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1、1/12,2/12,3/12,4/12,5/12,6/12,7/12,8/12,9/12,10/12,11/12,12/12,EquityResearchReport/Wholesale&RetailSector,2,059,16,0.77,62,12.4,32.3,1,78.21,Maoye International Holdings Limited(00848.HK)Cross-regional expansion viadevelopment of complexes,16 Jan 2013Investment HighlightsMedium-to-high-end departme
2、nt store aiming at cross-regionaldevelopment.A medium-to-high-end chain department store,Maoyerealized sales of Rmb5.4 billion in 1H12.The CAGR since 2008 is 33.5%,indicating high growth.Currently,its 37 stores are located in 18 cities,9provinces in South,Southwest,East and North China,We believe th
3、atMaoye can expand steadily and achieve cross-regional scale advantages in,BUY(Initiation)Share Price:HK$1.76Target Price:HK$2.54CSI Research DepartmentXueqin ZhaoTel:(8621)68762787Email:Price Chart,the long run.SSSG steadily driven,promising expansion via Complexes.The anchorstores of Maoye are loc
4、ated in the cities which have excellent consumptioncapacity.The effective distribution and innovative marketing(VIP/O2O etc.)co-drive organic growth.Its average SSSG of 2010-12M9(16.7%)leads thepeers.With the rich experience of its parent company in propertydevelopment,Maoye has 10 City complex proj
5、ects reserved in 2nd and 3rdtier cities.Approximately 2-5 stores are expected to open every year,serving,Turnover(HK$mn)140120100806040200,Maoye IntlMSCI-China,(HK$)2.62.42.22.01.81.61.41.21.0,as a catalyst.,Advantage built through own properties,efficiency improved by great,Source:Bloomberg,CSI,gov
6、ernance.Maoyes major anchor stores have occupied high-qualitycommercial districts,most of which are basically self-owned properties,showing clear first-mover advantages.By 1H12 the proportion of self-ownedarea accounted for 65.5%of the total,and an additional 26.7%leasedproperties were owned by the
7、parent company,effectively reducing rentappreciation risk.It also demonstrated governance advantage,as indicatedby the 32.2/9.3ppt increase in profit margin of Chengshang Group and BohaiLogistics after they were acquired by Maoye.Revenue rallies and profitability stays low in short-term.The revenueg
8、rowth for Maoye in 1H12 was just 1.9%.However,as the retail revives andnew stores become mature,especially with the completion of the,Latest Key DataMSCI-ChinaFF no of shares(mn)FF(%)FF market cap(HK$mn)52 week high/low(HK$)12M daily turnover(HK$mn)12M volatility(%)PEG FY12-14E(%)RoE avg FY12-14E(%)
9、P/B FY12ENet debt/equity FY12E(%),5,9641,17021.792.42/1.131.40,complexes,the overall growth in revenue is likely to increase.We expect a2-year revenue CAGR of 28.8%for 12-14E,while the consecutive impactsfrom new channels(e-commerce/shopping mall)may drag downcommission rate(17.0%/16.8%/16.7%,foreca
10、sted),and period expense,Performance(%)AbsoluteRel to MSCI-China,1M1811,YTD11,12M(11)(22),rate(16.6%/16.9%/17.1%,forecasted)may stay high at early stage of,property projects.In short term,profitability might stay low and earningsgrowth may fall behind revenue growth,with a 2-year CAGR of 16.9%.Poten
11、tial risks：Sluggish consumption;competitive impact from newchannels;slow-down in the construction of complex projects.,Major Shareholder(%)Maoye Department StoreInvestment LimitedAuditor,ERNST&YOUNGIMPORTANT DISCLOSURE AT THE END OF THIS REPORT,Maoye International Holdings Limited(00848.HK)Earnings
12、forecast,valuation and investment rating：We project Maoyes EPS for 2012/13/14E atHK$0.18/0.17/0.20,respectively.The projected EPS from property business is HK$-0.03/-0.02/-0.02,and projectedcore EPS of the commerce part is HK$0.17/0.19/0.22 in 2012/13/14E(in 1H12 there was an extraordinary income of
