china retail â€“ department store s & brand retailers

Find the best China retail player during eco

China retail – Department Stores

September - October 2012

Sarah Xing – NIHK+852 2252 [email protected]

See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.

Any authors named on this report are research analysts unless

otherwise indicated.

Equity Researchonomic downturn

s & Brand Retailers

Source: Bloomberg, Nomura estimates, closing price here and throughout this presentation as at Sep 21 2012, unless

Valuation table for China retail companies

Name Bloomberg ticker

Nomura rating

Market cap

(US$mn)Closing price CY12F

Brands:SportswearAnta Sports Products 2020 HK N.R. 1,763.1 5.48 8.0China Dongxiang Group 3818 HK N.R. 628.5 0.88 14.6Li Ning 2331 HK N.R. 553 4.06 naPeak Sport Products 1968 HK N.R. 349 1.29 4.7XTEP International Holdings 1368 HK N.R. 724 2.58 5.1361 Degrees International 1361 HK N.R. 517 1.94 3.6 Mcap Weighted Average 7.7

Brands:FootwearBelle International Holdings 1880 HK Buy 15,427 14.18 21.6 Daphne International Holdings 210 HK Buy 1,672 7.87 13.8 Le Saunda Holdings 738 HK N.R. 174.0 2.11 8.2C.banner International 1028 HK N.R. 691.4 2.68 13.6Mcap Weighted Average 20.4

Brands: ApparelBosideng International Holdings 3998 HK N.R. 2,262 2.19 9.8 Trinity 891 HK Buy 1,185 5.35 16.6 China Lilang 1234 HK Reduce 678.4 4.38 6.4Boshiwa International Holding 1698 HK N.R. 449.7 1.68 6.8Ports Design 589 HK Neutral 442 6.15 7.2 Giordano International 709 HK N.R. 1,238 6.23 12.5 IT 999 HK Buy 508.5 3.21 7.2Evergreen International 238 HK N.R. 190.9 1.56 6.9YGM Trading 375 HK N.R. 362 16.92 8.2 Glorious Sun Enterprises 393 HK N.R. 310 2.27 13.4 Embry Holdings 1388 HK N.R. 206.1 3.86 11.0Mcap Weighted Average 10.5

P/E

1

otherwise noted.

Net Margin(%)

CY13F CY12F CY13F CY12F CY13F CY12F CY13F CY12F CY13F CY12F CY12F

10.1 1.6 1.5 3.9 4.8 7.9 6.3 20.9 15.5 17.7 n.cash13.5 0.6 0.5 na na 3.5 4.1 3.5 3.5 13.9 n.cashna 1.0 1.0 7.3 4.3 0.7 1.4 1.3 4.2 (0.5) 3.05.0 0.5 0.5 na na 6.2 5.7 11.1 10.3 13.7 n.cash6.1 1.0 1.0 2.2 2.6 9.7 7.9 21.8 16.3 16.3 n.cash3.4 0.6 0.6 0.4 0.4 12.7 13.3 20.4 19.8 16.2 n.cash8.6 1.1 1.0 3.6 3.6 7.1 6.4 15.4 12.7 14.3

18.1 4.3 3.6 13.7 11.1 1.4 1.7 22.6 22.7 14.1 n.cash11.6 2.7 2.2 7.0 5.3 2.4 3.0 23.7 24.0 10.0 n.cash7.7 na na na na 5.5 6.0 13.5 13.0 9.9 n.cash10.6 na na 8.3 6.6 1.8 2.4 na na 12.5 n.cash17.1 4.1 3.5 12.9 10.4 1.6 1.9 22.6 22.7 13.6

9.3 1.9 1.8 6.2 5.5 7.4 7.5 19.6 19.6 15.8 n.cash14.5 2.6 2.5 11.0 8.8 4.3 5.0 16.6 18.3 17.9 n.cash8.0 1.7 1.7 3.1 3.7 10.2 8.2 29.7 21.9 21.8 n.cash5.4 0.8 0.7 1.8 1.4 4.3 6.4 na na 14.6 n.cash6.6 1.5 1.4 3.5 3.3 10.4 9.9 21.4 22.1 18.4 n.cash11.0 3.2 3.1 8.3 7.1 6.0 6.7 26.6 27.9 12.4 n.cash6.2 1.5 1.3 4.2 3.6 5.6 6.5 22.6 22.5 8.2 n.cash6.2 0.8 0.7 0.5 0.5 6.8 7.5 11.5 12.4 20.9 n.cash8.5 1.7 1.6 5.1 4.4 11.9 7.1 35.5 22.5 22.8 n.cash11.4 1.0 1.0 2.9 2.5 7.5 7.9 7.3 8.7 2.6 n.cash9.2 na na 7.3 6.1 2.8 3.4 11.0 12.0 7.1 n.cash9.6 2.0 1.9 6.1 5.3 6.9 7.0 21.4 20.6 15.4

P/B EV/EBITDA Div yld (%)E Net debt to equity (%)ROE(%)

Source: Bloomberg, Nomura estimates, closing prices here and throughout this presentation as at Sep 21 2012, unless

Valuation table of China retail companies

Name Bloomberg ticker

Nomura rating

Market cap

(US$mn)Closing price CY12F CY

Retailer: Department StoreParkson 3368 HK Neutral 2,353 6.49 14.1 12Golden Eagle 3308 HK Buy 3,730 14.96 19.0 16Intime 1833 HK Buy 2,123.3 8.23 18.0 15NWDS 825 HK Neutral 935.2 4.30 13.3 1Lifestyle International 1212 HK N.R. 3,438 16.02 14.2 12Maoye International 848 HK N.R. 970 1.40 8.4 7PCD Stores 331 HK N.R. 331.5 0.61 6.3 4Springland International 1700 HK N.R. 1,219.0 3.78 12.0 10Shirble 312 HK N.R. 232 0.72 5.9 5Mcap Weighted Average 15.0 13

Retailer: Jewelry and Watch RetailerChow Tai Fook 1929 HK N.R. 14,058 10.90 15.9 13Chow Sang Sang 116 HK N.R. 1,650 18.90 11.9 9Luk Fook 590 HK N.R. 1,888 24.85 11.4 10Hengdeli 3389 HK N.R. 1,258 2.22 9.8 8Mcap Weighted Average 14.7 12

Retailer: Home Appliance RetailerGome 493 HK N.R. 1,741 0.80 na 2Haier Electronic 1169 HK N.R. 2,760 8.78 10.2 8Mcap Weighted Average 10.2 13

P/E

2

s otherwise noted.

Net Margin(%)

Y13F CY12F CY13F CY12F CY13F CY12F CY13F CY12F CY13F CY12F CY12F

2.5 2.6 2.3 11.6 9.7 3.2 3.6 19.4 19.6 22.1 n.cash6.2 4.5 3.7 13.9 11.9 1.6 1.9 25.9 25.6 33.8 n.cash5.2 1.9 1.8 14.3 11.4 2.7 3.3 13.6 15.3 24.0 22.71.6 1.2 1.1 3.8 3.2 3.2 3.7 10.0 10.6 15.2 n.cash2.7 2.8 2.5 10.3 9.2 2.9 3.2 21.2 20.9 33.6 5.0

7.6 1.0 0.9 7.1 6.4 4.0 4.8 11.7 12.2 19.8 51.9 4.9 0.9 0.9 3.5 2.8 5.6 6.9 13.2 15.2 23.7 n.cash0.3 1.7 1.5 6.2 5.3 3.3 3.9 14.7 15.6 15.8 n.cash

5.3 0.8 0.7 na na 5.6 6.0 14.1 13.9 15.2 n.cash3.0 2.7 2.3 10.9 9.3 2.8 3.3 18.9 19.2 26.6

3.2 3.2 2.7 12.0 9.9 1.6 1.6 23.2 21.9 10.5 n.cash9.7 1.8 1.6 9.9 7.9 2.9 3.6 15.4 16.7 5.5 28.4 0.2 2.4 2.0 8.3 7.2 3.4 3.9 23.4 21.0 9.6 n.cash

8.5 1.4 1.3 7.1 6.3 3.6 3.9 15.6 14.9 6.6 14.4 2.2 2.8 2.4 11.1 9.2 2.0 2.1 22.0 20.9 9.7

1.7 0.7 0.7 47.4 5.7 1.4 2.3 (1.1) 2.9 (0.4) n.cash8.5 3.1 2.3 4.9 4.1 1.0 1.2 35.7 31.4 3.1 n.cash3.6 2.2 1.7 21.4 4.7 1.1 1.6 21.4 20.4 1.7

P/B EV/EBITDA Div yld (%) Net debt to equity (%)ROE(%)

Source: Bloomberg, Nomura research

China retail stock performance – by subsec

3

ctors

● China retail companies have underperformed MSCI China Index YTD.

