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29 Jan, 2015 (Thursday)


WISDOM GROUP(1661)
Analysis:
Mainland sports event is stepping into a rapid growth period. One reason is policy support. What`s more, when per capita GDP reaches above USD 5000, expenditures of people on cultural and sports entertainment will increase. In respects of quantity and quality of Marathon races operated, Wisdom Group has grown into a leading sports event operator in the industry. In terms of 2012-2013, sports business presented a trend of high growth and high profit, which would become a major growth point of the company in the middle or short term. In 2014 Wisdom Group has successively established cooperative partnership with 12 relevant provincial or municipal departments in charge of sports including that of Beijing and Shanghai, all these contracts ensure that in the next two to four years, Wisdom Group will hold no less than 640 massively covered sports competitions annually, which will support mid and long term development. At present, the company is traded at around 13X 2015EPS, which does not reflect its high growth in our view.
Strategy:
Buy-in Price: $4.74, Target Price: $6.55, Cut Loss Price: $4.20


Lifestyle International (1212.HK) - Worth anticipation

Company Profile

The business of Lifestyle mainly focuses on department stores operated in Hong Kong and Mainland China respectively by SOGO and JiuGuang. Two SOGO department stores of Lifestyle are SOGO Causeway Bay store and SOGO TST store, among which SOGO TST store was newly opened in December 2014. The company runs four department stores under the brand "JiuGuang" in Mainland China, located in Shanghai, Suzhou, Dalian and Shenyang respectively.

Summary

-From 2009 to 2013, the total revenue of Lifestyle rose from 3.756 billion to 5.96 billion HKD, with a compound growth rate at 12.2%, in which, the revenue in Hong Kong grew from 3.06 billion to 4.73 billion HKD, with its compound growth rate at 11.5%; and the revenue in Mainland China increased from 697 million to 1.23 billion HKD, with its compound growth rate at 25.2%.

-On the whole, Hong Kong is still a major source of income for Lifestyle. In 2013, the proportion of revenue in Hong Kong market reached 79%, while that in Mainland China was 21%, and for the business performance in H1 of 2014, the proportions of income in Hong Kong and Mainland China were 72% and 28% respectively.

-In December 2014, Lifestyle announced that the family of Thomas Lau Luen-hung and Qatar Investment Authority (QIA) bought 16.14% of the shares of Lifestyle held by Chow Tai Fook (CTF) at a price of 14.75 HKD per share. After the transaction, holdings of Lao Family Group grew to 815 million shares, with a shareholding ratio of 50.14%, and holdings of QIA as the second-largest shareholder rose to 371 million shares with its shareholding ratio of 22.78%.

-In the fourth quarter of 2014, business in Hong Kong might exceed expectations. Although "Occupying the Central " has negative influence on the retail industry in Hong Kong, many signs show that SOGO Causeway Bay store may exceed original market expectations of the growth plateauing. In addition, we also have positive expectations on SOGO TST store.

-Recently, some changes in the fundamental aspects of Lifestyle mainly include important shareholder turnover, normal operation of SOGO Causeway Bay store in the mid-late November, as well as SOGO TST store after reopening. We think that the Lifestyle is returning to normal operation from being forced to change the address of Causeway Bay store and the "Occupying the Central" event of Hong Kong.

-In our opinion, Lifestyle's brand value and management team deserve a better valuation. In the future, with a better atmosphere of commercial retail in Hong Kong and Mainland China, we believe that the valuation of Lifestyle is expected to recover. Lifestyle is allowed to "Accumulate" ratings with a 12-month target price of 16.50 HKD, equivalent to 12 times of P/E in 2015.

Financials

Click Here for PDF format...




Recommendation on 29-1-2015
RecommendationAccumulate
Price on Recommendation Date$ 15.160
Suggested purchase priceN/A
Target Price$ 16.500
Writer Info
Chen Geng
(Research Analyst)
Tel: +8621 51699400-107
Email:
chengeng@phillip.com.cn

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Phillip Research - Hong Kong 輝立研究部 – 香港及中國
Company Stock Code Last Update Suggestion Target Price Price on Recom
Mainland Financial Xingyu Chen (86) 2151698900-105chenxingyu@phillip.com.cn
China Galaxy Securities688127/01/2015Buy12.58.74
Haitong Securities683720/01/2015Buy23.915.36
Transportation and Automobiles Zhang Jing (86) 2151699200-103zhangjing@phillip.com.cn
CSR176623/01/2015Cautious Accumulate11.4610.36
SAIC Motor60010416/01/2015Accumulate28.824.67
Mainland Property Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
YUEXIU PROPERTY12322/01/2015Accumulate1.61.55
GREENTOWN CHINA390015/01/2015Buy107.34
Insurance Xingyu Chen (86) 2151699400-105chenxingyu@phillip.com.cn
CPIC260111/11/2014Buy33.728.1
New China Insurance133615/08/2014Buy36.628
Properties  
FORTUNE REIT77814/10/2014Accumulate7.326.92
Hysan Development001418/03/2014Accumulate36.833.35
Hotels and Entertainment Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
Wisdom Group166105/01/2015BUY6.554.6
Galaxy Entertainment2719/11/2014Accumulate5651.75
New Energy  
Dynagreen Env133028/01/2015Accumulate54.48
United PV68621/01/2015Neutral11
Food, Beverage and Retail  
Lifestyle International121229/01/2015Accumulate16.500.000
CSPC109326/01/2015Accumulate7.776.7
Telecommunications  
TCL Communication Tech261816/12/2014BUY10.137.5
Coolpad Group236910/12/2014Buy1.921.59
Oil and Gas Geng Chen (86) 2151699400-107chengeng@phillip.com.cn
CIMC ENRIC389927/10/2014Buy107.67
Anton Oilfield Service333710/10/2014Neutral2.22.29
Software & Service  
KINGDEE INT`L26802/12/2014Accumulate2.752.45
Tencent Holdings70027/11/2014Accumulate136125.7

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