519 Segmental profit (HK$ m) Capital Exp.(net) (174) (184) (210) (230) Retailing - HK, Macau & overseas 1,005 1,660 1,375 1,492Other Invts.(net) 0 0 0 0 Retailing - PRC 66 39 33 37Invts in Assoc. & JV 0 0 0 0 Wholesaling (incl manufacturing) 213 332 326 403Div from Assoc & JV 0 0 1 1 Licensing 287 413 507 624Other Investing CF (126) 1 1 1 Others 0 0 0 0Net Investing CF (300) (183) (208) (228) Total 1,571 2,445 2,241 2,557Div Paid (477) (747) (639) (725) Segmental profit Margins (%) Chg in Gross Debt 0 568 114 136 Retailing - HK, Macau & overseas 10.1 11.4 11.4 11.4Capital Issues 0 0 0 0 Retailing - PRC 6.5 2.4 2.4 2.4Other Financing CF 0 (2) (2) (2) Wholesaling (incl manufacturing) 10.5 13.7 13.7 13.7Net Financing CF (477) (181) (528) (591) Licensing 63.8 66.8 66.8 66.8Currency Adjustments 1 1 1 1 Total 11.7 12.7 13.5 13.8Chg in Cash (351) 522 2,361 701 Key Assumptions – Number of stores HK & Macau - Self-operated 46.0 55.0 55.0 58.0 HK & Macau - Licensee 0.0 0.0 0.0 0.0

China - Self-operated 78.0 83.0 88.0 93.0 China - Licensee 944.0 1,125.0 1,294.0 1,462.0Source: Company, DBS Vickers Overseas 4.0 5.0 5.0 6.0

Industry Focus

Consumer Sector

New World Dept Store (825 HK EQUITY, HK$3.13, Buy,Target Price HK$3.98) Forecast & Valuation General Data

FY Jun (HK$ m) 2013A 2014F 2015F 2016FTurnover 4,012 4,183 4,712 5,320EBITDA 1,144 1,235 1,364 1,510Pre-tax Profit 875 913 1,016 1,142Net Profit 642 669 745 837Net Pft (Pre Ex.) 631 662 745 837EPS (HK$) 0.38 0.40 0.44 0.50EPS Gth (%) 5.6 4.3 11.4 12.4Diluted EPS (HK$) 0.38 0.40 0.44 0.50DPS (HK$) 0.19 0.18 0.20 0.22BV Per Share (HK$) 3.93 4.28 4.59 4.93PE (X) 8.2 7.9 7.1 6.3P/Cash Flow (X) 4.8 4.5 3.2 2.9P/Free CF (X) nm 7.9 5.1 4.3EV/EBITDA (X) 2.6 3.2 2.7 2.2Net Div Yield (%) 6.1 5.7 6.4 7.1P/Book Value (X) 0.8 0.7 0.7 0.6Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 10.2 9.7 10.0 10.4 Earnings Rev (%): Nil Nil NilConsensus EPS (HK$): 0.40 0.44 0.51Other Broker Recs: B: 4 S: 0 H: 2


Cheng Yu Tung Family (%) 72.3 GMT Capital Corp (%) 5.1 New Silk Road Inv. Pte. Ltd. (%) 5.0



FY Jun 2013A 2014F 2015F 2016F FY Jun 2013A 2014F 2015F 2016F

Turnover 4,012 4,183 4,712 5,320 Net Fixed Assets 2,036 2,216 2,466 2,686Cost of Goods Sold (693) (693) (779) (888) Invts in Assocs & JVs 2,432 2,432 2,432 2,432Gross Profit 3,318 3,490 3,933 4,432 Other LT Assets 4,550 6,059 6,665 7,331Other Opg (Exp)/Inc (2,494) (2,603) (2,947) (3,332) Cash & ST Invts 2,959 2,044 2,252 2,569Operating Profit 824 888 986 1,100 Inventory 152 159 179 202Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 98 103 116 130Associates & JV Inc 0 0 0 0 Other Current Assets 606 632 711 803Net Interest (Exp)/Inc 41 18 30 42 Total Assets 12,834 13,644 14,821 16,154Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 10 7 0 0 ST Debt 73 73 74 74Pre-tax Profit 875 913 1,016 1,142 Other Current Liab 4,433 4,631 5,212 5,879Tax (234) (244) (271) (305) LT Debt 609 609 609 609Minority Interest 0 0 0 0 Other LT Liabilities 1,094 1,119 1,195 1,283Preference Dividend 0 0 0 0 Shareholder’s Equity 6,626 7,212 7,731 8,309Net Profit 642 669 745 837 Minority Interests 0 0 0 0Net profit before Except. 631 662 745 837 Total Cap. & Liab. 12,834 13,644 14,821 16,154EBITDA 1,144 1,235 1,364 1,510 Sales Gth (%) 14.9 4.3 12.6 12.9 Non-Cash Wkg. Cap (3,576) (3,738) (4,206) (4,743)EBITDA Gth (%) 10.6 7.9 10.5 10.7 Net Cash/(Debt) 2,277 1,362 1,569 1,886Opg Profit Gth (%) 11.3 7.7 11.1 11.5 Effective Tax Rate (%) 26.7 26.7 26.7 26.7



Pre-Tax Profit 875 913 1,016 1,142 Revenues (HK$ m) Dep. & Amort. 320 347 378 410 2,639 2,626 2,891 3,231Tax Paid (188) (196) (219) (246)

- Commission income from concessionaire sales

Assoc. & JV Inc/(loss) 0 0 0 0 810 810 910 1,037(Pft)/ Loss on disposal of FAs 0 0 0 0

- Sales of goods - direct sales

Chg in Wkg.Cap. 154 172 529 609 - Management fees 52 74 89 105Other Operating CF (50) (65) (79) (91) - Rental income 511 674 822 946Net Operating CF 1,110 1,170 1,627 1,824 Total 4,012 4,183 4,712 5,320Capital Exp.(net) (1,279) (500) (600) (600) Key Assumptions – Number of stores Other Invts.(net) 0 0 0 0 Self-operated stores 36.0 39.0 42.0 46.0Invts in Assoc. & JV 0 0 0 0 Managed stores 5.0 6.0 8.0 10.0Div from Assoc & JV 0 0 0 0 Total no. of stores 41.0 45.0 50.0 56.0Other Investing CF (6) 67 80 92 Net Investing CF (1,285) (433) (520) (508) Div Paid (304) (301) (335) (377) Chg in Gross Debt (374) 0 0 0 Capital Issues 0 0 0 0 Other Financing CF (49) (1,352) (564) (622) Net Financing CF (727) (1,653) (899) (999) Currency Adjustments 133 0 0 0 Chg in Cash (769) (915) 208 317


Industry Focus

Consumer Sector

Oriental Watch (398 HK EQUITY, HK$1.81, Fully Valued, Target Price HK$ 1.57) Forecast & Valuation General Data

FY Mar (HK$ m) 2013A 2014A 2015F 2016FTurnover 3,733 3,477 3,370 3,474EBITDA 252 92 105 114Pre-tax Profit 183 25 41 48Net Profit 163 20 29 33Net Pft (Pre Ex.) 163 20 29 33EPS (HK$) 0.28 0.04 0.05 0.06EPS Gth (%) (1.5) (87.6) 42.5 15.5Diluted EPS (HK$) 0.28 0.04 0.05 0.06DPS (HK$) 0.12 0.06 0.01 0.02BV Per Share (HK$) 3.90 3.89 3.92 3.97PE (X) 6.4 51.1 35.8 31.0P/Cash Flow (X) 11.3 2.8 10.6 48.9P/Free CF (X) 8.9 3.2 21.9 nmEV/EBITDA (X) 5.3 12.0 9.6 8.6Net Div Yield (%) 6.6 3.3 0.8 0.9P/Book Value (X) 0.5 0.5 0.5 0.5Net Debt/Equity (X) 0.1 0.0 CASH CASHROAE (%) 7.5 0.9 1.3 1.5 Earnings Rev (%): Nil NilConsensus EPS (HK$): 0.08 0.09Other Broker Recs: B: 0 S: 2 H: 2

At A GlanceIssued Capital (m shrs) 571 Mkt. Cap (HK$m/US$m) 1,033 / 133Major Shareholders

Yeung Ming Biu (Chairman) (%) 27.3 FMR LLC (%) 14.1 TIG Advisors LLC (%) 5.1




Turnover 3,733 3,477 3,370 3,474 Net Fixed Assets 292 280 297 296Cost of Goods Sold (3,033) (2,864) (2,773) (2,853) Invts in Assocs & JVs 133 182 182 182Gross Profit 700 612 597 621 Other LT Assets 46 53 53 53Other Opg (Exp)/Inc (488) (567) (540) (558) Cash & ST Invts 373 425 512 545Operating Profit 212 46 57 63 Inventory 2,060 1,788 1,709 1,706Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 168 123 113 108Associates & JV Inc 0 0 0 0 Other Current Assets 9 8 9 10Net Interest (Exp)/Inc (30) (21) (15) (15) Total Assets 3,082 2,859 2,874 2,898Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 393 289 289 289Pre-tax Profit 183 25 41 48 Other Current Liab 166 148 142 142Tax (23) (10) (18) (21) LT Debt 293 203 203 203Minority Interest 3 5 5 6 Other LT Liabilities 2 2 2 2Preference Dividend 0 0 0 0 Shareholder’s Equity 2,228 2,218 2,239 2,263Net Profit 163 20 29 33 Minority Interests 0 0 0 0Net profit before Except. 163 20 29 33 Total Cap. & Liab. 3,082 2,859 2,874 2,898EBITDA 252 92 105 114 Sales Gth (%) (5.2) (6.9) (3.1) 3.1 Non-Cash Wkg. Cap 2,071 1,771 1,689 1,682EBITDA Gth (%) (28.9) (63.5) 14.7 8.3 Net Cash/(Debt) (313) (66) 21 53Opg Profit Gth (%) (33.4) (78.5) 24.3 11.0 Effective Tax Rate (%) 12.8 38.4 43.5 43.2



Pre-Tax Profit 186 25 41 48 Revenues (HK$ m) Dep. & Amort. 39 46 49 51 Hong Kong 2,554 2,366 2,213 2,174Tax Paid (56) (23) (43) (49) China 1,179 1,111 1,157 1,301Assoc. & JV Inc/(loss) 0 0 0 0 Total 3,733 3,477 3,370 3,474(Pft)/ Loss on disposal of FAs 0 0 0 0 Key Assumptions – Number of stores Chg in Wkg.Cap. (28) 303 83 8 HK 14.0 14.0 13.0 13.0Other Operating CF (50) 21 (34) (37) Macau & China 41.0 42.0 43.0 45.0Net Operating CF 92 372 97 21 Total no. of self-operated stores 55.0 56.0 56.0 58.0Capital Exp.(net) 24 (50) (50) (50) China (non self-operated stores) 50.0 38.0 38.0 39.0Other Invts.(net) 0 0 0 0 Total no. of stores 107.0 97.0 97.0 100.0Invts in Assoc. & JV (58) 0 0 0 Div from Assoc & JV 0 0 0 0 Other Investing CF 2 2 2 3 Net Investing CF (32) (48) (48) (47) Div Paid (40) (34) (8) (9) Chg in Gross Debt 176 (195) 0 0 Capital Issues 0 0 0 0 Other Financing CF (30) (43) 45 68 Net Financing CF 106 (272) 37 59 Currency Adjustments 1 0 0 0 Chg in Cash 167 52 87 33


Industry Focus

Consumer Sector

Parkson (3368 HK Equity, HK$2.27, Fully Valued,Target Price HK$ 1.90) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 5,140 5,110 5,089 5,362EBITDA 1,417 967 880 966Pre-tax Profit 1,205 611 463 519Net Profit 851 354 262 293Net Pft (Pre Ex.) 851 354 262 293EPS (RMB) 0.30 0.13 0.09 0.10EPS (HK$) 0.38 0.16 0.12 0.13EPS Gth (%) (24.2) (58.4) (26.0) 12.2Diluted EPS (HK$) 0.38 0.16 0.12 0.13DPS (HK$) 0.17 0.07 0.05 0.06BV Per Share (HK$) 2.48 2.49 2.55 2.62PE (X) 6.0 14.4 19.5 17.4P/Cash Flow (X) 5.6 8.0 8.4 5.9P/Free CF (X) 9.0 26.0 32.6 12.3EV/EBITDA (X) 1.8 3.8 3.9 3.1Net Div Yield (%) 7.7 3.3 2.3 2.6P/Book Value (X) 0.9 0.9 0.9 0.9Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 15.7 6.3 4.6 5.0