● Footwear Brands is the only subsector that has performed in line with MSCI China Index YTD, but it retreated QTD after gains in 1H12.

● The performances of Jewelry & Watch Retailers and Sportswear Brands have improved and outperformed the MSCI China index QTD.

● Home Appliance Retailer sand Department Stores remain weak QTD.


China retail stock performance – by compa

4

nies


China retail stock earnings revision – by su

5

ubsectors

● Downward earnings revision trend persists.

● The magnitude of earning revisions is correlated with sector share price performance, except for department stores.

● Department stores suffer more de-rating than other subsectors.

● De-rating of department stores sector reflects rising concerns about overall retail sales growth in China.


China retail stock performance – by compa

(120.0)

(100.0)

(80.0)

(60.0)

(40.0)

(20.0)

0.0

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EPS change for FY12 (%) (YTD)

(100.0)

(90.0)

(80.0)

(70.0)

(60.0)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

0.0

10.0

Em

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361

Deg

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Ant

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Tra

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EPS change for FY13 (%) (YTD)

6

nies

(120.0)

(100.0)

(80.0)

(60.0)

(40.0)

(20.0)

0.0

20.0

Mao

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YGM

Tra

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Hen

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Ever

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San

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Glo

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Li N

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EPS change for FY12 (%) (QTD)

(80.0)

(70.0)

(60.0)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

0.0

10.0

YGM

Tra

ding

Hai

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lect

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EPS change for FY13 (%) (QTD)

Financial performance comparison in 1H12

25.1

7.3

15.3

19.5

25.1

5.2

13.2

16.8

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Belle - Footwear Belle - Sportswear Daphne C.Banner

1H11 1H12

Operating profit margin comparison (%)

Source: Company filings, Nomura research

15.4

28.9

21.8

9.0 11.2

5.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Belle Daphne C.banner

Sales Operating profit

Sales and operating profit growth comparison (1H12) (%)

7

- Footwear

186

125

149

207200

143

202

239

0

50

100

150

200

250

300


1H11 1H12

Inventory turnover days comparison

68.6

37.4

61.2 62.3

67.6

37.1

60.7 62.4

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0


1H11 1H12

Gross profit margin comparison (%)


16.2

22.0

1.8

9.7

21.9

1.8

14.7

32.8

3.8

10.1

23.7

(0.9)(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Trinity China Lilang Evergreen Ports Design China Outfitters Giordano



21.6 23.1

29.2 26.3

44.2

14.3

21.4

27.3 23.5

21.6

39.7

12.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0


1H11 1H12


Source: Company filings, Nomura research 8

- Apparel

80.8

36.4

66.9

81.6

75.5

59.7

79.7

39.7

68.3

81.9

76.6

58.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0


1H11 1H12


361

49

320

635

325

70

409

59

430

681

399

60

0

100

200

300

400

500

600

700

800


1H11 1H12



(16.4)(11.6) (9.9)

1.4

(29.4) (28.5)

(86.3)

(18.6)

(32.1)

5.2

(80.9)

(40.8)

(100.0)

(80.0)

(60.0)

(40.0)

(20.0)

0.0

20.0

Li Ning Anta 361 Degrees Xtep China Dongxiang Peak Sports



9.2

23.7

27.8

22.0 23.5 22.9

1.5

21.9 21.0 22.8

6.4

18.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0


1H11 1H12


Source: Company filings, Nomura research9

- Sportswear

45.0 42.8

41.1 40.9

61.2

39.9

44.2 41.8 42.7

40.9

50.1

37.7

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0


1H11 1H12


64

36 19

81

125

50

96

50 45

82

304

86

0

50

100

150

200

250

300

350

Li Ning Anta 361 Degrees Xtep China Dongxiang

Peak Sports

1H11 1H12



20.1

18.1 18.6

16.3

18.6

23.1

18.9 17.2

18.2 16.2

17.3

23.4

0.0

5.0

10.0

15.0

20.0

25.0

Golden Eagle Intime Parkson Maoye PCDS Lifestyle

1H11 1H12

Comprehensive gross profit margin for merchandise sales (%)


16.6 18.5

7.6 5.1

13.8 9.9

15.7 20.1

6.4

(0.6)

3.6

10.0

3.0

12.7

(17.2)

2.1

(29.0)

12.4

(40.0)

(30.0)

(20.0)

(10.0)

0.0

10.0

20.0

30.0


GSP Sales Core-operating profit

GSP, Sales and operating profit growth comparison (1H12) (%)

10

– Department stores

20.0 18.0 18.7

17.3 18.2

22.3

19.0 17.3

18.3 17.1 17.2

22.5

0.0

5.0

10.0

15.0

20.0

25.0


1H11 1H12

Concessionaire rate (%)

13.2

7.4

10.3

7.7

13.0

16.4

11.6

7.0 7.9 7.5

8.1

16.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0


1H11 1H12

Core operating profit to GSP (%)


9.8

6.3

(18.8)

5.3

(25.0)

(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

Chow Sang Sang Hengdeli




7.7

11.9

5.7

11.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0


1H11 1H12


11

– Jewelry & Watches

18.4

25.7

17.6

26.7

15.0

17.0

19.0

21.0

23.0

25.0

27.0

29.0


1H11 1H12


129

162 152

217

0

50

100

150

200

250


1H11 1H12



(22.4)

8.4

(1,901.1)

25.9

(2,000.0)

(1,500.0)

(1,000.0)

(500.0)

0.0

500.0

Gome Haier




0.2

3.0

(5.2)

3.5

(6.0)

(5.0)

(4.0)

(3.0)

(2.0)

(1.0)

0.0

1.0

2.0

3.0

4.0

Gome Haier

1H11 1H12


12

– Home appliance

12.5 11.7

12.6

14.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Gome Haier

1H11 1H12


58

10 12

74

14 15

0

10

20

30

40

50

60

70

80

Gome Haier Washing Machine and Water Heater

Haier Integrated Channel Services

1H11 1H12


Source: Nomura research

Summary of stock rating and TP under our

Name Stock code C(H

Brand: Footwear & ApparelBelle 1880 HK 14Daphne 210 HK 7I.T 999 HK 3Trinity 891 HK 5China Lilang 1234 HK 4Ports Design 589 HK 6Retail: Department storesIntime 1833 HK 8Golden Eagle 3308 HK 14Parkson 3368 HK 6NWDS 825 HK 4

13

coverage

CP TP Upside RatingKD) (HKD) (%)