13、Rmb0.18 billion from selling equity in Shenguoshang,which is excluded here),with a 2-yr CAGR of 13.11%.Given aPEG of 1X we obtain the value per share of HK$2.28.By applying NAV we obtain the intrinsic value of propertyprojects at HK$0.26 per share.With sum-of-parts valuation,we set the target price
14、at HK$2.54,and initiate coveragewith a“BUY”rating.Investment Summary,Item/YearTotal operating revenue(Rmb mn)Change(%)Profit for owners(Rmb mn)Change(%)EPS(Rmb)EPS(HK$)Change(%)PEOCF per share(HK$)Price-to-OCF per shareEV/EBITDADividend per share(HK$)Yield(%),20102,74886.0257752.090.110.1352.09130.3
15、84.612.520.021.02,20114,12350.0364011.050.120.1511.05120.199.49.220.063.35,2012E4,3796.2076519.450.140.1819.45100.1214.97.650.031.51,2013E5,77331.83739-3.380.140.17-3.38100.424.27.450.031.45,2014E7,27025.9488519.820.160.2019.8290.742.46.350.031.74,Source:Company announcement,CSI,Note:Closing price a
16、s of 15 Jan.2013,exchange rate at HK$=Rmb0.8,IMPORTANT DISCLOSURE AT THE END OF THIS REPORT,IN,TO,ck,hy,65,fa,up,Rm,re,h.,s,Rm,s),g.an,75,08,1,ru,TH,Maooye International Holdings Limited(008488.HK),HIGH-END DEPAARTMENT,S ORE,NGAGED,CROSS-REGIONAL,DEVELOPMMENTMaoye Internatiional Holding was set up i
17、n Cayman Island on Auugust 8th,20007,thand went public on the Honng Kong Stoc Exchange on May 5,2008.Its maainbussiness focuses on deparrtment store industry and it has two major brands,nammely Maoye Department Store and Peoples Malll.Maoye opeens departmeentstores in wealth regions with high ecoono
18、mic growwth in China,particularly inGuangdong,Sichuan,Shanndong and Pan-Bohai Seea Area.As of 1H12,it had37 stores in tottal,in 18 citties of 9 provinces,with total GFA of 1.123 millionsquuare meters and self-ownned property area ratio was nearly 5.5%.Fig.1：Maoyes geographic distribution of stores(J
19、un.20112)Source:Company annnouncement,CSIMaoye Departtment Store mainly ells mediumm-high end domestic andinteernational ashion brandds,particularrly clothing and cosmettics,consisteentwith the current trend of pgrading consumption.The company realized salesrevvenue of mb5.4 billion in 1H12(saales i
20、ncome from franchhise and directsale amounted to Rmb4.666 billion/740 million,espectively).The CAGR ofsale since 20008 reached 33.5%and maintains its fast growth In addition todeppartment stoore business since 201 Maoye has develope its propeertybussinesses effeectively.In 20010/2011/1HH12 it realiz
21、eed property sales income ofmb46/95/64 million,respeectively,and several propperty projects are expecttedto be open for booking in 012-2014E,which may heelp further inccrease the otalrevvenue.,Fig.2：Sales breeakdown(cateegory of goods,Fig 3：Sales nd operating revenue(Rmb10,000),100.0%,ApparelShoes a
22、n d leather goods,Cosmetics and jewelryChildrens wear,toys and others,1200000,Total saleSales_yo,Total operating revenueRevenue_yoy60%,90.0%,22.0%,20.9%,23.5%,22.5%,1,042,986,80.0%,1000000,50%,70.0%60.0%,14.0%,13.4%,12.9%,13.1%,800000,726,669,40%,50.0%,19.0%,19.7%,20.2%,21.2%,600000,485,474,539,783,
23、30%,40.0%30.0%20.0%,45.0%,46.0%,43.3%,43.2%,400000200000,379,758 399,57161,139 171,173 183,208,274,83,412,335,213,288,20%10%,10.0%,0.0%,2009,2010,2011,2012H1,0,2007,200,2009,2010,2011,2012H1,0%,Source:Company annnouncement,CSI,Source:Company announcement,CSI*note:in 2010 vehicle ales,bussiness was d
24、ispoosed of,vehicle sales has been uled outIMPPORTANT DISCLOSURE AT HE END OF THIS REPORT,2,Maoye International Holdings Limited(00848.HK)The actual controlling shareholder of the company is HUANG Maoru andZHANG Jing with total shareholding of 79.14%.The founder/board of director/CEO Huang Maoru has
25、 rich experience in commercial estate and departmentstore industry.Maoye became the controlling shareholder of A-share listedfirms Chengshang Group and Bohai Logistics in 2005 and 2009,respectively,holding 68.05%and 46.70%in the companies currently.Fig.4：The company structure of Maoye,MOY Internatio