Earnings Rev (%): (9) (8)Consensus EPS (RMB): 0.13 0.13Other Broker Recs: B: 0 S: 16 H: 6


Parkson Holdings (%) 52.1 Genesis Asset Managers, LLP (%) 6.8 Pangkor Investments (%) 6.7 Golden Eagle International Retail Group (%) 5.8 Prudential plc (%) 5.8




Turnover 5,140 5,110 5,089 5,362 Net Fixed Assets 2,761 3,830 3,825 3,778Cost of Goods Sold (1,316) (1,334) (1,347) (1,415) Invts in Assocs & JVs 2 40 40 40Gross Profit 3,824 3,777 3,742 3,947 Other LT Assets 3,517 3,314 3,252 3,202Other Opg (Exp)/Inc (2,702) (3,233) (3,359) (3,526) Cash & ST Invts 5,066 4,671 4,929 5,394Operating Profit 1,122 543 384 421 Inventory 311 342 340 359Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 17 94 93 98Associates & JV Inc 0 36 42 49 Other Current Assets 1,026 1,416 1,410 1,486Net Interest (Exp)/Inc 83 32 38 49 Total Assets 12,701 13,706 13,890 14,357Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 2,491 0 0 0Pre-tax Profit 1,205 611 463 519 Other Current Liab 4,066 4,062 4,057 4,283Tax (325) (239) (181) (203) LT Debt 0 3,196 3,196 3,196Minority Interest (29) (19) (21) (23) Other LT Liabilities 482 766 807 881Preference Dividend 0 0 0 0 Shareholder’s Equity 5,584 5,597 5,742 5,903Net Profit 851 354 262 293 Minority Interests 77 85 89 94Net profit before Except. 851 354 262 293 Total Cap. & Liab. 12,701 13,706 13,890 14,357EBITDA 1,417 967 880 966 Sales Gth (%) 4.1 (0.6) (0.4) 5.4 Non-Cash Wkg. Cap (2,712) (2,211) (2,213) (2,340)EBITDA Gth (%) (18.8) (31.7) (9.0) 9.8 Net Cash/(Debt) 2,575 1,475 1,733 2,198Opg Profit Gth (%) (25.6) (51.6) (29.4) 9.8 Effective Tax Rate (%) 27.0 39.0 39.0 39.0



Pre-Tax Profit 1,205 611 463 519 Revenues (RMB m) Dep. & Amort. 295 388 455 497 Sales of goods - direct sales 1,568 1,577 1,589 1,669Tax Paid (417) (312) (236) (265)Assoc. & JV Inc/(loss) 0 (36) (42) (49)

Commission from concessionaire sales

2,715 2,665 2,625 2,774

(Pft)/ Loss on disposal of FAs 0 0 0 0Chg in Wkg.Cap. (114) 3 (15) 189

Consultancy and management fees

19 13 14 14

Other Operating CF (61) (14) (18) (28) Rental income 246 281 283 298Net Operating CF 908 640 607 864 Other operating revenues 593 574 578 607Capital Exp.(net) (341) (443) (450) (450) Total 5,140 5,110 5,089 5,362Other Invts.(net) 0 0 0 0 Key Assumptions – Number of stores Invts in Assoc. & JV 0 0 0 0 Div from Assoc & JV 0 0 0 0 Self-operated stores 52.0 57.0 62.0 68.0Other Investing CF (677) (807) 268 271 Managed stores 2.0 1.0 1.0 1.0Net Investing CF (1,018) (1,251) (182) (179) Total no. of stores 54.0 58.0 63.0 69.0Div Paid (506) (337) (118) (132) Chg in Gross Debt 0 675 0 0 Capital Issues 0 0 0 0 Other Financing CF (101) (216) (73) (88) Net Financing CF (607) 122 (191) (220) Currency Adjustments (1) (4) 0 0 Chg in Cash (718) (493) 233 465


Industry Focus

Consumer Sector

Prada (1913 HK Equity, HK$54.45, Hold ,Target Price HK$ 60.00) Forecast & Valuation General Data

FY Jan (EUR m) 2013A 2014A 2015F 2016FTurnover 3,297 3,587 3,751 4,126EBITDA 1,059 1,137 1,108 1,243Pre-tax Profit 884 923 893 1,027Net Profit 626 628 608 698Net Pft (Pre Ex.) 626 628 608 698EPS (EUR) 0.24 0.25 0.24 0.27EPS (HK$) 2.58 2.59 2.51 2.88EPS Gth (%) 44.9 0.3 (3.2) 14.9Diluted EPS (HK$) 2.58 2.59 2.51 2.88DPS (HK$) 0.95 1.16 1.12 1.29BV Per Share (HK$) 9.56 11.08 12.42 14.18PE (X) 21.1 21.0 21.7 18.9P/Cash Flow (X) 17.4 17.1 15.7 14.4P/Free CF (X) 30.9 59.9 24.0 18.8EV/EBITDA (X) 12.2 11.3 11.4 9.8Net Div Yield (%) 1.7 2.1 2.1 2.4P/Book Value (X) 5.7 4.9 4.4 3.8Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 30.2 25.1 21.3 21.6

Earnings Rev (%): Nil NilConsensus EPS (EUR): 0.27 0.30Other Broker Recs: B: 14 S: 5 H: 12


Prada Holding B.V. (%) 80.0 Free Float (%) 20.0 Avg. Daily Vol.(‘000) 2,699

Income Statement (EUR m) Balance Sheet (EUR m)

FY Jan 2013A 2014A 2015F 2016F FY Jan 2013A 2014A 2015F 2016F

Turnover 3,297 3,587 3,751 4,126 Net Fixed Assets 857 1,230 1,308 1,303Cost of Goods Sold (921) (939) (970) (1,049) Invts in Assocs & JVs 23 21 21 21Gross Profit 2,377 2,649 2,781 3,078 Other LT Assets 1,118 1,175 1,175 1,175Other Opg (Exp)/Inc (1,487) (1,709) (1,885) (2,055) Cash & ST Invts 572 568 837 1,266Operating Profit 890 939 896 1,023 Inventory 344 450 577 635Other Non Opg (Exp)/Inc 7 (7) 0 0 Debtors 305 308 395 434Associates & JV Inc 0 0 0 0 Other Current Assets 167 135 135 135Net Interest (Exp)/Inc (13) (10) (2) 4 Total Assets 3,385 3,888 4,448 4,969Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 176 62 62 62Pre-tax Profit 884 923 893 1,027 Other Current Liab 566 645 869 953Tax (250) (285) (276) (317) LT Debt 79 208 208 208Minority Interest (8) (10) (10) (11) Other LT Liabilities 234 272 272 272Preference Dividend 0 0 0 0 Shareholder’s Equity 2,320 2,688 3,014 3,440Net Profit 626 628 608 698 Minority Interests 10 14 24 35Net profit before Except. 626 628 608 698 Total Cap. & Liab. 3,385 3,888 4,448 4,969EBITDA 1,059 1,137 1,108 1,243 Sales Gth (%) 29.0 8.8 4.6 10.0 Non-Cash Wkg. Cap 249 249 238 251EBITDA Gth (%) 40.9 7.3 (2.5) 12.2 Net Cash/(Debt) 317 299 567 996Opg Profit Gth (%) 41.5 5.6 (4.6) 14.1 Effective Tax Rate (%) 28.3 30.9 30.9 30.9

Cash Flow Statement (EUR m) Segmental Breakdown (EUR m) / Key Assumptions

FY Jan 2013A 2014A 2015F 2016F FY Jan 2013A 2014A 2015F 2016F

Pre-Tax Profit 884 923 893 1,027 Revenues (EUR m) Dep. & Amort. 155 199 212 221 Prada 2,650 2,944 3,098 3,422Tax Paid (306) (282) (132) (276) Miu Miu 513 519 528 577Assoc. & JV Inc/(loss) 0 0 0 0 Church's 68 69 69 69(Pft)/ Loss on disposal of FAs 0 0 0 0 Car Shoe 20 13 11 11Chg in Wkg.Cap. 43 (123) (133) (54) Others 47 43 45 48Other Operating CF (16) 53 0 0 Net Operating CF 759 769 840 917 Total 3,297 3,587 3,751 4,126Capital Exp.(net) (333) (549) (290) (215) Key Assumptions Other Invts.(net) 0 0 0 0 Total no. of stores 461.0 540.0 620.0 675.0Invts in Assoc. & JV 0 0 0 0 EBITDA margin 31.9 31.9 29.5 30.1Div from Assoc & JV 0 0 0 0 Other Investing CF 1 1 0 0 Net Investing CF (332) (548) (290) (215) Div Paid (134) (237) (281) (272) Chg in Gross Debt (66) 17 0 0 Capital Issues 0 0 0 0 Other Financing CF 1 0 0 0 Net Financing CF (198) (220) (281) (272) Currency Adjustments (11) (5) 0 0 Chg in Cash 218 (3) 268 429


Industry Focus

Consumer Sector

Sa Sa (178 HK EQUITY, HK$5.91, Hold ,Target Price HK$ 5.61) Forecast & Valuation General Data

FY Mar (HK$ m) 2013A 2014A 2015F 2016FTurnover 7,670 8,756 9,614 10,811EBITDA 1,160 1,309 1,430 1,610Pre-tax Profit 995 1,126 1,227 1,388Net Profit 826 935 1,019 1,153Net Pft (Pre Ex.) 826 935 1,019 1,153EPS (HK$) 0.29 0.33 0.36 0.41EPS Gth (%) 18.9 13.0 8.6 13.1Diluted EPS (HK$) 0.29 0.33 0.36 0.41DPS (HK$) 0.21 0.23 0.25 0.28BV Per Share (HK$) 0.70 0.82 0.93 1.05PE (X) 20.2 17.9 16.5 14.6P/Cash Flow (X) 19.7 18.8 17.4 16.1P/Free CF (X) 25.4 27.0 21.9 19.9EV/EBITDA (X) 13.8 12.1 11.0 9.6Net Div Yield (%) 3.6 4.0 4.2 4.8P/Book Value (X) 8.5 7.2 6.4 5.6Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 45.8 43.5 41.1 41.1 Earnings Rev (%): Nil NilConsensus EPS (HK$): 0.36 0.41Other Broker Recs: B: 10 S: 3 H: 11


Kwok Family (%) 65.7 Free Float (%) 34.4 Avg. Daily Vol.(‘000) 10,427



Turnover 7,670 8,756 9,614 10,811 Net Fixed Assets 343 405 410 379Cost of Goods Sold (4,111) (4,683) (5,142) (5,777) Invts in Assocs & JVs 0 0 0 0Gross Profit 3,558 4,073 4,472 5,034 Other LT Assets 220 219 241 265Other Opg (Exp)/Inc (2,571) (2,952) (3,250) (3,653) Cash & ST Invts 752 989 1,194 1,438Operating Profit 987 1,121 1,222 1,382 Inventory 1,235 1,373 1,508 1,694Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 93 52 27 31Associates & JV Inc 0 0 0 0 Other Current Assets 154 198 247 278Net Interest (Exp)/Inc 8 5 5 6 Total Assets 2,797 3,237 3,627 4,085Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 0 80 86 92Pre-tax Profit 995 1,126 1,227 1,388 Other Current Liab 792 777 850 950Tax (169) (191) (208) (235) LT Debt 0 0 0 0Minority Interest 0 0 0 0 Other LT Liabilities 30 55 61 67Preference Dividend 0 0 0 0 Shareholder’s Equity 1,975 2,325 2,631 2,977Net Profit 826 935 1,019 1,153 Minority Interests 0 0 0 0Net profit before Except. 826 935 1,019 1,153 Total Cap. & Liab. 2,797 3,237 3,627 4,085EBITDA 1,160 1,309 1,430 1,610 Sales Gth (%) 19.7 14.2 9.8 12.5 Non-Cash Wkg. Cap 690 766 847 961EBITDA Gth (%) 22.7 12.9 9.2 12.6 Net Cash/(Debt) 752 909 1,108 1,347Opg Profit Gth (%) 19.2 13.6 9.0 13.1 Effective Tax Rate (%) 17.0 16.9 16.9 16.9