4.18 16.60 17.1 BUY.87 11.50 46.1 BUY.21 6.30 96.3 BUY.35 6.40 19.6 BUY.38 4.10 (6.4) REDUCE.15 6.90 12.2 NEUTRAL

.23 11.00 33.7 BUY4.96 17.60 17.6 BUY.49 6.80 4.8 NEUTRAL.30 4.10 (4.7) NEUTRAL

Source: CEIC, Nomura research

Outlook for China retail trend

0.0

5.0

10.0

15.0

20.0

25.0

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

y-y chang of total personal consumption y-y change of real personal consumption

Quarterly nominal and real personal consumption change

0

5

10

15

20

25

Jan-

08

Jun-

08

Nov

-08

Apr-

09

Sep-

09

Feb-

10

Jul-1

0

Dec

-10

May

-11

Oct

-11

Mar

-12

Retail Sales of Consumer Goods: YoY (%) Real Retail Sales of Consumer Goods: YoY (%)

Monthly nominal and real retail sales of consumer goods change

14

● Deceleration of nominal retail sale growth as well as real retail sales growth YTD

● Steady real personal consumption growth, supported by wage increases

● Rising portion of non-individual consumption in total retail sales of consumer goods

● Deceleration of non-individual consumption growth due to softening economic situation

0.0

5.0

10.0

15.0

20.0

25.0

0

2000

4000

6000

8000

10000

12000

14000

Average wages (Rmb) y-y change (%) (RHS)

Quarterly average wage change

Aug-

12

Source: CEIC, Nomura research

Outlook for China retail trend

(60.0)

(40.0)

(20.0)

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Government revenue

Disposable income per capita for urban household

Industrial enterprise profits

Government, corporate and personal income growth (%)

89 87 83 80 84 84 83 81 77 77 77 76 77 74 71 68 67 67 63 60 55 54

11 13 17 20 16 16 17 19 23 23 23 24 23 26 29 32 33 33 37 40 45 46

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Individual consumption to total retail sales Non-individual consumption to total retail sales

Individual consumption vs non-individual consumption

15

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1H09 2H09 1H10 2H10 1H11 2H11 1H12

Parkson Golden Eagle Intime Maoye NWDS

SSSG trend of major department store players

M1-M0 change: Leading indicator of retail sales growth

China Department Stores – consolidation b

Source: Euromonitor, company data, Nomura research

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

China Hong KongJapan SingaporeSouth Korea USA

Internet retailing as % to total retailing sales by countries

0.0

5.0

10.0

15.0

20.0

25.0

2008 2009 2010 2011

Goldend Eagle IntimeParkson NWDSMaoye PCD stores

Unused prepaid card balance as % to GSP

enefits leading players

16

3.0

5.0

7.0

9.0

11.0

13.0

15.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

China Hong KongJapan SingaporeSouth Korea USA

Department sales as % to total retailing sales by countries

(50.7) (49.4)

28.5 31.2

(37.4)

(74.5)

(7.8)

(33.2)

44.0 46.7

(28.9)

(67.5)

(100.0)

(80.0)

(60.0)

(40.0)

(20.0)

0.0

20.0

40.0

60.0

Golden Eagle Parkson Intime Maoye PCD NWDS

Net gearing (%) Adjusted net gearing (%)

Net gearing ratio and adjusted net gearing ratio comparison

China Department Stores – consolidation b

Source: Euromonitor, company data, Nomura research

7.5

36.0

53.959.7

63.8

84.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

China Japan USA Singapore Hong Kong South Korea

Market share of top four department store players (2011)

Market share (%) of leading four players by country

1990 2010 changeJC Penney 1,312 1,106 (206)Kohl's 55 1,089 1,034Sears 867 894 27Macys 147 850 703Dillard's 87 324 237Bon Ton 33 275 242Nordstrom 59 204 145Saks Fifth Avenue 48 104 56Boscov's 50 39 (11)MAY 322 0 (322)Mervyn's 240 0 (240)Federated 220 0 (220)Broadway 88 0 (88)Total 3,528 4,885 1,357

Market consolidation of US department stores

enefits leading players

17

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2005 2006 2007 2008 2009 2010 2011

Parkson Beijing Wangfujing Golden Eagle Dashang Intime

Maoye NWDS Silver Plaza Rainbow Grandbuy

Market share of top ten department stores in China

52

38 38

2824

20

0

10

20

30

40

50

60

Parkson Maoye NWDS Intime Golden Eagle PCD

Number of stores

Number of stores for HK-listed department stores (2011)

China Department Stores – Summary of KP

Source: Company data, Nomura research

Golden Eagle Parkson IntimeStore position Upscale Upper-middle Upper-midd

Key markets Jiangsu Nationwide Zhejiang

Store portfolioNo. of self-operated stores 23 46 26Store age(yrs) 4.0 6.1 3.0Total GFA(sqm) 882,883 1,469,037 1,113,716 -GFA owned(sqm) 553,264 225,834 439,135 -GFA leased(sqm) 329,619 1,243,203 674,581GFA per store(sqm) 38,386 31,936 42,835Financail performanceGross sales proceeds of merchandise (RMBm) 14,280 15,626 11,416 Direct sales 1,120 1,502 1,137 Concessionary sales 13,160 14,125 10,279Avg. sales per sqm( RMB) 19,461 12,058 11,821

Merchandise comprehensive gross margin(%) 19.6 18.6 17.1Concessionaire rate(%) 19.6 18.7 17.2Direct sales gross margin(%) 20.2 17.5 16.6

Other income from suppliers as percentage to GSP of concessionare sales (%) 0.9 3.1 2.3

Major operating expenses as percentage to GSP (%) 8.6 13.8 14.5Staff costs 2.5 2.4 3.7Rental costs 1.1 4.2 3.2Depreciation costs 1.1 1.5 2.4Other operating costs 3.9 5.7 5.2

Staff costs analysisAverage annual GSP per staff (Rmb) 2.3 2.1 1.8Staff per 100 sqm GFA 0.7 0.5 0.7

Annual average costs per staff (Rmb) 55,441 50,568 61,308

Operating costs per sqm (Rmb)Rental costs 509 618 611Depreciation costs 189 180 287Other operating costs 657 686 352

Is for key players

18

Maoye PCD NWDSdle Middle to high-end Upscale Upper-middle

Guangdong, Sichuan, Hebei, Shangdong

Fujian, Guizhou, Beijing

Shanghai, Beijing, Liaoning, Hubei

36 15 324.0 2.5 6.4

1,058,136 337,305 1,088,420672,367 107,904 163263385,769 229,401 925,15729,393 22,487 34,013

10,430 4,810 10,7791,437 329 5468,993 4,481 10,23310,487 18,035 10,137

16.0 18.1 18.816.9 17.8 18.810.8 22.5 17.8

8.4 1.8 0.3

15.9 13.5 16.33.5 3.5 3.72.0 3.1 6.43.1 1.3 2.67.3 5.6 3.7

1.1 2.0 1.60.8 0.8 0.6

40,663 67,336 59,265

561 876 763323 243 260764 1,030 373



0

20000

40000

60000

80000

100000

120000

2012E 2013E 2014E Average size per new store (2012-14)

Golden Eagle Intime Parkson NWDS*

Average size of new store opening (Sqm)

50

100

150

200

250

300

350

400

450

64 63

3932

15 15

36 37

6168

85 85

0

10

20

30

40

50

60

70

80

90

100

Maoye Golden Eagle Intime PCD NWDS Parkson

Owned properties Leased properties

China department stores owned/leased properties (%) (2011)

2

3

4

5

6

7

8

9

10

Is for key players

19

42,835

38,386

34,01331,936

29,393

22,487

0

000

000

000

000

000

000

000

000

000

Intime Golden Eagle NWDS Parkson Maoye PCD

Average GFA per store (sqm)

Average size per store comparison (2011)

68 63

4639

32 37

5461

0

10

20

30

40

50

60

70

80

90

00

Macy's Kohl's Nordstrom JC Penney

Owned stores Leased stores

US department stores owned/leased properties (%) (2010)