26、nal,HUANG Maoru，,Others,Holdings Limited100%,100%,ZHUANG Jing,Maoye Department Store,0.93%,20.86%,Investment Limited78.21%Maoye International Holdings Limited（00848.HK）,68.05%Chengshang Group（600828.SH),46.70%Bohai Logistics（000889.SZ),Source:Company announcement,CSIIMPORTANT DISCLOSURE AT THE END O
27、F THIS REPORT,3,Maoye International Holdings Limited(00848.HK)COMPETITION LANDSCAPE OF THE TARGETED REGIONSSouth China and Shenzhen Region:high consumption capacity andfierce competition.Maoye has six department stores in Shenzhen and one inZhuhai,all of which are in Guangdong Province.In 2011 the G
28、DP ofGuangdong stood at Rmb5.3 trillion,ranking first in China.As one of theSpecial Economic Zones,Shenzhen is widely regarded as a region withexcellent consumption capacity.In 2011 the disposable income per capita andconsumption expenditure per capita of the city reached Rmb36,500/24,080respectivel
29、y,far exceeding the national(Rmb14,582/10,317)and Guangdongprovincial(Rmb21,026/15,721)level.In addition,Shenzhen is also whereMaoye originated and has its headquarters.The strategy of penetratingShenzhen and nearby region enables the company to benefit from the highconsumption capacity of the local
30、 market.In terms of growth,the past 3-year CAGR of disposable income per capita andconsumption expenditure per capita in Shenzhen is 10.9%/6.8%,lower than thenational(13.6%/12.6%)and Guangdong provincial(12.3%/10.6%)growth rate.We believe that the relatively low rate of growth is due to the high bas
31、e effect,and we project that the sales growth of South China region will slow down.,Fig.5：Consumption per capita of Shenzhen(Rmb),Fig.6：Disposable income per capita of Shenzhen(Rmb),30,00025,000,Consumption per capita_ShenzhenConsumption per capita_GuangdongConsumption per capita_National average,24
32、,080,40,00035,000,Disposable income per capita_ShenzhenDisposable income per capita_GuangdongDisposable income per capita_National average,36,505,30,000,20,00015,00010,000,15,72110,317,25,00020,00015,000,21,02614582,10,000,5,0000,5,0000,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011,2002,2003,200
33、4,2005,2006,2007,2008,2009,2010,2011,Source:Wind,CSI,Source:Wind,CSI,The competition in the traditional department store industry in Shenzhen isquite fierce,and currently is in a stage of oligarch competition with Rainbow,Jiahua,Maoye,Shirble and Haiya.From the perspective of commercial area,Maoye h
34、as 162 thousand square meters area from 6 stores,taking up about14.7%of the total local supply area in traditional department store industry andis ranked third.Apart from traditional department stores,it has abundantbusiness resource such as shopping centers and now there are about 18 largeshopping
35、centers already in business with total area of 820 thousand squaremeters,expected to enjoy over 10%annual growth rate.Under the currentstate of satiated supply,limited space and fierce competition,the companysmarket share in Shenzhen is expected to remain steady.IMPORTANT DISCLOSURE AT THE END OF TH
36、IS REPORT,9,634,0,4,Maoye International Holdings Limited(00848.HK),Fig.7：Department store market in Shenzhen,Table 1：Profile of TOP5 department store in Shenzhen,Market share in terms of commercial area,Name,Total Area,Stores Information,HAIYA,Others,6.8%,Rainbow,About 470thousand m2,21stores,mainly
37、 located in BaochengBusiness Zone,Baoan District andNanshan Business Zone,Nanshan District.,Dept.,6.4%,ShirbleDept.,11.2%,RainbowDept.,Jiahua,About 200 13 stores,9 located in Baocheng Businessthousand m2 Zone.,42.7%,Maoye,14.7%,Jiahuastores,18.2%,MaoyeShirble,About 162 6 stores:Huaqiangbei,Dongmen,A