Pre-Tax Profit 995 1,126 1,227 1,388 Revenues (HK$ m) Dep. & Amort. 173 188 208 228 Retail sales of beauty products 7,286 8,362 9,141 10,244Tax Paid (8) (114) (125) (141) Sasa.com 384 394 473 567Assoc. & JV Inc/(loss) 0 0 0 0 Total 7,670 8,756 9,614 10,811(Pft)/ Loss on disposal of FAs 6 0 0 0 Key Assumptions – Number of stores Chg in Wkg.Cap. (170) (142) (159) (220) HK & Macau 99.0 109.0 113.0 121.0Other Operating CF (149) (169) (184) (208) China 62.0 67.0 69.0 89.0Net Operating CF 846 889 968 1,046 Singapore & Malaysia 71.0 75.0 79.0 83.0Capital Exp.(net) (189) (268) (200) (200) Taiwan 28.0 29.0 31.0 33.0Other Invts.(net) 0 0 0 0 Total no. of stores 260.0 280.0 292.0 326.0Invts in Assoc. & JV 0 0 0 0 Div from Assoc & JV 0 0 0 0 Other Investing CF 5 13 13 14 Net Investing CF (184) (255) (187) (186) Div Paid (522) (668) (713) (807) Chg in Gross Debt 0 0 0 0 Capital Issues 13 14 15 15 Other Financing CF 0 177 117 169 Net Financing CF (509) (477) (582) (622) Currency Adjustments 0 0 0 0 Chg in Cash 153 157 199 238


Industry Focus

Consumer Sector

Samsonite International (1910 HK EQUITY, HK$25.90, Buy,Target Price HK$ 28.75) Forecast & Valuation General Data

FY Dec (US$ m) 2012A 2013A 2014F 2015FTurnover 1,772 2,038 2,296 2,603EBITDA 287 333 389 458Pre-tax Profit 220 270 330 387Net Profit 148 176 219 259Net Pft (Pre Ex.) 167 189 219 259EPS (US$) 0.11 0.13 0.16 0.18EPS (HK$) 0.82 0.97 1.20 1.43EPS Gth (%) 64.4 18.6 24.2 18.5Diluted EPS (HK$) 0.82 0.97 1.20 1.43DPS (HK$) 0.21 0.44 0.55 0.65BV Per Share (HK$) 5.79 6.57 7.23 8.01PE (X) 31.7 26.7 21.5 18.1P/Cash Flow (X) 23.2 24.4 20.6 17.2P/Free CF (X) 28.5 34.6 56.5 23.1EV/EBITDA (X) 16.1 13.6 11.6 9.8Net Div Yield (%) 0.8 1.7 2.1 2.5P/Book Value (X) 4.5 3.9 3.6 3.2Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 15.1 15.7 17.5 18.7

Earnings Rev (%): Nil NilConsensus EPS (US$): 0.16 0.19Other Broker Recs: B: 13 S: 1 H: 1


JPMorgan Chase & Co. (%) 12.0 Wellington Management Company, LLP (%) 7.4 Morgan Stanley (%) 5.7


Income Statement (US$ m) Balance Sheet (US$ m)


Turnover 1,772 2,038 2,296 2,603 Net Fixed Assets 136 155 217 261Cost of Goods Sold (821) (949) (1,066) (1,204) Invts in Assocs & JVs 0 0 0 0Gross Profit 951 1,088 1,230 1,399 Other LT Assets 964 944 958 974Other Opg (Exp)/Inc (704) (800) (895) (1,006) Cash & ST Invts 151 225 244 295Operating Profit 247 288 335 393 Inventory 278 298 341 391Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 222 246 278 315Associates & JV Inc 0 0 0 0 Other Current Assets 62 65 78 94Net Interest (Exp)/Inc (8) (5) (5) (6) Total Assets 1,813 1,935 2,116 2,329Dividend Income 0 0 0 0 Exceptional Gain/(Loss) (19) (13) 0 0 ST Debt 32 14 14 15Pre-tax Profit 220 270 330 387 Other Current Liab 461 488 540 601Tax (53) (73) (89) (104) LT Debt 0 0 0 0Minority Interest (18) (21) (22) (24) Other LT Liabilities 233 203 208 214Preference Dividend 0 0 0 0 Shareholder’s Equity 1,052 1,193 1,312 1,454Net Profit 148 176 219 259 Minority Interests 35 38 42 46Net profit before Except. 167 189 219 259 Total Cap. & Liab. 1,813 1,935 2,116 2,329EBITDA 287 333 389 458 Sales Gth (%) 13.2 15.0 12.7 13.4 Non-Cash Wkg. Cap 101 122 156 199EBITDA Gth (%) 11.7 16.2 16.8 17.6 Net Cash/(Debt) 119 212 230 280Opg Profit Gth (%) 12.9 16.9 16.3 17.2 Effective Tax Rate (%) 24.1 27.0 27.0 27.0

Cash Flow Statement (US$ m) Segmental Breakdown (US$ m) / Key Assumptions


Pre-Tax Profit 167 197 330 387 Revenues (US$ m) Dep. & Amort. 40 45 54 65 Asia 684 768 863 987Tax Paid (54) (60) (89) (104) North America 500 622 711 820Assoc. & JV Inc/(loss) 0 0 0 0 Europe 465 515 575 632(Pft)/ Loss on disposal of FAs 0 0 0 0 Latin America 113 124 139 155Chg in Wkg.Cap. 2 (48) (39) (47) Corporate 10 9 8 8Other Operating CF 48 59 (28) (28) Total 1,772 2,038 2,296 2,603Net Operating CF 203 193 228 273 Operating profit (US$ m) Capital Exp.(net) (38) (57) (145) (69) Asia 88 83 95 112Other Invts.(net) 1 3 0 0 North America 38 49 58 70Invts in Assoc. & JV 0 0 0 0 Europe 43 63 71 79Div from Assoc & JV 0 0 0 0 Latin America 11 14 16 18Other Investing CF 0 0 0 0 Corporate 61 73 95 114Net Investing CF (37) (54) (145) (69) Total 242 281 335 393Div Paid (6) (8) (99) (118) Operating profit Margins (%) Chg in Gross Debt 20 (19) 1 1 Asia 12.9 10.8 11.1 11.4Capital Issues 0 0 0 0 North America 7.7 7.9 8.2 8.5Other Financing CF (30) (38) 35 (36) Europe 9.3 12.1 12.3 12.5Net Financing CF (17) (65) (64) (153) Latin America 9.7 11.0 11.2 11.4Currency Adjustments 3 (1) 0 0 Corporate 631.1 820.4 1,150.0 1,498.4Chg in Cash 152 74 19 50 Total 13.6 13.8 14.6 15.1 Key Assumptions – Number of stores

Number of wholesale POS 44,011.0 44,880.0 45,687.8 46,510.2 Number of retail POS 1,014.0 1,163.0 1,276.0 1,392.9Source: Company, DBS Vickers Total number of POS 45,025.0 46,043.0 46,963.9 47,903.1

Industry Focus

Consumer Sector

Sitoy Group (1023 HK EQUITY, HK$5.26, Buy,Target Price HK$ 6.44) Forecast & Valuation General Data

FY Jun (HK$ m) 2013A 2014F 2015F 2016FTurnover 3,360 3,908 4,393 4,875EBITDA 523 647 757 871Pre-tax Profit 489 598 686 770Net Profit 400 484 548 615Net Pft (Pre Ex.) 400 484 548 615EPS (HK$) 0.40 0.48 0.55 0.61EPS Gth (%) (6.4) 20.7 13.4 12.1Diluted EPS (HK$) 0.40 0.48 0.55 0.61DPS (HK$) 0.22 0.22 0.22 0.25BV Per Share (HK$) 1.74 1.93 2.26 2.63PE (X) 13.2 10.9 9.6 8.6P/Cash Flow (X) 14.2 11.6 10.0 8.5P/Free CF (X) 19.1 12.5 11.0 9.4EV/EBITDA (X) 8.5 6.7 5.4 4.4Net Div Yield (%) 4.2 4.1 4.2 4.7P/Book Value (X) 3.0 2.7 2.3 2.0Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 24.1 26.3 26.2 25.1

Earnings Rev (%): Nil Nil NilConsensus EPS (HK$): 0.47 0.53 0.58Other Broker Recs: B: 4 S: 0 H: 0


Yeung Family (%) 66.8 Schroders Plc (%) 5.4




Turnover 3,360 3,908 4,393 4,875 Net Fixed Assets 387 393 407 431Cost of Goods Sold (2,576) (2,957) (3,321) (3,683) Invts in Assocs & JVs 0 0 0 0Gross Profit 785 952 1,072 1,192 Other LT Assets 48 50 58 66Other Opg (Exp)/Inc (339) (387) (424) (465) Cash & ST Invts 835 904 1,154 1,435Operating Profit 445 564 648 726 Inventory 382 438 492 545Other Non Opg (Exp)/Inc 38 27 30 34 Debtors 374 384 419 452Associates & JV Inc 0 0 0 0 Other Current Assets 84 90 98 107Net Interest (Exp)/Inc 6 7 8 10 Total Assets 2,110 2,258 2,628 3,037Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 0 0 0 0Pre-tax Profit 489 598 686 770 Other Current Liab 367 324 364 404Tax (89) (114) (138) (155) LT Debt 0 0 0 0Minority Interest 0 0 0 0 Other LT Liabilities 2 2 3 3Preference Dividend 0 0 0 0 Shareholder’s Equity 1,741 1,932 2,261 2,630Net Profit 400 484 548 615 Minority Interests 0 0 0 0Net profit before Except. 400 484 548 615 Total Cap. & Liab. 2,110 2,258 2,628 3,037EBITDA 523 647 757 871 Sales Gth (%) 0.7 16.3 12.4 11.0 Non-Cash Wkg. Cap 473 587 645 700EBITDA Gth (%) 3.6 23.7 17.0 15.1 Net Cash/(Debt) 835 904 1,154 1,435Opg Profit Gth (%) (2.4) 26.6 14.9 12.1 Effective Tax Rate (%) 18.1 19.1 20.1 20.1



Pre-Tax Profit 489 598 686 770 Revenues (HK$ m) Dep. & Amort. 39 56 78 111 Manufacturing 3,307 3,805 4,218 4,631Tax Paid (119) (154) (186) (208) Retail 54 103 176 244Assoc. & JV Inc/(loss) 0 0 0 0 Total 3,360 3,908 4,393 4,875(Pft)/ Loss on disposal of FAs 0 0 0 0 Segment results (HK$ m) Chg in Wkg.Cap. (42) (48) (58) (55) Manufacturing 510 612 695 769Other Operating CF 3 3 4 4 Retail (20) (12) (7) 3Net Operating CF 370 456 525 622 Total 490 599 688 772Capital Exp.(net) (94) (35) (46) (59) Segment results Margins (%) Other Invts.(net) 0 0 0 0 Manufacturing 15.4 16.1 16.5 16.6Invts in Assoc. & JV 0 0 0 0 Retail (36.8) (11.8) (3.8) 1.2Div from Assoc & JV 0 0 0 0 Total 14.6 15.3 15.7 15.8Other Investing CF 0 0 0 0 Key Assumptions Net Investing CF (94) (35) (46) (59) Manufacturing volume 14.9 16.4 17.5 18.6Div Paid (200) (220) (218) (219) ASP (HK$) 221.3 232.6 241.0 248.4Chg in Gross Debt 0 0 0 0 Capital Issues 0 0 0 0 Other Financing CF 12 (131) (12) (62) Net Financing CF (188) (351) (230) (282) Currency Adjustments 0 0 0 0 Chg in Cash 88 69 250 281


Industry Focus

Consumer Sector

Springland Int'l (1700 HK EQUITY, HK$3.23, Hold ,Target Price HK$ 3.68) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 3,807 4,162 4,493 4,867EBITDA 1,116 1,286 1,401 1,539Pre-tax Profit 922 1,035 1,115 1,218Net Profit 651 730 787 859Net Pft (Pre Ex.) 651 730 787 859EPS (RMB) 0.26 0.29 0.32 0.34EPS (HK$) 0.33 0.37 0.39 0.43EPS Gth (%) 12.2 12.1 8.1 9.2Diluted EPS (HK$) 0.33 0.37 0.39 0.43DPS (HK$) 0.16 0.18 0.18 0.19BV Per Share (HK$) 2.24 2.40 2.62 2.86PE (X) 9.9 8.8 8.2 7.5P/Cash Flow (X) 4.9 6.4 5.0 4.5P/Free CF (X) 10.1 19.9 nm 51.4EV/EBITDA (X) 5.9 6.7 6.3 5.9Net Div Yield (%) 5.0 5.7 5.5 6.0P/Book Value (X) 1.4 1.3 1.2 1.1Net Debt/Equity (X) CASH 0.4 0.4 0.4ROAE (%) 15.1 15.7 15.7 15.7