Golden Eagle Parkson Intime Maoye PCD NWBeijing - 3 1 - 2 5Shanghai 1 4 - - - 9Tianjin - 1 - - - 1Chongqing - 3 - 1 - 1Inner Mongolia - - - - - -Liaoning - 4 - 1 1 5Jilin - - - - 1 -Heilongjiang - 1 - - - 1Hebei - 2 1 6 - -Shanxi - 2 - 1 1 -Henan - 1 - - - 1Hubei - - 6 - - 6Shandong - 3 - 7 3 -Jiangxi - 1 - - - -Hunan - 1 - - - 1Anhui 4 2 0 - - -Jiangsu 15 5 - 4 - 2Zhejiang - 1 17 - - 2Guangxi - 2 - - - -Fujian - - - - 5 -Guangdong - 1 - 7 - -Sichuan - 4 - 11 - 2Guizhou - 3 - - 6 -Yunnan 1 2 - - - 1Shaanxi 3 4 2 - 1 -Gansu - 1 - - - 1Qinghai - - - - - -Xinjiang - 1 - - - -Total 24 52 27 38 20 38Self-operated 23 46 26 36 15 34Management 1 6 1 2 5 4

Network of HK-listed department stores (2011)

Is for key players

20

63.0 62.5

30.0 28.9

23.7

9.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Intime Golden Eagle PCD Maoye NWDS Parkson

No. of stores at the core market vs total store number in China (%)

% of stores at single core market comparison

16.0

16.2

16.4

16.6

16.8

17.0

17.2

17.4

17.6

11.0 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 12.0 12.1

GE

Parkson

NWDS

PCDMaoye

Intime

Weighted

average of CA

GR

of retail sales

Weighted average of CAGR of disposable income per capita for urban household

(%)

(%)

Retail sales growth vs. disposable income growth analysis

DS59

5

6

22

2

844



0

1

2

3

4

5

6

7

8

2007 2008 2009 2010 2011

NWDS* Parkson Golden Eagle

Maoye Intime PCD stores

Historical store portfolio age comparison

8.47.8

6.76.2

5.3

3.9

0

1

2

3

4

5

6

7

8

9

Parkson NWDS* PCD stores Maoye Golden Eagle Intime

ages of comparable stores (years)

Store portfolio age of comparable stores comparison (2011)

Is for key players

21

6.46.1

4.0 4.0

3.02.5

0

1

2

3

4

5

6

7

NWDS* Parkson Golden Eagle Maoye Intime PCD stores

Store age of store portforlio (years)

Store portfolio age comparison (2011)

53.8

73.3 73.5 70.955.7

38.1

15.0

6.5 2.4 7.9 35.3

16.9

31.320.2 24.1 21.2

9.0

45.0

0

10

20

30

40

50

60

70

80

90

100

NWDS* Golden Eagle Intime Parkson Maoye PCD stores

% of GFA for stores with over 2 years old% of GFA for stores with 1-2 years old% of GFA for stores with less than 1 years old

GFA breakdown by store age (%) (2011)



8000

10000

12000

14000

16000

18000

20000

22000

24000

FY08 FY09 FY10 FY11

Golden Eagle (RMB) Parkson (RMB)

Intime (RMB) Maoye (RMB)

PCD (RMB) NWDS (HKD)

Comparison of GSP per sqm

2

2.5

3

3.5

4

4.5

FY08 FY09

Golden EagleIntimePCD

Staff cost as % of

0

0.5

1

1.5

2

2.5

3

3.5

FY08 FY09 FY10 FY11

Golden Eagle ParksonIntime MaoyePCD NWDS

Depreciation cost as % of GSP comparison

0

1

2

3

4

5

6

7

8

FY08 FY09


Other operating costs a

Is for key players

22

FY10 FY11

ParksonMaoyeNWDS

GSP comparison

0

1

2

3

4

5

6

7

FY08 FY09 FY10 FY11


Rental cost as % of GSP comparison

FY10 FY11

ParksonMaoyeNWDS

as % of GSP comparison

2.5 3.5 2.4 3.7 3.5 3.71.1

3.1 4.2 3.22.0

6.4

1.1

1.3 1.5 2.43.1

2.6

3.9

5.6 5.75.2 7.3

3.7

0

2

4

6

8

10

12

14

16

18

Golden Eagle

PCD Parkson Intime Maoye NWDS

Staff cost as % of GSP(%)Rental as % of GSP(%)Depreciation as % of GSP(%)Other operating expense as % of GSP(%)

Operating costs as % of GSP breakdown



0.4

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

FY08 FY09 FY10 FY11


Staff per 100 sqm GFA

1

1.2

1.4

1.6

1.8

2

2.2

2.4

2.6

FY08 FY09


Average annual GSP

400

500

600

700

800

900

1000

FY08 FY09 FY10 FY11


Rental cost per sqm for leased GFA (CNY)

0

50

100

150

200

250

300

350

400

FY08 FY09


Depreciation cost

Is for key players

23

FY10 FY11

ParksonMaoyeNWDS

P per employee (CNY m)

40,663

50,56855,441

59,265 61,30867,336

0

10000

20000

30000

40000

50000

60000

70000

80000

Maoye Parkson Golden Eagle

NWDS Intime PCD

Average annual payment per staff excluding share option (Rmb)

Average annual payment per employee in 2011 (CNY)

FY10 FY11

ParksonMaoyeNWDS

per sqm GFA (CNY)

0

200

400

600

800

1000

1200

1400

FY08 FY09 FY10 FY11


Other operating expenses per sqm GFA (CNY)

China Department Stores – store map of HK


Mianyang

ChengduCho

Lanzhou

N

LuzhoZigong

GLiupanshui Z

Kunming

Na

Urumqi

In time (4)

Golden Eagle (3)

Parkson (2)

In time (1)

Parkson (1)

Parkson (1)Intime (1)

Maoye (6)

Maoye (1)

Intime (1)

Parkson (1)

NWDS (1)

In time (1)

In time (1)

Golden Eagle (1)

Parkson (2)

NWDS (1)

Parkson (1)

PCD Stores (4)

Parkson (1)

PCD Stores (1)

Parkson (1)

PCD Stores (1)

Maoye (1)

Parkson (1)

Parkson (3)

Maoye (1)

NWDS (1)

Parkson (2)

Maoye (6)

NWDS (1)

Maoye (2)

Parkson (1)

Maoye (2)

NWDS (1)

Golden Eag le (3)

Parkson (4)

In time (2)

PCD Stores (1)

Parkson (1)

NWDS (1)

Parkson (1) Parkson (1)

Parkson (3)

Intime (1)

PCD Stores (

NWDS (5)

Parkson (1)

NWDS (1)

Parkson (1)

Maoye (1)

Parkson (1)

Parkson (1)

NWDS (1)

Golden Eag le

NWDS (1)

Intime (1)

Parkson (2)

In time (1)

Parkson (2)

Maoye (1)

PCD Stores (1) Maoye (1)

K-listed department stores

24

Changchun

Harbin

Shenyang

Beijing

Tian jin Yantai

QingdaoJinan

Yancheng

Nanjing Shanghai

Ningbo

Taizhou

Xiamen

Shenzhen

Zhuhai

Nanchang

Xiangyang

Wuhan

Zhengzhou

Hefei

ongqing

Xi’an

Baoding

Changsha

Anshan

Dalian

Shijiazhuang

Qinhuangdao

Tangshan

Zhangjiakou

Taiyuan

ZiboLinyi

Heze

Changzhou

Wuxi SuzhouYangzhou

Xuzhou

Nantong

Huai’anSuqian

Hangzhou Zhoushan

WenzhouJinhua

Shaoxing

Huaibei

Xianning

EzhouXiantao

Suizhou

Yueyang

Shantou

anchong

ou

Guiyang

Zunyi

anning

Parkson (1)