38、olai,thousand m2 Nanshan,Shennan、Youyi。About 123 7 stores:Jingtian,Mingxing,Longgang,thousand m2 Hongling.,Jufu,Wanxiang,Huahaoyuan.,Haiya,About 70thousand m2,2 stores:Baoan,Nanshan,Source:Announcement of each company,CSI*note:only traditionaldepartment stores count here.,Source:Announcement of each
39、 company,CSI,Southwest China：Promising consumption potential in Sichuan,tightcompetition in Chengdu.The company operates in Sichuan under the dualbrand name of Maoye Department Store and Peoples Mall.Five out of the 10stores of Maoye in Southwest China are located in Chengdu and the other 5are in Mi
40、anyang,Nanchong and Luzhou.Benefiting from the MideastDevelopment Scheme,Sichuan enjoys higher consumption growth thannational average even through it has relatively low consumption base.Therecent 3-year CAGR of sales growth in Chengdu/Luzhou/Mianyang/Nanchongis 20.8%/20.5%/19.8%/19.8%respectively,h
41、igher than the Sichuan andnational average level(17.6%/17.0%).,Fig.8：Disposable income/Consumption per capita of each cityMaoye has operation in Sichuan,Fig.9：Growth of consumer goods sales of each city Maoye hasoperation in Sichuan,Chengdu,Mianyang Luzhou National average,Nanchong,Sichuan,25.0%,25,
42、000,20.8%,20.5%,19.8%,19.8%,20,000,19,920,20.0%,17.6%,17.0%,15,00010,000,15,51615,50514,58212,63811,052,14,43012,26811,29310,317,8,449,15.0%10.0%,5,000,5.0%,Disposable income per capita,Consumption per capita,0.0%,Chengdu,Luzhou,Mianyang Nanchong,Sichuan,Nationalaverage,Source:Wind,CSI*note:data of
43、2011,Source:Wind,CSI*note:most recent 3-yr CAGR,Chengdu,capital city of Sichuan,plays a leading role in consumption base inthe province.Its retail sales of consumer goods accounted for 38.3%of thetotal amount of Sichuan in 2011,and still maintains a steady growth.Thecompetition within the city appea
44、rs to be fierce.Department stores like ITOYOKADO,Renhe,Maoye,MALL,Wangfujing,PACIFIC,Parkson occupy thecore business zone in Chunxi Road,Yanshikou and Tianfu Square.Their totaloperating area amounts to over 50 thousand square meters,demonstratingintensive competition among them.In terms of operating
45、 area,Maoye(Chengshang)only has less than 10%market share in Chengdu.In spite of thefierce competition,we believe with the fast-growing regional consumptiondemand,the major players still can realize common developments viadifferentiated competition strategies.IMPORTANT DISCLOSURE AT THE END OF THIS
46、REPORT,5,Maoye International Holdings Limited(00848.HK)Table 2：Overview of Major Department Store Enterprises in Chengdu,NameITOYOKADORenhe SpringMaoyeMALLWang fujingPACIFIC,Total areaAbout150,000 m2About100,000 m2About70,000 m2About60,000 m2About60,000 m2About60,000 m2,Stores Information5 stores:on
47、e in Jingjiang District and one inWuhou District.3 stores:Rendong,Zongbei,Guanghua.5 stores:Yanshikou,Beizhan,Wuhou,Wenjiang,Longquanyi.3 stores:Tianfu,Shawan,New Times2 stores:Chunxi Road,2nd Ring Road2 stores:Chunxi Road,Quanxing,Brief IntroductionEntered Chengdu in 1996,aiming at community depart
48、ment store withlongstanding brand image,but is affected by several waves ofanti-Japanese protests.Targets high-end market,complies with international standard in product,store environment and management system.The Rendong store realizessales avenue over Rmb1.6 billion in 2011.Operates with dual bran
49、ds of Maoye Store and People Store.Peoples Mallis affiliated with Chengshang Group.Affiliated fully with SichuanYangyang Department Store.The Tianfu store isin Tianfu square business zone with excellent location.Chunxi Road store plays the leading role in Chengdu department storeindustry.It ranks th
50、e first for several years in Chengdu in sales revenue withannual sales income of Rmb3.5 billion in 2011.Affiliated with Taiwan Fareast Group,among the earliest foreign departmentstore in Chengdu.Chunxi Road store has annual sales income over Rmb1billion.,In addition,there are also Chengbai,Guangbai,