Earnings Rev (%): 1 1Consensus EPS (RMB): 0.31 0.34Other Broker Recs: B: 9 S: 0 H: 3


Chen Jianqiang (%) 57.8 Matthews Int'l Capital Mgmt (%) 7.1 International Value Advisers, LLC (%) 5.3




Turnover 3,807 4,162 4,493 4,867 Net Fixed Assets 5,805 6,132 7,082 7,988Cost of Goods Sold (2,112) (2,310) (2,492) (2,697) Invts in Assocs & JVs 261 302 302 302Gross Profit 1,695 1,852 2,001 2,170 Other LT Assets 1,448 1,801 1,826 1,857Other Opg (Exp)/Inc (831) (881) (960) (1,034) Cash & ST Invts 1,539 892 637 511Operating Profit 864 970 1,042 1,136 Inventory 314 383 376 407Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 9 13 12 13Associates & JV Inc (2) (4) (4) (5) Other Current Assets 1,005 2,609 2,633 2,659Net Interest (Exp)/Inc 60 67 76 85 Total Assets 10,382 12,132 12,869 13,738Dividend Income 0 2 2 2 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 794 1,872 1,872 1,872Pre-tax Profit 922 1,035 1,115 1,218 Other Current Liab 3,459 3,473 3,707 4,022Tax (266) (299) (322) (351) LT Debt 655 992 992 992Minority Interest (5) (6) (7) (8) Other LT Liabilities 763 770 840 921Preference Dividend 0 0 0 0 Shareholder’s Equity 4,478 4,796 5,229 5,701Net Profit 651 730 787 859 Minority Interests 232 230 230 230Net profit before Except. 651 730 787 859 Total Cap. & Liab. 10,382 12,132 12,869 13,738EBITDA 1,116 1,286 1,401 1,539 Sales Gth (%) 5.7 9.3 8.0 8.3 Non-Cash Wkg. Cap (2,132) (467) (686) (943)EBITDA Gth (%) 8.3 15.2 9.0 9.8 Net Cash/(Debt) 91 (1,972) (2,226) (2,353)Opg Profit Gth (%) 6.7 12.3 7.4 9.0 Effective Tax Rate (%) 28.8 28.8 28.8 28.8



Pre-Tax Profit 922 1,035 1,115 1,218 Revenues (RMB m) Dep. & Amort. 254 317 362 406 Department stores 1,551 1,684 1,815 2,019Tax Paid (255) (304) (328) (358) Supermarkets 2,256 2,477 2,679 2,848Assoc. & JV Inc/(loss) 2 4 4 5 Total 3,807 4,162 4,493 4,867(Pft)/ Loss on disposal of FAs 6 10 0 0 Key Assumptions – Number of stores Chg in Wkg.Cap. 455 40 202 239 No. of department stores 17.0 18.0 18.0 20.0Other Operating CF (57) (99) (76) (85) No. of supermarkets 28.0 31.0 33.0 37.0Net Operating CF 1,327 1,003 1,280 1,425 Total no. of stores 45.0 49.0 51.0 57.0Capital Exp.(net) (690) (678) (1,300) (1,300) Other Invts.(net) (287) (73) 0 0 Invts in Assoc. & JV 0 (45) 0 0 Div from Assoc & JV 0 0 0 0 Other Investing CF (1,437) (1,715) 104 106 Net Investing CF (2,414) (2,511) (1,196) (1,194) Div Paid (293) (450) (354) (387) Chg in Gross Debt 508 539 0 0 Capital Issues 0 (7) 0 0 Other Financing CF (57) 845 16 29 Net Financing CF 158 928 (338) (358) Currency Adjustments 8 (27) 0 0 Chg in Cash (919) (606) (255) (126)


Industry Focus

Consumer Sector

Time Watch Investments Ltd (2033 HK Equity, HK$1.14, Buy,Target Price HK$ 1.82) Forecast & Valuation General Data

FY Jun (HK$ m) 2012A 2013A 2014F 2015FTurnover 1,525 1,912 2,287 2,638EBITDA 288 342 399 465Pre-tax Profit 244 292 375 434Net Profit 184 214 286 331Net Pft (Pre Ex.) 202 239 286 331EPS (HK$) 0.09 0.11 0.14 0.16EPS Gth (%) 36.8 16.0 28.8 15.8Diluted EPS (HK$) 0.09 0.10 0.14 0.16DPS (HK$) 0.00 0.09 0.05 0.06BV Per Share (HK$) 0.19 0.64 0.71 0.81PE (X) 12.4 10.7 8.3 7.2P/Cash Flow (X) 487.9 16.2 8.8 8.8P/Free CF (X) nm 26.3 11.2 11.7EV/EBITDA (X) 8.5 5.4 4.2 3.4Net Div Yield (%) 0.0 7.7 4.2 4.9P/Book Value (X) 6.0 1.8 1.6 1.4Net Debt/Equity (X) 0.3 CASH CASH CASHROAE (%) 44.4 25.7 20.7 21.0 Earnings Rev (%): Nil NilConsensus EPS (HK$): 0.14 0.16Other Broker Recs: B: 1 S: 0 H: 0


Tung Koon Ming (%) 68.4 Orchid Asia & related parties (%) 9.0



FY Jun 2012A 2013A 2014F 2015F FY Jun 2012A 2013A 2014F 2015F

Turnover 1,525 1,912 2,287 2,638 Net Fixed Assets 47 70 116 148Cost of Goods Sold (606) (753) (833) (941) Invts in Assocs & JVs 0 0 0 0Gross Profit 918 1,159 1,453 1,698 Other LT Assets 12 12 13 15Other Opg (Exp)/Inc (652) (836) (1,081) (1,266) Cash & ST Invts 157 537 801 905Operating Profit 266 323 373 431 Inventory 466 442 503 567Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 289 409 418 482Associates & JV Inc 0 0 0 0 Other Current Assets 1 150 0 0Net Interest (Exp)/Inc (4) (5) 2 3 Total Assets 972 1,620 1,851 2,117Dividend Income 0 0 0 0 Exceptional Gain/(Loss) (18) (26) 0 0 ST Debt 286 41 49 58Pre-tax Profit 244 292 375 434 Other Current Liab 251 217 243 274Tax (56) (77) (87) (100) LT Debt 0 0 0 0Minority Interest (4) (2) (2) (3) Other LT Liabilities 21 31 34 37Preference Dividend 0 0 0 0 Shareholder’s Equity 377 1,286 1,472 1,688Net Profit 184 214 286 331 Minority Interests 38 46 53 60Net profit before Except. 202 239 286 331 Total Cap. & Liab. 972 1,620 1,851 2,117EBITDA 288 342 399 465 Sales Gth (%) 28.2 25.4 19.6 15.4 Non-Cash Wkg. Cap 506 784 677 776EBITDA Gth (%) 42.8 18.6 16.8 16.5 Net Cash/(Debt) (129) 497 753 847Opg Profit Gth (%) 43.7 21.3 15.4 15.7 Effective Tax Rate (%) 22.9 26.3 23.1 23.1


FY Jun 2012A 2013A 2014F 2015F FY Jun 2012A 2013A 2014F 2015F

Pre-Tax Profit 244 292 375 434 Revenues (HK$ m) Dep. & Amort. 22 19 27 34 Tian Wang 980 1,231 1,577 1,876Tax Paid (51) (77) (87) (100) Balco 109 150 183 214Assoc. & JV Inc/(loss) 0 0 0 0 Other brands 184 249 279 307(Pft)/ Loss on disposal of FAs (1) 0 0 0 Trading of watch movements 252 282 248 241Chg in Wkg.Cap. (227) (102) (46) (102) Total 1,525 1,912 2,287 2,638Other Operating CF 17 8 2 2 Segmental profit (HK$ m) Net Operating CF 5 141 271 268 Tian Wang 281 331 408 489Capital Exp.(net) (19) (54) (60) (66) Balco 2 9 9 11Other Invts.(net) 0 0 0 0 Other brands 7 10 10 12Invts in Assoc. & JV 0 0 0 0 Trading of watch movements 14 9 8 8Div from Assoc & JV 0 0 0 0 Total 305 359 435 520Other Investing CF (48) 0 0 0 Segmental profit Margins (%) Net Investing CF (67) (54) (60) (66) Tian Wang 28.7 26.9 25.9 26.1Div Paid 0 (175) (100) (116) Balco 1.9 5.8 4.8 5.0Chg in Gross Debt 92 (303) 155 20 Other brands 4.0 4.1 3.6 3.8Capital Issues 0 780 0 0 Trading of watch 5.4 3.1 3.3 3.3Other Financing CF 12 (8) (2) (2) Total 20.0 18.8 19.0 19.7Net Financing CF 104 294 53 (98) Key Assumptions – Number of stores Currency Adjustments 4 0 0 0 Tian Wang POS number 1,178.0 1,514.0 1,784.0 1,954.0Chg in Cash 46 381 264 104 Balco POS number 333.0 405.0 475.0 525.0 Other brands POS number 62.0 78.0 93.0 103.0

Total POS number 1,573.0 1,997.0 2,352.0 2,582.0


Industry Focus

Consumer Sector

Wumart (1025 HK Equity, HK$6.80, Hold ,Target Price HK$ 7.00) Forecast & Valuation General Data

FY Dec (RMB m) 2012A 2013A 2014F 2015FTurnover 17,334 18,886 20,525 22,644EBITDA 1,169 1,030 1,075 1,195Pre-tax Profit 865 716 714 781Net Profit 602 459 464 508Net Pft (Pre Ex.) 602 459 464 508EPS (RMB) 0.47 0.36 0.36 0.40EPS (HK$) 0.59 0.45 0.45 0.50EPS Gth (%) 2.7 (23.7) 1.1 9.5Diluted EPS (HK$) 0.59 0.45 0.45 0.50DPS (HK$) 0.26 0.31 0.23 0.25BV Per Share (HK$) 3.44 3.62 3.85 4.10PE (X) 11.6 15.2 15.0 13.7P/Cash Flow (X) 4.1 4.7 5.6 4.8P/Free CF (X) 8.8 9.0 13.0 9.4EV/EBITDA (X) 4.6 4.8 4.1 3.4Net Div Yield (%) 3.9 4.6 3.3 3.6P/Book Value (X) 2.0 1.9 1.8 1.7Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 17.9 12.7 12.1 12.5


Issued Capital - H shares (m shs) 537 - Non H shrs (m shs) 745H shs as a % of Total 42Total Mkt. Cap (HK$m/US$m) 8,713 / 1,124Major Shareholders

Wumei Holdings (%) 38.9 Wangshang Shijie (%) 12.5

Major H Shareholders (%) J.P. Morgan Chase & Co. (%) 8.8 Genesis Asset Managers, LLP (%) 14.1 Prudential plc (%) 9.0 Massachusetts Financial Services 8.5 The Capital Group Companies, Inc (%) 8.3

H Shares-Free Float (%) 51.3Avg. Daily Vol.(‘000) 4,592



Turnover 17,334 18,886 20,525 22,644 Net Fixed Assets 3,410 3,621 3,909 4,127Cost of Goods Sold (13,948) (15,089) (16,357) (17,995) Invts in Assocs & JVs 245 250 272 298Gross Profit 3,386 3,797 4,167 4,649 Other LT Assets 1,429 1,727 1,518 1,568Other Opg (Exp)/Inc (2,548) (3,128) (3,520) (3,955) Cash & ST Invts 2,245 2,758 3,252 3,702Operating Profit 838 669 647 694 Inventory 1,112 1,460 1,587 1,751Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 86 170 185 204Associates & JV Inc 12 14 16 20 Other Current Assets 1,541 1,433 1,542 1,682Net Interest (Exp)/Inc 16 33 50 68 Total Assets 10,067 11,420 12,265 13,333Dividend Income 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 ST Debt 525 522 522 522Pre-tax Profit 865 716 714 781 Other Current Liab 5,817 6,932 7,509 8,281Tax (227) (222) (214) (235) LT Debt 0 0 0 0Minority Interest (37) (35) (35) (39) Other LT Liabilities 13 73 74 75Preference Dividend 0 0 0 0 Shareholder’s Equity 3,532 3,707 3,947 4,209Net Profit 602 459 464 508 Minority Interests 180 186 214 246Net profit before Except. 602 459 464 508 Total Cap. & Liab. 10,067 11,420 12,265 13,333EBITDA 1,169 1,030 1,075 1,195 Sales Gth (%) 5.7 9.0 8.7 10.3 Non-Cash Wkg. Cap (3,079) (3,869) (4,195) (4,644)EBITDA Gth (%) (0.9) (11.9) 4.5 11.1 Net Cash/(Debt) 1,720 2,236 2,731 3,180Opg Profit Gth (%) (0.5) (20.1) (3.3) 7.2 Effective Tax Rate (%) 26.2 31.0 30.0 30.0