NWDS (1)

Parkson (1)

Maoye (1)

PCD Stores (1)

NWDS (3)

Parkson (1)

NWDS(1)

Parkson (2)

NWDS (1)

Intime (1)

Maoye (5)

Parkson (1)

Parkson (1)

PCD Stores (3)

Maoye (1)

Golden Eagle (1)

Golden Eagle (1)

Golden Eagle (1)

Golden Eagle (1)

Golden Eagle (1)

Golden Eagle (1)

Golden Eagle (1)

Maoye (1)

NWDS (1)

Golden Eagle (2)

Golden Eagle (1)

Parkson (2)

Golden Eagle (1)

Parkson (1)

Maoye (2)

Golden Eagle (1)

Parkson (4)

NWDS (9)

Intime (5)

NWDS (2)

Intime (1)

Parkson (1)

Intime (6)

PCD Stores (5)

2)

PCD Stores (1)

Maoye (5)

Parkson (2)

Maoye (1)

Intime (1)

e (5)


Intime (1833.HK, BUY, CP:HKD8.23; TP: HK

61%

23%

8%

4% 4%

Zhejiang Hubei Shaanxi Hebei Beijing

Store network breakdown by region

41,939 41,939

37,224 37,224

32,422 36,236

39,597 38,949 41,921

44,412

49,770 52,298

0

10,000

20,000

30,000

40,000

50,000

60,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E


Average size per store

25

D11.00)

1.8 1.9

2.9 3.0 3.4 3.4

3.7

5.8

4.7

4.0 3.9

4.9 5.0 5.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2008 2009 2010 2011 2012E 2013E 2014E

Age of store portfolio on GFA (years) Age of comparable stores on GFA (years)

Age of store portfolio

100.0 100.0 100.0

37.6 37.6

18.5 25.8

37.5 37.0 39.4 45.7 45.8 49.6

0.0 0.0 0.0

62.4 62.4

81.5 74.2

62.5 63.0 60.6 54.3 54.2 50.4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E

Self-owned properties Leased properties

GFA breakdown by self‐owned properties and leased properties



2.5

3.7

6.4

3.4 4.3

9.5

11.7 11.0

10.5 10.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E

Unused prepaid card balance to GSP (%)

Unused pre‐paid card balance as % to GSP

0

10

20

30

40

50

60

70

80

90

100

%

23.7

28.5

21.318.9

1.4

35.7

44.0

37.8 36.7

20.8

0

5

10

15

20

25

30

35

40

45

50

2010 2011 2012E 2013E 2014E

Net gearing (%) Adjusted net gearing(%)

Net gearing ratio and adjusted net gearing ratio

26

D11.00)

21 29

57

73 64 63 62 21

30

40 2 20 11

22 58

41

3

24 15

26 17

2008 2009 2010 2011 2012E 2013E 2014E

% GFA of comparable stores % GFA of 1-2 years old stores % GFA of less than 1 year old stores

GFA breakdown by store ages

(10,000)

(5,000)

0

5,000

10,000

Beginning balance Cash inflow Cash outflow Ending balance

Cash excluding unused balance of prepaid cardsCash inflow from business operation excluding prepaid cards balance Repayment of shareholder's loansRefinancingInteret incomeRepayment of CB and BondCapexDividend payment

(CN

Ym

)

Cash flow analysis for 2012‐14F

Source: Bloomberg, company data, Nomura research


0.00

10.00

20.00

30.00

40.00

50.00

60.00

Mar

-07

Jun-

07

Sep-

07

Dec

-07

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

(x)

Trading PE MeanMean + 1std Mean + 2stdMean - 1std Mean - 2std

P/E band with standard deviation

2010Net GFA additions (sqm) 35,000 26

SSSG (%) 18.2

Concessionaire rate (%) 17.8Gross profit margin for direct sales (%) 20.0Comprehensive merchandise gross margin (%) 17.9

Operating expenses to GSP ratio (%) 14.4Staff costs 3.4Rental costs 3.4Depreciation 2.7Utilities 1.4Promotion 0.8Others operating expenses 2.6

Effective tax rate (%) 24.3

Dividend payout ratio 39.6

Summary of k

6.0

7.0

8.0

9.0

10.0

11.0

12.0

27

D11.00)

2011 2012F 2013F 2014F63,000 198,000 454,000 350,000

23.1 10.5 15.5 15.5

17.2 16.9 16.8 16.716.6 16.2 16.2 16.217.1 16.8 16.7 16.6

14.5 15.3 15.3 15.63.7 3.6 3.4 3.33.2 3.5 3.4 3.42.4 2.8 3.1 3.41.2 1.3 1.3 1.51.1 1.0 1.1 1.12.9 3.0 3.0 3.0

24.0 25.0 25.5 25.5

40.3 40.0 40.0 40.0

ey assumptions

9.0%

9.9% 9.8% 9.7%

10.4%

11.7%

0%

0%

0%

0%

0%

0%

0%

FY09 FY10 FY11 FY12 FY13 FY14

Intime ROIC

Intime's core ROIC


Golden Eagle (3308.HK, BUY, CP: HKD14.96

60.9 17.4

13.0

4.3 4.3

Jiangsu Anhui Shaanxi Yunnan Shanghai


24,554

29,896 26,585

29,039 28,879 33,233 31,997 32,728

40,131 40,048

45,136

52,145

0

10,000

20,000

30,000

40,000

50,000

60,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E



28

6; TP: HKD17.60)

5.7 5.6 5.2 5.3

6.0 6.0 6.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2008 2009 2010 2011 2012E 2013E 2014

Age of store protfolio on GFA (years) Age of comparable stores


95.9 81.3

87.7 82.2 87.8 82.3 87.2

70.7 66.8 62.7 57.4 59.1 69.4

4.1 18.7

12.3 17.8 12.2 17.7 12.8

29.3 33.2 37.3 42.6 40.9 30.6

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E





0.8 2.6

4.8 5.9

9.3

13.9

16.9 18.5

19.5 20.0 19.5 19.0 18.5

0.0

5.0

10.0

15.0

20.0

25.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E


Unused pre‐paid card balance as % to GSP

-62.2

-50.7

-30.2

-15.1 -12.9

-22.7

-7.8

13.1

26.8 28.6

-70.0

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

2010 2011 2012E 2013E 2014E



29

6; TP: HKD17.60)

58 61 76 73

63 61 58

14 22

14 6

16 17 17

28 17

10 20 21 22 25

0

10

20

30

40

50

60

70

80

90

100

2008 2009 2010 2011 2012E 2013E 2014E



(15,000)

(10,000)

(5,000)

0

5,000

10,000


Cash excluding unused balance of prepaid cardsOP cash inflow excluding prepaid cards balance Interest incomeSydicate loanRepayment of short-term loanCapexDividend payment

Cash flow analysis for 2012‐14F



0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Mar

-06

Jun-

06Se

p-06

Dec

-06

Mar

-07

Jun-

07Se

p-07

Dec

-07

Mar

-08

Jun-

08Se

p-08

Dec

-08

Mar

-09

Jun-

09Se

p-09

Dec

-09

Mar

-10

Jun-

10Se

p-10

Dec

-10

Mar

-11

Jun-

11Se

p-11

Dec

-11

Mar

-12

Jun-

12

(x)

Trading PE Mean Mean + 1std

Mean + 2std Mean - 1std Mean - 2std


2010Net GFA additions (sqm) 77,153

SSSG (%) 25.1

Concessionaire rate (%) 20.0Gross profit margin for direct sales (%) 22.3Comprehensive merchandise gross margin 20.2

Operating expenses to GSP ratio (%) 7.2Staff costs 2.0Rental costs 0.9Depreciation 1.1Utilities 0.8Promotion 0.6Others operating expenses 1.8