Pre-Tax Profit 0 0 0 0 Revenues (RMB m) Dep. & Amort. 319 346 412 482 Sales of merchandise 15,363 16,988 18,553 20,492Tax Paid (272) (241) (233) (255) Rental income from 508 609 669 736Assoc. & JV Inc/(loss) (12) (14) (16) (20) 1,463 1,290 1,302 1,415(Pft)/ Loss on disposal of FAs 18 55 0 0 Chg in Wkg.Cap. 711 552 333 431 Other Operating CF 929 783 738 801

Service income (e.g. income from suppliers, inc. store display income & promotion income)

Net Operating CF 1,694 1,481 1,234 1,440 Total 17,334 18,886 20,525 22,644Capital Exp.(net) (905) (705) (700) (700) Key Assumptions – Number of stores Other Invts.(net) 13 (325) 0 0 Superstores 141.0 155.0 166.0 180.0Invts in Assoc. & JV 0 0 0 0 Mini-marts 397.0 392.0 428.0 461.0Div from Assoc & JV 12 9 10 11 Total no. of stores 538.0 547.0 594.0 641.0Other Investing CF 18 (99) 0 0 % y-o-y 3.7 1.7 8.6 7.9Net Investing CF (862) (1,120) (690) (689) Div Paid 0 0 0 0 Chg in Gross Debt 250 60 0 0 Capital Issues 0 0 0 0 Other Financing CF (275) (311) (49) (301) Net Financing CF (25) (251) (49) (301) Currency Adjustments 0 0 0 0 Chg in Cash 808 111 494 449


Industry Focus

Consumer Sector

Appendix

Same-store sales growth table – Cosmetics retailers SSSG (%y-o-y)

2011 1Q12 2Q12 1H12 3Q12 4Q12 2012 1Q13 2Q13 1H13 3Q13 4Q13 2013 1Q14 2Q14 1H14 Remarks

L'Occitane c.7% c.8% 1% >4.4% c.4.4% 4% c.6% largely flat 1% largely flat 1% 5% largely flat

(973) # (* >12-13%) (* 8.9%) (* >11%)

Sa Sa HK/Macau: 20% HK/Macau: 21.1%

HK/Macau: 14.1%

HK/Macau: 16.2%

HK/Macau: 18.6%

HK/Macau: high-teens

HK/Macau: 8.7&

HK/Macau:15.2%

HK/Macau: mid-teens

HK/Macau:9.9%

HK/Macau: 1.9%

(178) # China: -2% China: 10.5%Singapore: -4% Singapore: 5.5%Malaysia: >1% Malaysia: -2.1% Other

markets: n.a.Other

markets: n.a.

Other markets:

n.a.

Other markets:

n.a.

Taiwan: 2% Taiwan: flat

Bonjour 6% n.a. n.a. 2.1% n.a. n.a. 6% 18.8%

(653)Labour

holiday: 33% (May)

Other markets:

n.a.

Singapore: -3.3%

Malaysia: 9.3%

Taiwan: -0.3%

Singapore: -5%

Malaysia: 6%

Taiwan: 7%

China: slight decline;

Singapore: slight decline; Malaysia: mid

single-digit; Taiwan: mid

single-digit

mid single-digit

Other markets:

n.a.

China: -8.3%;

Singapore: -2.7%;

Malaysia: 4.8%;

Taiwan: 6.1%

Other markets:

n.a.

(July-Aug: high single-

digit)

HK/Macau: mid-teens

2M14: mid to high

single-digit

high single-digit

>10%target at >10%

low-teens (estimated)

>20% (estimated)

Malaysia: 2.5%;

Taiwan: 1.1%

Other markets:

n.a.

(*Included forex gain)

(* mid single-digit)

HK/Macau: mid-teens

(excluded milk powder sales:

c.9%)

(For other markets,

blended retail sales (not

SSSG) grew 31.5%)

(HK/Macau: excluded adjustments on VIP bonus scheme)

HK/Macau: 17.3%

HK/Macau: 12.6%

(excluded milk powder sales: 7.2%)

n.a.

China: low single-digit

decline;Singapore:

-0.2%

n.a.

n.a.

Oct13 Golden Week: c.10%

HK/Macau: mid single-

digit

n.a. n.a.

low single-digit

(# For companies with a year-end of March, same-store sales growth has been adjusted to calendar year basis.)

Source: DBS Vickers

Industry Focus Consumer Sector

Same-store sales growth table – Department store

SSSG 2011 1Q12 2Q12 1H12 3Q12 4Q12 2012 1Q13 2Q13 1H13 3Q13 4Q13 2013 1Q14 2Q14 1H14 Remarks(%y-o-y)

Golden Eagle (3308)

24.9% 11-12% c.6% 8.6% low single-digit(July: 8%)

n.a. 6.1% low single-digit

high single-digit

5.6%

Intime 23.1% 9.1% 9.3% 9.2% low single-digit low-teens 9.1% 10% >16% 13.7% 8%(1833) (July: low single-

digit; August: fairly flat amid strong

typhoons)

Lifestyle(1212)

HK: 22% HK: 12-13% HK: low- to mid-teens

HK: 11.1% (SOGO CWB);

18.1% (SOGO TST)

HK: high single-digit


HK: 7.4% n.a. n.a. HK: 7.3% (SOGO

CWB), 6.1% (SOGO TST)



HK: 6.7% (SOGO

CWB), 5% (SOGO TST)

HK: low-to-mid single-

digit

n.a. n.a.

Shanghai: c.8%

Shanghai: -ve low-

single digit

Shanghai: -ve low-single

digit

Shanghai: -2.9%

Shanghai: slight -ve to flat

Shanghai: -ve low single-digit

to flat

Shanghai: -2%

Shanghai: 2.6%

Shanghai: low single-

digit

Shanghai: decline

Shanghai: -0.3%

Shanghai: -ve

Suzhou: >40%

Suzhou: >20%

Suzhou: >20%

Suzhou: 20.7%

Suzhou: high-teens to 20%

Suzhou: high-teens to 20%

Suzhou: 19.4%

Suzhou: 22.6%

Suzhou: high-teens

Suzhou: high-teens

Suzhou: 17%

Suzhou: slight +ve

Dalian: >20%

Dalian: n.a. Dalian: n.a. Dalian: -7% Dalian: -ve Dalian: slight -ve

Dalian: -6.4%

Dalian: 8.1% Dalian: mid single-digit

Dalian: fairly flat

Dalian: 1.6%

(for Jul)

Maoye (848) 19.7% low single-digit

low single-digit

2.4% low single-digit low single-digit 3.9% 5.3% >9% 7.7% low single-digit

low single-digit

4.4% n.a. n.a. n.a.

(Concessionaire sales only)

New World Department Store (825) #

high-teens high single-digit

low-teens c.10% (estimated)

single-digit low-teens low-teens >10% mid single-digit (Jul-

Aug)

slight decline

flat high single-digit decline

(Apr-May); excluding

jewelleries: flat

single-digit decline

Parkson 11.4% 2.0% c.4% 2.9% -1% 0.4% -2.8% c.1% -0.7% -1.8%(3368) (ex-gold

sales: -1%)

Springland (1700) (Dept store division only)

25.4% c.10% c.13-14% 12.1% n.a. (July: low single-

digit) (Aug: mid single-

digit)

n.a. 8.8% mid single-digit

low-teens 10.6% 11-12% (Jul) single-digit 7.1% low to mid single-digit

high single-digit decline

slight decline

2014 target: mid single-digit

2014 target: HK: mid single-digit for SOGO CWB

n.a.

2014 target: high single-digit


negative

single-digit decline

-2.4%

negativedown c.2%

c.10% high single-digit

-4% slight decline

mid single-digit

-8% 2014 target: flat to low single-digit

5-6% (Jul-Aug)

n.a.

FY14: mid-to-high single-digit

slight decline

2.9%

largely flat

slight decline

1.8%high single-digit

single-digit to low-teens

decline

(# For New World Dept Store with June year-end, same-store sales growth has been adjusted to calendar year basis.)

Source: DBS Vickers

Industry Focus

Consumer Sector

Same-store sales growth table – Food retail SSSG (%y-o-y) 2011 1Q12 2Q12 1H12 3Q12 4Q12 2012 1Q13 2Q13 1H13 3Q13 4Q13 2013 1Q14 2Q14 1H14 Remarks

Beijing Jingkelong 8.7% 3.2% c.6% 4.7% 3.4% 0.6% 3.6% -4%

(814)

CRE (291) - 10.9% 6.4% c.5% 5.7% 4.6% fairly flat 4% 3% >6% 1% 4.7% -0.4% n.a. n.a.

retail division only

Lianhua Supermarket (980)

5% -2.8% -0.2% -1.7% c.3% >3% 3.7% decline largely flat -4% to -5% n.a. n.a.

Sun Art (6808) 8.8% n.a. n.a. 4.3% >2% >1% 3.3% c.3% c.5% 4.0% Fairly flat in Jul (expect Aug-Sep

better)

slight decline 2% c.2% n.a. n.a. 2014 target: similar or slightly better

SSSG vs. 2013

Wumart (1025) 9.8% n.a. n.a. 3.9% c.2% c.1% 2.1% n.a. n.a. 3.8% >3% low single-digit

3% n.a. n.a. n.a.

Springland (1700) 10.9% flat 1.0% -1% n.a. n.a. -3.1% -2% (Jul) n.a. -0.9% slight growth flat slight growth

(supermarket division only)

low single-digit

low single-digit

dec line

down 2-3%

high single-

d

low single-digit

low single-digit

2.1%


low single-digit decline

-0.7%

-6%down >6%

n.a.

2M14: -6% to -7%

2014 target: slight growth

5.6%

mid single-digit decline (Jul-Aug)

low single-digit dec line

2014 target: flat SSSG by 3Q14

n.a.

<1%

low single-digit

Source: Companies, DBS Vickers


Net sales growth table – Samsonite

3Q11 4Q11 2011 1Q12 2Q12 1H12 3Q12 4Q12 2012 1Q13 2Q13 1H13 3Q13 4Q13 2013 1Q14 2Q14 1H14 Remark

Net sales growth (y-o-y)

Overall 30% 18% 29% 15% 13% -2% 7% 18% 13% 16% 17% 16% 17% 11% 15% 10% Apr-May: c.10%

c.10%

- Asia 45% 30% 43% 24% 19% 0% 15% 17% 18% 15% 13% 14% 9% 13% 12% 14% Apr-May: low-teens

low-teens

- Europe 21% 6% 18% 3% -6% 21% -8% 1% -3% 5% 9% 7% 13% 15% 11% 11% Apr-May: low-teens

low-teens

- N.America 29% 21% 28% 24% 31% -2% 17% 42% 29% 28% 32% 30% 38% 4% 24% 4% Apr-May: c.10%

6-7%

- Latin America 10% 11% 22% -4% -0.3% 28% 2% 18% 4% 10% 5% 8% 8% 14% 10% 4% Apr-May: mid single-digit

mid single-digit

- Corporates -5% 12% -5% -14% 11% -2% -23% -20% -11% -15% -11% -13% -4% 1% -8% -7% n.a. n.a.

2014 target: c.10%; mid to high single-digit for

N.America, 15-20% for Asia, c .10% for Europe,

teens growth for Latin America (constant rates)

Note: In USD terms

Source: DBS Vickers

Industry Focus

Consumer Sector

Same-store sales growth table – Global players Prada (FY Jan) FY11 FY12 1QFY13 2QFY13 3QFY13 4QFY13 FY13 1QFY14 2QFY14 3QFY14 4Q FY14 FY14 1Q FY15Group 22% 23% 19% 19% 14% 5% 14% 8% 7% 7% c.7% 7% flat Italy n.a. 28% 17% 26% 20% 15% 20% 8% Stable q-o-q Stable q-o-q n.a. n.a. n.a. Europe n.a. 19% 31% 32% 32% 13% 26% 9% Stable q-o-q Stable q-o-q n.a. n.a. n.a. N.America n.a. 16% 13% 6% 0% -2% 3% 7% Accelerated Accelerated n.a. n.a. n.a. Asia Pacific n.a. 33% 22% 20% 13% 4% 13% 6% Moderated Moderated n.a. n.a. n.a. Greater China n.a. 40% 24% 19% 13% 7% 14% 9% Moderated Moderated n.a. n.a. n.a. Japan n.a. 1% 3% 3% -3% -6% -2% 11% Accelerated Accelerated Accelerated Accelerated n.a.Note: Starting 2QFY14, Prada does not disclose Retail SSSG by region.

Coach (FY Jun) FY11 FY12 1QFY13 2QFY13 3QFY13 4QFY13 FY13 1QFY14 2QFY14 3QFY14North America 11% 7% 6% -2% 1% -2% 0.3% -7% -14% -21%

Burberry (FY Mar) FY11 FY12 1QFY13 2QFY13 3QFY13 4QFY13 FY13 1QFY14 2QFY14 3QFY14 4QFY14 FY14 1Q FY15Group 11% 14% 6% 1% 6% 8% 5% 13% 13% 12% 12% 12% 12%

Michael Kors (FY Mar) FY11 FY12 1QFY13 2QFY13 3QFY13 4QFY13 FY13 1QFY14 2QFY14 3QFY14 4QFY14 FY14Group 48% 39% 37% 45% 41% 37% 40% 27% 23% 28% 26% 26%North America 49% 40% 38% 45% 41% 35% 40% 25% 21% 24% 21% 23%Europe 14% 22% 24% 50% 58% 63% 51% 56% 45% 73% 63% 60%Japan n.a. 35% 21% 17% 11% 14% 15% 23% n.a. 18% n.a. 29%

Salvatore Ferragamo (FY Dec) 2010 2011 1Q12 2Q12 3Q12 4Q12 2012 1Q13 2Q13 3Q13 4Q13 FY13 1Q14Group n.a. 16% 10% 7% 8% 8% 8% 6% 8% 4% 1% 5% 3%

Source: DBS Vickers


Same-store sales growth table – Key jewellery retailers SSSG (%y-o-y)


Chow Sang Sang (116)

Overall: 37% HK/Macau: c.15%

HK/Macau: mid-teens

HK/Macau: 16%

HK/Macau: 22%

China: c.10% China: 8%China: 5% China: single-

digitChina: >45% China: 31% China: high

single-digitChina: high single-digit

China: 20%

Chow Tai Fook (1929)#

HK/Macau/ Taiwan:

>50%

HK/Macau/ Taiwan: >20%

HK/Macau/ Taiwan:

down 1%

HK/Macau/ Taiwan: <10%

HK/Macau: >10% decline

HK/Macau: -6% HK/Macau: mid single-

digit decline

HK/Macau: 4%

HK/Macau: 68%

HK/Macau: >35%

HK/Macau: 26%

HK/Macau: 7%

HK/Macau: >20%

HK/Macau: -9%

HK/Macau: -50%

n.a.

China: >35% China: >15% China: 10% China: low-teens

China: single-digit decline

China: -11% China: fairly flat

China: down 5-6%

China: 32% China: mid-teens

China: 12% China: 14% China: teens growth

China: 15% China: -28%

Overall: >45% Overall: >20% Overall: 4% Overall: low-teens

Overall -8% Overall: 48% Overall: high teens growth

(roughly estimated)

(roughly estimated)

Luk Fook (590) #

HK/Macau: >37%

HK/Macau: 8% HK/Macau: c.6% HK/Macau: c.7%

HK/Macau:4-5%

China: n.a. ^ China: 13% ^ China: >20% ^ China: n.a.^ China:

>16%^ China: low

single-digit^ China: mid

single-digit^ China:

117%^ China:

>60%^ China: 70% ^ China: 36% ^ China: 1%

^ China: low single-digit

HK/Macau: >20%

^ China: strong double-

digit

HK/Macau: 83%

HK/Macau: >50%

HK/Macau: low double-

digit

Overall: 11%

HK/Macau: 30%

HK/Macau: 6%

HK/Macau: high-teens

HK/Macau: double-digit

Overall: down 1-2%

Overall: c.25%

HK/Macau: 50%

HK/Macau: 65%

Overall: 18%

HK/Macau: low single-digit

decline

China: low single-digit

HK/Macau: 9%

HK/Macau: c.10%

HK/Macau: down 4-5%

HK/Macau: down 19% (Oct), up 20% (Nov), up

single-digit (Dec)

HK/Macau: estimated at

-50%

n.a.

(^ self-operated stores only)

China (licensees): c.10%

China: high single-digit

n.a.

HK/Macau: -12%

HK/Macau: estimated at

-50%

Overall: high single-digit

decline

Overall: slight decline

China: low single-digit (October Golden Week:

HK/Macau down 20%; China down

15%)

HK/Macau: high single-digit

Non-gold: HK: flat

China: teens' growth

^ China: estimated at

-20%

FY3/15: flattish

overall top-line growth

FY3/15: double-digit

growth against FY3/13

n.a.

China: estimated at

-30%

Overall: -40%

Gold: double-digit decline

Overall: 4%

(# For companies with March year-end, same-store sales growth has been adjusted to calendar year basis.)

Source: DBS Vickers

Industry Focus

Consumer Sector

Same-store sales growth table – Key watch retailers SSSG (%y-o-y)


Emperor Watch (887)

Overall: >30% Overall: <15% Overall: low singledigit

6.3% down by low single-digit

down by low single-digit

fairly flat low single-digit

n.a. 1.6% decline decline -1.2% mid single-digit decline

n.a. n.a.

Hengdeli (3389)

China: 30.1% n.a. n.a. China: -0.2% (of which mid-

end: 10.4%)

n.a. n.a. China: 8% n.a. n.a. China: low to mid single-

digit

China: -7.1% (of which mid-

end: 0.6%)

n.a. n.a.

HK: 25.7% HK: -ve

Oriental Watch (398) #

Overall: c.15%

HK: down 7% HK: down 12% HK: down 4% HK: +3% HK: high single-digit

HK: mid single-digit

HK: largely flat

HK: c.10% decline

HK: largely flat


HK: teens decline (Apr-

May)

decline

Macau: down 19%

Macau: down 19%

Macau: down 7%

Macau: +16%

Macau: low-teens

Macau: low-teens

Macau: single-digit

Macau: c.10%

Macau: c.10%

China: down 13%

China: down 8% China: down 5%

China: -20% China: down by high single-

digit

China: down by mid-teens

China: down by single-digit

China: down by single-digit

China: down by high single-

digit

(Overall: down 11%)

(Overall: down 4%)

China: -ve Overall: -2% Overall: mid single-digit

Overall: low single-digit

Overall: largely flat

(Oct to mid-Nov)

HK: flat (2.8% at constant currency)HK: high

single-digit to low-teens

(of which mid-end: >10%)

Similar to 1H13

performance

n.a.

(Jul-Aug: we estimate single-

digit sales growth for mid-

end but sales decline for high-

end)

HK/Macau: down by

c.10%

HK: c.-3%

(Jul-Aug: low single-digit)

HK/Macau: down c.5%

HK/Macau: up 2%+ (Oct), up

10%+ (Nov); slightly -ve (Dec)

China: down by high single-

digit

China: down by low-teens

FY15: fairlyflat

Macau: n.a. China: single-

digit decline (Apr-May)

2M14: China: -ve single-

digit for high-end; +ve

single-digit for mid-end

n.a.

2014 target:low to midsingle-digit

(# For companies with March year-end, same-store sales growth has been adjusted to calendar year basis.)

Source: DBS Vickers


Same-store sales growth table – Home appliances

2011 1Q12 2Q12 1H12 3Q12 4Q12 2012 1Q13 2Q13 1H13 3Q13 4Q13 2013 1Q14 2Q14 1H14 Remark

SSSG (y-o-y)GOME (493) 3% -34% -19% -28% -16% -26% -25% 17% 8% 15% 9% 17% 14% 8% high

single-digit

highsingle-

digit

2014 target: >5% SSSG

Suning (002024.CH) 3% -7% -14% -10% -10% -19% -12% 10% 12% 11% 3% 0.1% 6% -13% n.a. n.a. n.a.

Revenue growth (y-o-y)Haier E lectronics (1169) 36% 8% 11% 16% 11% 14% 7% 10% 16% 11% 12% 13% low-

teenslow-

teens2014 target: low-teens sales growth

- Washing machine & water heaterdivisions

10% 8% n.a. n.a. 11% 14% -9% 3% 15% -1% 5% -2% lowsingle-

digit

flattish 2014 target: mid s ingle-digit salesgrowth

- Integrated Channel Services 55% 8% n.a. n.a. 12% 15% 9% 12% 16% 15% 13% 14% mid-teens

mid-teens

Sales of non-Haier products to grow>30% in 2014

n.a.

n.a.

n.a.

Source: DBS Vickers

Industry Focus

Consumer Sector

Same store sales growth table - Apparel & footwear players -

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14Women's footwea rDaphne 1% 32% 23% 26% 22% 14% 5% 2% -3% -14% -18% -5% -10%

Belle - footwear** 22% 20% 19% 8% 3% 11% 3% 3% 5% 1% 1% 1% -3%C.banner 8% 17% 23% 12% 4% 10% 6% 3% 2% -10% -10% -10% -8%

Le Saunda 9% 8% 15% 18% 14% 10%

Stella 21% 52% 30% 22% 17% 3% -8% -1% 9% -9% 7% -6% -9%

ApparelsGiordano* 5% 17% 9% 1% -1% 0% -2% -3% -7% -8% -5% -8% -10%Esprit*

Texwinca *

Trinity

SportswearBelle - sportswear 7% 6% 3% 4% -2% 5% 4% 10% 11% 3% 5% 5% 7%Anta -ve MSD -ve MSD 0% 0% 0% MSD MSD

Xtep 0% 0% 0% n.a . LSD

Peak 13% n.a. 6% 2% 0% -19% 0% 0% 0% 0% LSD LSD LSD

-12%

-ve MSD

3% -12%

22% High-teens 6% -8% -10%

-13%

8% Low single digit

-1% -4% -4%

* China only

** For Belle, SSSG for 1Q14 represents that during Dec 13 - Feb 14

LSD: Low single digit; MSD: Mid single digit, HSD: High single digit


Industry Focus

Consumer Sector

PRC: Domestic tourist number

PRC: Domestic tourist spending

mn

2,109

2,6412,957

3,262

1,120

2,333

10.6%

13.2%

10.3%

12.0%

12.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2009 2010 2011 2012 2013 1Q14

0%

2%

4%

6%

8%

10%

12%

14%

Tourist number Growth y-o-y

09 ~ 13 CA GR 12%

RMB bn

1,265

1,931

2,271

2,628

896

1,562

16.40%

23.5%

17%

23.6%

17.6%15.7%

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 1Q14

0%

5%

10%

15%

20%

25%


09 ~ 13 CA GR 20%

Source: China National Tourism Administration, China Tourism Academy


PRC: Outbound tourist number

PRC: Outbound tourist spending

mn

48

70

83

98

26

57

20.4%

17%

22.4%

18.4% 18.0%

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 1Q14

0%

5%

10%

15%

20%

25%

Tourist number Growth y-o-y

09 ~ 13 CA GR 20%

USD bn

42

73

102

129

55

34

16%

30.7% 32.2%

40.5%

26.2%

16%

0

20

40

60

80

100

120

140

2009 2010 2011 2012 2013 1Q14

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


09 ~ 13 CA GR 32%



Industry Focus

Consumer Sector

HK: PRC tourist arrivals

HK: PRC tourist spending

mn

18

28

35

41

1823

26.3%23.9%

17.6%24.2%

16.7%

0

5

10

15

20

25

30

35

40

45

2009 2010 2011 2012 2013 5M14

0%

5%

10%

15%

20%

25%

30%

HK tourist arrival (from PRC) Growth y-o-y

09 ~ 13 CA GR 23%

HKD bn

83

147

179

217

113

35.3%

30.3%

21.4% 21.5%

0

50

100

150

200

250

2009 2010 2011 2012 2013

0%

5%

10%

15%

20%

25%

30%

35%

40%

HK tourist spending (from PRC) Growth y-o-y

09 ~ 13 CA GR 27%

Source: CEIC Source: CEIC

Macau: PRC tourist arrivals

Macau: PRC tourist spending

mn

11

16 1719

8.6

13

-5.3%

20.4%22.2%

15.8%

4.6%

10.2%

0

2

4

6

8

10

12

14

16

18

20

2009 2010 2011 2012 2013 5M14

-10%

-5%

0%

5%

10%

15%

20%

25%

Macau tourist arrival (from PRC) Growth y-o-y

09 ~ 13 CA GR 15%

MOP bn

32

40

48

13

33

4.4%

21.8%

18.4%

12%

0

10

20

30

40

50

60

2010 2011 2012 2013 1Q14

0%

5%

10%

15%

20%

25%

Macau tourist spending (from PRC)