Summary of key ass

30

6; TP: HKD17.60)

64.3%

53.5%

43.1%

31.1%25.7% 23.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

FY09 FY10 FY11 FY12F FY13F FY14F

Golden Eagle ROIC

Golden Eagle's core ROIC

2011 2012F 2013F 2014F293,785 238,469 323,000 485,000

24.9 10 14 14.5

19.6 18.8 18.8 18.820.2 17.0 17.0 17.019.6 18.7 18.6 18.6

7.4 8.0 8.1 8.32.1 2.1 2.1 2.20.9 1.1 1.3 1.31.0 1.1 1.1 1.20.8 0.9 1.0 1.10.7 0.5 0.6 0.61.9 2.2 2.0 2.0

25.5 25.5 25.5 25.5

30.2 30.0 30.0 30.0

sumptions


Parkson (3368.HK, Neutral, CP:HKD6.49; TP

6.5

8.7 2.2

6.5

2.2 2.2

4.3

4.3

2.2 2.2 2.2

2.2

4.3 10.9 2.2

4.3 2.2

8.7

4.3

4.3

8.7

2.2 2.2 Beijing

Shanghai

Tianjin

Chongqing

Liaoning

Heilongjiang

Hebei

Shanxi

Henan

Shandong

Jiangxi

Hunan

Anhui

Store network breakdown by region1

31,212 31,277

32,849

32,157

31,049

30,595 30,742

31,275

32,645

33,461 33,691

33,437

29,000

29,500

30,000

30,500

31,000

31,500

32,000

32,500

33,000

33,500

34,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E


Average size per store 1

31

P:HKD6.80)

6.0 6.5 6.7

6.1 6.2 6.5 6.6 6.9 7.5

8.0 8.4 8.7 8.4 8.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2008 2009 2010 2011 2012E 2013E 2014E

Age of store protfolio on GFA (years) Age of comparable stores on GFA (years)


36.2 32.8 28.6 23.0 21.2 17.8 19.5 17.7 19.5 15.4 14.7 14.6 12.7

63.8 67.2 71.4 77.0 78.8 82.2 80.5 82.3 80.5 84.6 85.3 85.4 87.3

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E





0.8

2.8 3.0

4.4

5.9 6.5

6.8 6.5

6.0 5.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E


Unused pre‐paid card balance as % to GSP1

-21.8

-49.4-46.9

-54.0

-59.9

-6.6

-33.2 -31.4

-38.7

-45.8

-70

-60

-50

-40

-30

-20

-10

02010 2011 2012E 2013E 2014E



32

P:HKD6.80)

86 86 82 71 71 75 74

8 5 8

8 17 10 13

6 9 10 21

12 15 13

0

10

20

30

40

50

60

70

80

90

100

2008 2009 2010 2011 2012E 2013E 2014E



(6,000)

(4,000)

(2,000)

0

2,000

4,000

6,000

8,000


Cash excluding unused balance of prepaid cardsCash inflow from operation excluding prepaid cards balance Net finance incomeOthersCapex

Cash flow analysis for 2012‐14F (CNY m)



0.00

10.00

20.00

30.00

40.00

50.00

60.00

Jan-

06Ap

r-06

Jul-0

6O

ct-0

6Ja

n-07

Apr-

07Ju

l-07

Oct

-07

Jan-

08Ap

r-08

Jul-0

8O

ct-0

8Ja

n-09

Apr-

09Ju

l-09

Oct

-09

Jan-

10Ap

r-10

Jul-1

0O

ct-1

0Ja

n-11

Apr-

11Ju

l-11

Oct

-11

Jan-

12Ap

r-12

Jul-1

2

(x)




2010Net GFA additions (sqm) 111,938

SSSG (%) 11.4

Concessionaire rate (%) 19.2Gross profit margin for direct sales (%) 17.3Comprehensive merchandise gross margin (%) 19.0

Operating expenses to GSP ratio (%) 13.6Staff costs 2.7Rental costs 4.3Depreciation 1.3Others operating expenses 5.3



Summary of key

33

P:HKD6.80)

18.2%

17.0%

15.6%

14.4%15.2%

15.8%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%


Parkson ROIC

Parkson's core ROIC

2011 2012F 2013F 2014F311,859 337,867 315,640 318,382

11.4 4.0 8.0 8.0

18.7 18.5 18.4 18.417.5 17.3 17.3 17.318.6 18.4 18.3 18.3

13.8 15.1 15.5 15.62.4 2.7 3.0 3.24.2 4.7 4.5 4.41.5 1.6 1.6 1.75.7 6.1 6.4 6.3

24.1 25.0 25.5 25.5

45.0 45.0 45.0 45.0

y assumptions


NWDS (825.HK, Neutral, CP: HKD4.30; TP: H

13.2

23.7

2.62.6

13.2

2.62.6

15.8

2.65.3

5.35.32.6

2.6

Beijing

Shanghai

Tianjin

Chongqing

Liaoning

Heilongjiang

Henan

Hubei

Hunan

Jiangsu

Zhejiang


6.16.5

7.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

FY08 FY

Average age of total

Age of

66.6 66.1 65.653.8 57.0

75.887.2

12.2 17.8 12.815.0

28.512.9

11.121.1 16.1 21.5 31.314.5 11.3 1.7

0102030405060708090

100

FY08 FY09 FY10 FY11 FY12E FY13E FY14E

% GFA of comparable stores

% GFA of 1-2 years old stores


0.0 0.0 0.10

0.0

1.0

2.0

3.0

4.0

5.0

6.0

FY04 FY05 FY06 FY

Advance from customers

Unused pre‐paid ca

34

HKD4.10)

6.0 6.4

7.58.3 8.1

Y09 FY10 FY11

GFA-self operated stores

f store portfolio

22,292 20,341

22,822 24,674

26,647 27,335 30,277

34,013 35,476

37,003 36,720

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

average GFA per store (sqm)


0.5

1.4

4.5

5.3

4.5

Y07 FY08 FY09 FY10 FY11

s as % of GSP

ard balance as % to GSP

(75.4) (74.5)

(36.3)

(22.5)(29.6)

(69.6) (67.5)

(27.6)

(12.7)(19.3)

(80.0)

(70.0)

(60.0)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

0.0 FY2010 FY2011 FY2012E FY2013E FY2014E

Net gearing (%) Adjusted net gearing (%)



NWDS (825.HK, Neutral, CP: HKD4.30; TP: H

FY10Net GFA additions(sqm) 118,400

SSSG(%) for self-operated stores 5.3

Concessionaire rate(%) 19.4Gross profit margin of direct sales(%) 25.5Comprehensive merchandise gross margin(%) 19.8

Operating expenses to GSP ratio(%) 15.8Staff costs 3.5Rental costs 5.3Depreciation 2.9Other operating expenses 3.1

Effective tax rate(%) 28.8

Dividend payout ratio(%) 43.8

Summary of key assump

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

Jul-0

7Se

p-07

Nov

-07

Jan-

08M

ar-0

8M

ay-0

8Ju

l-08

Sep-

08N

ov-0

8Ja

n-09

Mar

-09

May

-09

Jul-0

9Se

p-09

Nov

-09

Jan-

10M

ar-1

0M

ay-1

0Ju

l-10

Sep-

10N

ov-1

0Ja

n-11

Mar

-11

May

-11

Jul-1

1Se

p-11

Nov

-11

Jan-

12M

ar-1

2M

ay-1

2Ju

l-12

(x)



1

1

2

2

3

35

HKD4.10)