Growth y-o-y

10 ~ 13 CA GR 14%


Industry Focus

Consumer Sector

PRC outbound tourist number by destination Person - T ime t h 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012HK 7,771 9,310 13,005 13,525 14,334 16,137 17,557 18,666 23,099 28,321 34,956Macau 2,783 4,791 7,491 8,479 9,895 12,770 15,522 15,128 16,112 19,765 21,503Taiwan N/A N/A N/A N/A N/A N/A N/A 986 1,662 1,845 2,630J apan 760 805 1,021 1,117 1,280 1,458 1,557 1,553 1,969 1,628 1,962South Korea 551 559 697 843 1,098 1,313 1,374 1,474 1,969 2,368 2,995Thailand 689 528 682 596 767 717 624 622 1,015 1,523 2,245Singapore 289 262 429 477 557 648 713 668 826 1,004 1,167Malay sia 231 244 337 355 435 574 623 609 1,034 1,738 1,372USA N/A N/A N/A N/A N/A N/A N/A 824 1,078 1,360 1,722UK N/A N/A N/A N/A N/A N/A N/A 257 312 376 406F rance N/A N/A N/A N/A N/A N/A N/A 228 273 321 370Germany 166 165 223 230 258 272 253 236 287 334 377Russia N/A N/A N/A N/A N/A N/A N/A 684 711 810 869Australia 199 198 274 318 345 398 413 452 545 652 729Others 3,163 3,361 4,694 5,086 5,554 6,668 7,210 5,270 6,495 8,205 9,880T o t al 16 ,602 20 ,222 28 ,853 31 ,026 34 ,524 40 ,954 45 ,844 47 ,656 57 ,387 70 ,250 83 ,183

Source: CEIC

PRC outbound tourism: Top destinations (2013)

Consumption tax & import tariff for selective consumer goods

05

1015202530354045

Hon

g K

ong

Mac

au

Kor

ea

Thai

land

Taiw

an

USA

Japa

n

Vie

tnam

Cam

bodi

a

Mal

aysia

Sing

apor

e

Russ

ia

Indo

nesia

Aus

tral

ia

Can

ada

-20%-10%0%10%20%30%40%50%60%70%80%90%

2013 Growth

Consumpt ion tax Import tarif fCigarette 30-45% 10-25%Alcohol 10-20% 14-65%Cosmetics 30% 5-10%Jewelleries 5-10% 8-21%Autos 1-40%, depending on

engine displacement25%

Golf items 10% 12-14%Luxury watches 20% 11-20%Yacht 10% 8-10.5%Glasses n.a. 10-12%Home appliances n.a. 6-10%

Note: For mailed products, consumption tax and import tariff would be levied together.

Source: China National Tourism Administration, China Tourism Academy Source: Government websites

Industry Focus

Consumer Sector

E-Commerce penetration in China E-Commerce consumption per capita

4.3%

6.3%

7.7%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2011 2012 2013 Note: Penetration: E-Commerce sales as percentage of retail sales.

USD2,344

1,087858 828 821

376251 156

0

500

1,000

1,500

2,000

2,500

UK

Fran

ce

Net

herla

nds

US

Ger

man

y

Spai

n

Italy

Chi

na

Source: iResearch, CEIC Source: iResearch, Forrester Research, IMF, CEIC

Value of E-Commerce transactions

Online purchase of overseas items: Market size

0

100

200

300

400

500

600

2009 2010 2011 2012 2013 2014F 2015F

China USA

USD bn

5 1226.5

48.3

76.7

154.9140%

121%

82%

102%

59%

0

30

60

90

120

150

180

2009 2010 2011 2012 2013 2014F

0%

40%

80%

120%

160%

Online purchase of overseas items (LHS)Growth y-o-y (RHS)

RMB bn %

Source: KPMG, Statista, Bain & Co Source: China E-Commerce Research Center

Industry Focus

Consumer Sector

Annual amount for online purchase

Region & city-tier differences in online purchase

1,397

726

1,085

1,6571,837

2,163

1,314

2,0851,868

2,108

0

500

1000

1500

2000

2500

Ave

rage

Und

er 2

0

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

Mal

e

Fem

ale

RMB

1,397

1,6581,479

1,068

1,374 1,2811,471

1,150988

1,415 1,528

0200400600800

10001200140016001800

Ave

rage

Nor

ther

nC

hina

East

ern

Chi

na

Cen

tral

Chi

na

Sout

hwes

tern

Chi

naN

orth

east

ern

Chi

naN

orth

wes

tern

Chi

na Tier

-1

Tier

-2

Tier

-3

Tier

-4

RMB

Source: KPMG Surveys, Feb 2014 (Sample size: c.10,200) Source: KPMG Surveys, Feb 2014 (Sample size: c.10,200)

Consumers in China use multiple online sales channels

Motivations for purchasing on smart phones

0

10

20

30

40

50

60

70

80

Desktop/laptop Smart-phone Tablet

% of respondents

74

62

32

27

23

0 20 40 60 80

I can shop wherever and wheneverI want

Easy to use during commuting

Good to receive latest information

Convenient to receive SMSinformation

Easy to share with my friends

% of respondents

Source: KPMG Surveys, Feb 2014 (Sample size: c.10,200) Source: KPMG Surveys, Feb 2014 (Sample size: c.10,200)

Industry Focus

Consumer Sector

China retail sales (monthly)

China retail sales (annual)

0500

1,0001,5002,0002,5003,0003,5004,0004,500

Jan-

Feb

11

Jul-1

1

Dec

-11

Jun-

12

Nov

-12

May

-13

Oct

-13

Apr

-14

0

5

10

15

20

25

China Retail Sales (LHS) YoY growth (RHS)

RMB bn %

13,26815,700

18,39221,031

23,781

10,303

15.5%

18.3%17.1%

14.3%13.1%

12.1%

0

5,000

10,000

15,000

20,000

25,000

2009 2010 2011 2012 2013 5M14

0%

5%

10%

15%

20%

China Retail Sales (LHS) YoY growth (RHS)

RMB bn


China retail sales breakdown

R e ta i l s a l e s g ro wth (Yo Y, % )Ca te g o r i e s 1 H0 8 2 H0 8 1 H0 9 2 H0 9 1 H1 0 2 H1 0 1 H1 1 2 H1 1 1 H1 2 2 H1 2 1 H1 3 2 H1 3 5 M 1 4Furniture 32.3 15.4 38.8 60.8 60.5 65.4 70.2 65.8 31.7 38.9 29.0 17.2 14.7Gold, Silve r and Jewe lry 43.9 33.4 22.9 30.9 49.5 62.4 54.6 37.8 19.5 21.0 43.4 24.6 (6.3)Construction & Decora tion Materia l (1.7) (19.7) 67.5 103.3 60.2 78.6 83.3 84.9 45.9 38.1 25.9 27.1 14.2Automobile 33.4 18.0 41.6 81.5 46.1 43.3 28.7 22.0 14.8 13.7 20.5 22.1 11.3Petroleum & Re la ted Product 44.4 36.2 4.0 17.1 39.0 28.9 42.9 35.4 17.4 13.6 10.2 12.5 7.4Da ily Use Goods 19.2 15.2 24.6 30.5 25.2 29.8 36.2 36.1 21.9 21.3 19.1 16.6 9.8Clothing 25.1 24.6 19.4 25.3 24.9 29.0 35.4 35.5 21.7 23.9 19.3 14.5 9.7Cosmetics 21.2 23.0 21.5 26.4 21.4 19.1 25.4 22.8 19.5 23.3 24.4 18.4 9.5Food & Beverage 25.0 17.0 16.1 19.9 19.6 34.1 42.3 40.0 18.4 21.8 20.4 18.9 11.1Household Electric & Video Appliance 18.3 10.2 9.0 24.3 27.5 29.6 32.7 32.3 7.2 13.4 20.4 14.1 7.3Communica tion Appliance 3.5 (0.6) (3.0) 9.4 20.2 27.0 32.8 36.9 45.6 42.6 34.9 30.1 19.5

China retail sales breakdown (monthly)

R e ta i l s a l e s g ro wth (Yo Y, % )

Ca te g o r i e sJa n -Fe b

1 3M a r-1 3 Ap r-1 3 M a y-1 3 Ja n -Fe b

1 4M a r-1 4 Ap r-1 4 M a y-1 4

Furniture 20.9 38.2 29.7 29.0 11.8 17.4 15.0 (2.0)Gold, Silve r and Jewe lry 14.3 39.3 89.1 51.9 9.3 (3.1) (33.6) (18.4)Construction & Decoration Mate ria l 17.7 28.1 23.9 24.1 12.0 13.3 17.2 (8.9)Automobile 6.9 15.9 25.9 21.8 11.5 21.5 18.7 0.2Petroleum & Re la ted Product 11.2 9.5 6.9 7.3 5.3 8.1 9.6 7.5Da ily Use Goods 13.0 21.8 19.7 21.1 8.7 5.6 9.3 0.9Clothing 9.4 24.0 17.6 19.3 8.7 5.3 10.4 (1.6)Cosmetics 12.5 22.4 25.7 17.3 9.4 12.0 10.4 1.1Food & Beve rage 12.1 19.3 20.0 23.1 10.1 14.4 14.8 (2.3)Household Electric & Video Appliance 16.7 22.6 23.2 18.8 7.3 8.3 1.8 4.9Communica tion Appliance 10.4 49.6 31.2 48.1 12.9 14.2 28.9 6.9

Noted: Above designated size enterprises

Source: CEIC

Industry Focus

Consumer Sector

Inflation of consumer goods in China

Food inflation in China

95

100

105

110

115

120

125

130

135

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jan 07 = 100

May

-14

8090

100110120130140150160170180

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jan 07 = 100

May

-14


Consumer confidence index in China

Unemployment rate in China

959799

101103105107109111113115

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jan 07 = 100

May

-14

3.5%

3.6%

3.7%

3.8%

3.9%

4.0%

4.1%

4.2%

4.3%

4.4%

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14


Industry Focus

Consumer Sector

Disposable income per capita growth – Urban households

Cash income per capita growth – Rural households

0%2%4%6%8%

10%12%14%16%18%20%

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Y-o-y

0%

5%

10%

15%

20%

25%

30%

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Y-o-y


China Properties - Secondary market transaction China Properties - Retail shop price index

02,0004,0006,0008,000

10,00012,00014,00016,00018,000

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Beijing Shanghai Guangzhou Shenzhen Tianjin Chengdu

'000 sm

82 87 92 97

102 107 112 117 122

20

08

/01

20

08

/05

20

08

/09

20

09

/01

20

09

/05

20

09

/09

20

10

/01

20

10

/05

20

10

/09

20

11

/01

20

11

/05

20

11

/09

20

12

/01

20

12

/05

20

12

/09

20

13

/01

20

13

/05

20

13

/09

20

14

/01

20

14

/05

Beijing Guangzhou

Shenzhen Shanghai

Jan 2007=100

Source: Centaline Property Agency, DBS Vickers Source: SouFun, DBS Vickers

Industry Focus

Consumer Sector

Hong Kong retail sales (monthly)

Hong Kong retail sales (annual)

(15)(10)(5)0 5 10 15 20 25 30 35

0

20,000

40,000

60,000

80,000

100,000

Jan

-Feb

11

Jul-

11

Dec

-11

Jun

-12

No

v-1

2

May

-13

Oct

-13

Ap

r-1

4

Hong Kong Retail Sales (LHS) YoY growth (RHS)

HKD bn %

275325

406445

494

212

0.6%

18.3%

24.9%

9.8% 11.0%

-0.2%-5%

0%

5%

10%

15%

20%

25%

30%

0

100

200

300

400

500

600

2009 2010 2011 2012 2013 5M14

Hong Kong Retail Sales (LHS) YoY growth (RHS)

HKD bn


Hong Kong retail sales breakdown

Ret ail sales g row t h (Y oY , % )Cat egories 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 5M 14J ewellery , Watches, Clocks & V aluableGift

23.2 4.0 (6.8) 17.7 37.4 34.9 50.4 43.3 11.8 3.9 32.6 13.5 (14.3)

Clothing, F ootwear & A llied Products 16.2 0.5 (7.2) 6.0 16.1 18.4 27.8 28.2 11.5 4.1 9.8 6.8 8.1Consumer Durable Goods 13.4 1.6 (13.2) 1.7 27.3 26.5 26.7 30.2 27.7 12.7 10.9 (3.8) (2.8)Department Stores 13.9 3.9 (4.0) 6.2 18.1 15.0 20.3 22.8 10.8 8.7 19.9 15.9 4.0Other Consumer Goods 15.3 7.4 (2.2) 5.1 11.6 14.2 17.1 18.0 10.6 7.4 10.4 8.2 7.4F uels 29.0 18.1 (14.8) (4.5) 10.8 9.0 15.1 14.4 6.0 0.9 1.5 (1.2) (0.7)Supermarkets 12.7 9.7 5.6 1.2 2.9 8.2 10.9 13.9 12.6 8.1 7.2 6.4 6.1F ood, A lcoholic Drinks & Tobacco 12.5 10.6 3.1 4.1 11.5 7.8 5.8 8.6 3.1 2.6 2.4 4.5 6.8Medicines & Cosmetics 11.8 11.8 8.5 10.2 15.4 20.6 22.3 20.8 17.0 13.1 13.2 10.6 8.7

Ret ail Sales V alue 16 .0 5 .5 (4 .5 ) 5 .8 17 .9 18 .7 24 .4 25 .3 13 .1 6 .8 15 .0 7 .1 (0 .2 )

Hong Kong retail sales breakdown (monthly)

R e ta i l s a l e s g ro wth (Yo Y, % )Ca te g o r i e s Ja n -Fe b 1 3 M a r-1 3 Ap r-1 3 M a y-1 3 Ja n -Fe b 1 4 M a r-1 4 Ap r-1 4 M a y-1 4Jewe lle ry, Watches, Clocks & Va luable Gift 20.5 11.2 68.5 34.3 5.2 (8.8) (39.9) (24.5)Clothing, Footwear & Allied Products 9.2 13.2 5.0 11.4 9.6 4.7 11.7 5.0Consumer Durable Goods 37.0 15.2 0.7 (9.3) 5.4 (15.2) (6.6) (5.2)Department Stores 13.5 19.9 21.9 23.8 8.7 1.9 (2.1) 2.3Other Consumer Goods 9.3 4.8 10.3 14.3 8.3 7.6 6.3 6.4Fue ls 0.3 1.0 1.7 (3.2) 1.9 (5.9) (0.6) 0.0Supermarkets 8.9 5.3 6.9 5.9 4.9 7.9 6.8 6.4Food, Alcoholic Drinks & Tobacco 4.6 (3.7) 4.4 3.7 6.4 9.7 5.4 6.5Medicines & Cosmetics 13.6 5.4 13.2 19.2 9.5 7.5 8.7 8.0

R e ta i l Sa l e s Va l u e 1 5 .8 9 .8 2 0 .7 1 2 .9 6 .7 (1 .5 ) (9 .9 ) (4 .1 )

Source: CEIC

Industry Focus

Consumer Sector

Inflation of consumer goods in Hong Kong

Food Inflation in Hong Kong

90

95

100

105

110

115

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Previous year = 100

90

95

100

105

110

115

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Previous year = 100


Consumer confidence index in Hong Kong

Unemployment rate in Hong Kong

60

70

80

90

100

110

120

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

0%

1%

2%

3%

4%

5%

6%

7%

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14


Industry Focus

Consumer Sector

Growth in nominal payroll in Hong Kong

-4%

-2%

0%

2%

4%

6%

8%

10%

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Y-o-Y

Source: CEIC

Hong Kong Properties - Secondary market transaction volume

Hong Kong Properties – Private retail shop price index

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Jan

-09

Ap

r-0

9Ju

l-0

9O

ct-0

9Ja

n-1

0A

pr-

10

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1Ju

l-1

1O

ct-1

1Ja

n-1

2A

pr-

12

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3Ju

l-1

3O

ct-1

3Ja

n-1

4A

pr-

14

No of unitsJun-14

4.1% m-o-m27% y-o-y

6M14

-11.3% y-o-y

50

100

150

200

250

300

350

400

450

500

550

Jan

-93

Jan

-94

Jan

-95

Jan

-96

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Price Index (1999=100)

Apr-140.4% m-o-m

0% y-o-y

Source: Centaline Property Agency Source: Rating & Valuation Department of HKSAR

Industry Focus

Consumer Sector

Total tourist arrival in Hong Kong (monthly)

Total tourist arrival in Hong Kong (annual)

-20%

-10%

0%

10%

20%

30%

40%

50%

0

1,000

2,000

3,000

4,000

5,000

6,000

Au

g-0

8D

ec-0

8A

pr-

09

Au

g-0

9D

ec-0

9A

pr-

10

Au

g-1

0D

ec-1

0A

pr-

11

Au

g-1

1D

ec-1

1A

pr-

12

Au

g-1

2D

ec-1

2A

pr-

13

Au

g-1

3D

ec-1

3A

pr-

14

Tourist arrival (LHS) Y-o-y (RHS)

'000

29,59136,030

41,92148,615 54,299

24,0370.3%

21.8%

16.4% 16.0%

11.7%13.6%

0%

5%

10%

15%

20%

25%

0

10,000

20,000

30,000

40,000

50,000

60,000

2009 2010 2011 2012 2013 5M14

Tourist arrival (LHS) Y-o-y (RHS)

'000


PRC tourist arrival in Hong Kong (monthly)

PRC tourist arrival in Hong Kong (annual)

-20%-10%0%10%20%30%40%50%60%

0 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

Au

g-0

8D

ec-0

8A

pr-

09

Au

g-0

9D

ec-0

9A

pr-

10

Au

g-1

0D

ec-1

0A

pr-

11

Au

g-1

1D

ec-1

1A

pr-

12

Au

g-1

2D

ec-1

2A

pr-

13

Au

g-1

3D

ec-1

3A

pr-

14

Tourist arrival: PRC (LHS) Y-o-y (RHS)

'000

17,95722,684

28,10034,911

40,745

18,427

6.5%

26.3%23.9% 24.2%

16.7% 17.6%

0%

5%

10%

15%

20%

25%

30%

0

5,000 10,000 15,000

20,000 25,000

30,000 35,000

40,000 45,000

2009 2010 2011 2012 2013 5M14

Tourist arrival: PRC (LHS) Y-o-y (RHS)

'000


Industry Focus

Consumer Sector

Macau retail sales (quarterly)

Macau retail sales (annual)

0%

10%

20%

30%

40%

50%

60%

0 2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000 20,000

Mar

-08

Jun

-08

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

Dec

-10

Mar

-11

Jun

-11

Sep

-11

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Retail Sales (LHS) Growth y-o-y (RHS)

MOP m

2231

4354

66

18

15.3%

36.8%

42.1%

23.1% 23.6%

15.3%

0%

5%10%

15%20%25%

30%35%

40%45%

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013 1Q14

Retail Sales (LHS) Growth y-o-y (RHS)

MOP bn


Macau retail sales breakdown

Gro wth y-o -y (% )1 H0 8 2 H0 8 1 H0 9 2 H0 9 1 H1 0 2 H1 0 1 H1 1 2 H1 1 1 H1 2 2 H1 2 1 H1 3 2 H1 3 1 Q 1 4

Motor Vehicle s 27 (30) (27) 20 57 36 24 43 36 9 13 20 (4)Motorcycle s, Pa rts and Accessorie s (6) 6 13 29 9 (12) (3) (3) (12) (6) (1) 18 28Automotive Fue ls 33 26 (26) (18) 21 9 26 32 23 14 2 1 1Goods in Supermarkets 30 22 8 11 10 12 26 20 28 28 10 16 25Goods in Department Stores 35 55 41 40 40 27 37 47 40 25 25 26 22Poultry, Frozen Meat and Roasted Meat 29 33 30 11 (17) 12 16 23 79 44 (6) 9 18Dried Seafood 33 (4) 25 64 15 21 20 13 15 12 (1) 6 37Goods in Pharmacy 27 16 2 12 24 27 53 62 24 17 26 22 11Cosmetic, Beauty Products and Sanita ryArticle s 34 23 8 16 28 43 54 26 5 22 39 18 7Adults Clothing 39 36 16 34 41 28 39 41 38 26 12 24 19Footwear 76 45 13 5 35 51 35 53 25 5 24 9 5Household Electric Appliances 13 0 0 18 27 16 3 10 35 13 5 10 47Furniture and Lighting 8 39 21 47 11 (21) 10 14 22 25 2 9 (4)Watches, Clocks and Jewe lle ry 93 44 24 42 67 60 52 61 49 12 23 36 15Fue ls for Household Use 39 8 (42) (34) 26 21 15 3 8 6 1 6 12Communica tion Equipment 96 50 6 15 21 8 39 55 (4) (28) 19 55 14Others 44 40 (29) (40) (5) 13 277 268 16 14 28 28 13

Source: CEIC

Industry Focus

Consumer Sector

Macau retail sales breakdown (quarterly)

Gro wth y-o -y (% )1 Q 1 3 2 Q 1 3 3 Q 1 3 4 Q 1 3 1 Q 1 4

Motor Vehicle s 39.7 (8.8) 24.6 15.4 (3.7)Motorcycle s, Parts and Accessorie s 1.8 (3.9) 16.7 19.6 27.6Automotive Fue ls 4.0 (0.7) 2.2 (0.7) 1.1Goods in Supermarke ts 5.1 15.6 16.1 15.0 25.4Goods in Department Stores 23.7 26.1 25.0 27.2 21.9Poultry, Frozen Meat and Roasted Meat (11.3) 0.0 12.7 6.5 18.2Dried Sea food 12.5 (12.3) 5.5 6.3 37.0Goods in Pha rmacy 24.6 26.4 20.7 24.3 11.0Cosmetic, Beauty Products and Sanita ry Artic les 35.5 43.6 20.2 15.9 6.7Adults Clothing 5.1 21.0 24.8 22.8 19.4Footwear 29.3 17.5 13.5 5.8 4.9Household Electric Appliances 4.8 5.0 (0.5) 20.9 46.6Furniture and Lighting 2.1 2.1 14.9 2.1 (4.2)Watches, Clocks and Jewe lle ry 15.3 31.2 37.3 35.5 15.4Fue ls for Household Use 4.3 (2.7) 1.9 9.7 12.2Communication Equipment 22.6 16.0 46.0 63.2 13.5Others 28.0 27.4 30.6 25.0 12.9

Source: CEIC

Industry Focus

Consumer Sector

Total tourist arrival in Macau (monthly) Total tourist arrival in Macau (annual)

-10%

-5%

0%

5%

10%

15%

20%

25%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Total tourist (LHS) Growth y-o-y (RHS)

'000 persons

22 25 28 28 29

13-5.1%

14.8%12.2%

0.3%

4.4%

8.8%

-10%

-5%

0%

5%

10%

15%

20%

0

5

10

15

20

25

30

35

20

09

20

10

20

11

20

12

20

13

5M

14

Total tourist (LHS) Growth y-o-y (RHS)

'000 persons


PRC tourist arrival in Macau (monthly) PRC tourist arrival in Macau (annual)

-10%-5%0%5%10%15%20%25%30%35%40%45%

0 200 400 600 800

1,000 1,200 1,400 1,600 1,800 2,000

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

China tourist (LHS) Growth y-o-y (RHS)

'000 persons

1113

16 17 19

9

-5.3%

20.4% 22.2%

4.6%

10.2%

15.8%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

0 2 4 6 8

10 12 14 16 18 20

20

09

20

10

20

11

20

12

20

13

5M

14

China tourist (LHS) Growth y-o-y (RHS)

'000 persons


Industry Focus

Consumer Sector

DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Vickers (Hong Kong) Limited (“DBSVHK”), a direct wholly-owned subsidiary of DBS Vickers Securities Holdings Pte Ltd ("DBSVH"). This report is intended for clients of DBSV Group only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVHK. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSVHK and/or DBSVH) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. DBSVHK accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. DBSVH is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. DBSVHK, DBS Bank Ltd and their associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by DBSVHK and/or DBSVH (and/or any persons associated with the aforesaid entities), that:

a. such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and

b. there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. ANALYST CERTIFICATION The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the analyst and his / her spouse and/or relatives and/or associate who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities, directorships and trustee positions).

Industry Focus

Consumer Sector

COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBSVHK and its subsidiaries do not have a proprietary position in the securities recommended in this report as of the date the report is

published.

2. DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates may beneficially own a total of 1% or more of any class of common equity

securities of the subject companies mentioned in this document as of the latest available date of the updated information.

3. Compensation for investment banking services: DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services from Time Watch Investments Limited (2033 HK) mentioned in this document.

DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or

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Wong Ming Tek, Executive Director, ADBSR

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