FY11 FY12F FY13F FY14F90,100 148,385 184,927 57,090

18.2 12.0 10.0 10.0

18.8 18.4 18.0 17.617.8 17.0 17.5 17.518.8 18.3 18.0 17.6

14.8 16.3 16.3 16.03.7 3.8 3.9 3.86.4 6.4 6.2 6.02.6 2.4 2.3 2.43.7 3.7 3.6 3.4

23.1 26.0 27.0 27.0

31.5 40.0 40.0 40.0

ptions

16.6%15.2%

16.7%

12.2%10.6% 10.8%

5.0%

0.0%

5.0%

0.0%

5.0%

0.0%


NWDS ROIC

NWDS's core ROIC

Source: Bloomberg, Nomura estimates

Belle (1880.HK, BUY, CP: HKD14.18; TP: HK

0.00 5.00

10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00

May

-07

Aug-

07

Nov

-07

Feb-

08

May

-08

Aug-

08

Nov

-08

Feb-

09

May

-09

Aug-

09

Nov

-09

Feb-

10

May

-10

Aug-

10

Nov

-10

Feb-

11

May

-11

Aug-

11

Nov

-11

Feb-

12

May

-12

Aug-

12

(x)



OLD NEWy-y change of store number (%)Footw ear 15 15Sportsw ear 20 19

SSSG (%)Footw ear 8.0 7.0Sportsw ear 3.5 3.5

Gross profit margin (%) 57.8 57.0Footw ear 69.0 68.0Sportsw ear 37.0 36.5

Major operating expenses to sales ratio (%)Rental 21.1 20.5Staff 14.1 14.2Operating to sales ratio (%) 39.9 39.7

Operating margin (%) 17.9 17.3

Effective tax rate 24.0 23.8

Dividend payout ratio (%) 30.0 30.0

Summary of key as2012F

36

KD16.60)

16.0%

14.8%

15.6%

14.9%

14.6%14.7%

15.0%

14.5%

14.7%

14.9%

15.1%

15.3%

15.5%

15.7%

15.9%

16.1%

FY08 FY09 FY10 FY11 FY12 FY13 FY14

Belle ROIC

Belle's ROIC

W OLD NEW OLD NEW

15 15 15 1515 15 15 15

15.0 12.0 15.0 12.03.5 3.5 3.6 3.6

58.4 57.5 59.1 58.169.0 68.1 69.0 68.337.0 36.5 37.0 36.5

21.1 20.5 21.2 20.614.4 14.4 14.7 14.640.2 39.6 40.4 39.7

18.2 17.9 18.7 18.4

26.0 25.6 26.0 25.6

30.0 30.0 30.0 30.0

ssumptions2013F 2014F


Daphne (210.HK, BUY, CP: HKD7.87; TP: HK

(10.00)

(5.00)

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Jan-

05M

ay-0

5S

ep-0

5Ja

n-06

May

-06

Sep

-06

Jan-

07M

ay-0

7S

ep-0

7Ja

n-08

May

-08

Sep

-08

Jan-

09M

ay-0

9S

ep-0

9Ja

n-10

May

-10

Sep

-10

Jan-

11M

ay-1

1

Sep

-11

Jan-

12M

ay-1

2(x)



OLD NEWNet store additions Core brands 700 700

Other brands 100 100

Same-store-sales growth (%) Core brands 15 15

Gross profit margin (%) 60.4 60.7 Core brands 61.5 61.5 Other brands 57.5 57.5 OEM 40.3 40.3

Staff costs to sales (%) 14.4 13.9Rental costs to sales (%) 21.1 21.8Operating costs to sales (%) 46.3 46.9Operating margin (%) 14.1 13.7

Effective tax rate (%) 28.8 27.0


Summary of key assum2012F

37

KD11.50)

16.1%

11.0%

13.6%

14.8%

14.1%13.6% 13.6%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%


Daphne ROIC

Daphne's ROIC

W OLD NEW OLD NEW

700 700 700 700

100 100 100 100

13 13 13 13

61.6 61.7 61.7 61.962.5 62.4 62.5 62.559.0 58.5 59.0 58.540.3 40.3 40.3 40.3

15.3 14.4 15.5 14.821.5 22.0 21.8 22.247.0 47.5 46.9 47.814.6 14.2 14.8 14.1

28.8 27.0 28.8 27.0

30.0 30.0 30.0 30.0

mptions2013F 2014F


Trinity (891.HK, BUY, CP: HKD5.35; TP: HKD

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov

-10

Jan-

11

Mar

-11

May

-11

Jul-1

1

Sep-

11

Nov

-11

Jan-

12

Mar

-12

May

-12

Jul-1

2(x)



OLD NEWNet store additionMainland China 40.0 30.0

Same-store-sales grow th (%)Mainland China 12.0 6.0HK 12.0 12.0Taiw an 12.0 (10.0)

Gross profit margin (%) 80.4 78.5Retail: Mainland China 80.5 79.5Retail: Hong Kong & Macau 80.5 80.2Retail: Taiw an 75.0 74.5Retail: Others 58.5 58.5Others 32.6 27.5License business 100.0 100.0

Operating costs to sales ratio (%) 59.1 60.1Rental costs 21.5 22.0Staff costs 21.6 22.8A&P expenses 5.0 5.0

Operating margin (%) 21.3 18.4

Effective tax rate (%) 24.0 20.2


2012F

38

D6.40)

8.1%7.7%

9.6%

11.8%12.7% 13.0%

13.8%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%


Trinity ROIC

Trinity's ROIC

OLD NEW OLD NEW

40.0 40.0 40.0 40.0

15.0 15.0 15.0 15.015.0 15.0 15.0 15.012.0 5.0 12.0 5.0

80.8 78.9 80.8 79.481.0 80.0 81.0 80.081.0 80.5 81.0 80.575.0 74.5 75.0 74.558.5 60.0 58.5 65.032.6 27.5 32.6 27.5100.0 100.0 100.0 100.0

58.0 59.8 57.0 58.321.5 22.0 21.5 22.020.6 22.5 20.1 21.95.0 5.0 5.0 5.0

22.8 19.1 23.8 21.1

24.0 20.2 24.0 20.2

70.0 70.0 70.0 70.0

2013F 2014F


China Lilang (1234.HK, REDUCE, CP: HKD4

5.00 7.00 9.00

11.00 13.00 15.00 17.00 19.00 21.00 23.00 25.00

Sep

-09

Nov

-09

Jan-

10M

ar-1

0M

ay-1

0Ju

l-10

Sep

-10

Nov

-10

Jan-

11M

ar-1

1M

ay-1

1Ju

l-11

Sep

-11

Nov

-11

Jan-

12M

ar-1

2M

ay-1

2Ju

l-12

(x)

Trading PE Mean Mean + 1stdMean + 2std Mean - 1std Mean - 2std


OLD NEWNet store additions LILANZ 200 200 L2 80 80

SSSG 10 10

Average sales prices (Rmb) 233 233

Sales Volume (m pieces) 13.6 13.6

Gross profit margin (%) 40.4 40.4

Major operating expenses to sales ratio (%)Staff 4.6 4.6A&P 8.0 8.0

Operating margin 27.4 27.4

Effective tax rate 25.5 25.5

Dividend payout ratio 65.0 65.0

Summary of assump2012F

39

4.30; TP: HKD4.10)

43.4%

65.2%

94.7%

83.6%

67.4%

50.6% 52.2%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

FY08 FY09 FY10 FY11 FY12F FY13F FY14F

China Lilang ROIC

OLD NEW OLD NEW

200 200 200 200100 100 100 100

12 8 12 8

245 240 257 252

15.2 12.0 17.3 13.8

41.0 40.4 41.0 40.4

4.5 5.9 4.4 5.78.3 8.3 8.5 8.5

27.7 25.2 27.6 25.2

28.5 28.5 28.5 28.5

65.0 65.0 65.0 65.0

ption changes2013F 2014F


I.T (999.HK, BUY, CP: HKD3.21; TP: HKD6.3

(20.00)

(10.00)

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Mar

-05

Jul-0

5

Nov

-05

Mar

-06

Jul-0

6

Nov

-06

Mar

-07

Jul-0

7

Nov

-07

Mar

-08

Jul-0

8

Nov

-08

Mar

-09

Jul-0

9

Nov

-09

Mar

-10

Jul-1

0

Nov

-10

Mar

-11

Jul-1

1

Nov

-11

Mar

-12

Jul-1

2

(x)



6

7

8

9

10

11

12

13

14

15

OLDy-y growth of sales footage (%)China - retail stores 20.0China - franchised stores 10.0Hong Kong 5.0Japan 10.0Other - retail stores 5.0Other - franchised stores 5.0

Same-store-sales growth (%)Hong Kong 8Mainland China 8

Gross profit margin (%) 62.0Hong Kong 61.9Mainland China 63.2

Rental to sales ratio (%) 21.1Staff costs to sales ratio (%) 16.5

Effective tax rate 20.0


Summary of key a

40

0)

13.9%

7.5%

13.3%

14.4% 14.3%

13.4% 13.4%

6.0%

7.0%

8.0%

9.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%


I.T ROIC

I.T's ROIC

FY15FNEW OLD NEW

10.0 20.0 20.0 20.010.0 10.0 10.0 10.05.0 5.0 5.0 5.0

10.0 10.0 10.0 10.010.0 5.0 10.0 10.00.0 5.0 0.0 0.0

10 10 10 105 12 8 8

61.0 62.2 61.7 62.061.6 61.9 61.9 61.960.7 63.6 62.1 62.7

21.1 20.9 21.3 21.515.8 16.7 15.9 16.2

18.0 20.0 18.5 19.0

40.0 40.0 40.0 40.0

FY13F FY14Fassumptions

Source: : Bloomberg, Nomura estimates

Ports Design (589.HK, Neutral, CP: HKD6.15

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Oct

-03

Feb-

04Ju

n-04

Oct

-04

Feb-

05Ju

n-05

Oct

-05

Feb-

06Ju

n-06

Oct

-06

Feb-

07Ju

n-07

Oct

-07

Feb-

08Ju

n-08

Oct

-08

Feb-

09Ju

n-09

Oct

-09

Feb-

10Ju

n-10

Oct

-10

Feb-

11Ju

n-11

Oct

-11

Feb-

12Ju

n-12

(x)




OLD NEW OLDNet store additions 25 25 26

Same-store sales growth (%) 7 4 10

Stock provision as % to sales 6.4 7.6 6.3

Gross profit margin (%) 82.0 82.5 82.0Retail 85.7 86.3 85.3OEM 11.5 11.5 11.5Others 26.1 55.0 26.1

Operating expenses to sales ra 50.4 50.6 51.1Rental 21.4 20.9 21.5Staff 16.0 15.7 16.7Advertising 3.6 3.5 3.8Other operating expenses 9.4 10.4 9.1

Operating margin (%) 25.2 24.3 24.5

Effective tax rate (%) 26.9 26.9 26.9

Dividend payout ratio 80.0 75.0 65.0

Summary of key assump2012F

41

5; TP: HKD6.90)

23.1%22.6%

20.7%

16.6%15.8% 16.0% 15.9%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%


Ports Design ROIC

Ports Design's ROIC

NEW OLD NEW26 29 29

9 10 9

7.7 6.1 7.6

82.4 81.9 82.485.9 84.9 85.711.5 11.5 11.555.0 26.1 55.0

51.2 51.6 51.821.0 21.6 21.116.1 17.3 16.73.7 3.8 3.810.3 8.8 10.2

23.6 24.2 23.0

26.9 26.9 26.9

65.0 65.0 65.0

ptions2013F 2014F

Appendix A-1

Any Authors named on this report are Research Analysts unless otherwAnalyst CertificationI, Sarah Xing, hereby certify (1) that the views expressed in this Research report accurately reflect my pepart of my compensation was, is or will be directly or indirectly related to the specific recommendations oinvestment banking transactions performed by Nomura Securities International, Inc., Nomura InternationaImportant DisclosuresOnline availability of research and conflict-of-interest disclosuresNomura research is available on www.nomuranow.com/research, Bloomberg, Capital IQ, Factset, MarkitHImportant disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/discyou have any difficulties with the website, please email [email protected] for help.

The analysts responsible for preparing this report have received compensation based upon various factoUnless otherwise noted, the non-US analysts listed at the front of this report are not registered/qualified asubject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies

Any authors named in this report are research analysts unless otherwise indicated. Industry Specialists idresponsible for the sales and trading effort in the sector for which they have coverage. Industry SpecialistMarketing Analysts identified in some Nomura research reports are research analysts employed by Nomusector for which they have coverage. Marketing Analysts may also contribute to research reports in which

Distribution of ratings (Global)The distribution of all ratings published by Nomura Global Equity Research is as follows:46% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a 43% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a11% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified aAs at 30 June 2012. *The Nomura Group as defined in the Disclaimer section at the end of this report.

Explanation of Nomura's equity research rating system in Europe, Middle East and AfriThe rating system is a relative system indicating expected performance against a specific benchmark idevalue - current price)/current price, subject to limited management discretion. In most cases, the fair valuevaluation methodology such as discounted cash flow or multiple analysis, etc.STOCKSA rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next Benchmark over the next 12 months. A rating of 'Reduce', indicates that the analyst expects the stock totarget price and estimates have been suspended temporarily to comply with applicable regulations and/ocapacity in a merger or strategic transaction involving the company.Benchmarks are as follows: United States/Europe: please see valuation methodologies for explanationshttp://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global Emmethodology.SECTORSA 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the Benchmark during the next 12 months. A 'Bearish' stance, indicates that the analyst expects the sector tBenchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emergin

42

wise indicated

ersonal views about any or all of the subject securities or issuers referred to in this Research report, (2) no r views expressed in this Research report and (3) no part of my compensation is tied to any specific al plc or any other Nomura Group company.

Hub, Reuters and ThomsonOne.closures/disclosures.aspx or requested from Nomura Securities International, Inc., on 1-877-865-5752. If

ors including the firm's total revenues, a portion of which is generated by Investment Banking activities. as research analysts under FINRA/NYSE rules, may not be associated persons of NSI, and may not be s, public appearances, and trading securities held by a research analyst account.

dentified in some Nomura International plc research reports are employees within the Firm who are ts do not contribute in any manner to the content of research reports in which their names appear. ura International plc who are primarily responsible for marketing Nomura’s Equity Research product in the h their names appear and publish research on their sector.

Buy rating; 40% of companies with this rating are investment banking clients of the Nomura Group*.a Hold rating; 46% of companies with this rating are investment banking clients of the Nomura Group*. s a Sell rating; 21% of companies with this rating are investment banking clients of the Nomura Group*.

ca, US and Latin Americaentified for each individual stock. Analysts may also indicate absolute upside to target price defined as (fair e will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate

12 months. A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the o underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, or firm policies in certain circumstances including, but not limited to, when Nomura is acting in an advisory

s of relevant benchmarks for stocks, which can be accessed at: merging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation

next 12 months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the to underperform the Benchmark during the next 12 months.ng Markets (ex-Asia): MSCI Emerging Markets ex-Asia.

Explanation of Nomura's equity research rating system in Japan and Asia ex-JapanSTOCKSStock recommendations are based on absolute valuation upside (downside), which is defined as (TargeTarget Price will equal the analyst's 12-month intrinsic valuation of the stock, based on an appropriate vA 'Buy' recommendation indicates that potential upside is 15% or more. A 'Neutral' recommendation inrecommendation indicates that potential downside is 5% or more. A rating of 'Suspended' indicates thaand/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity inSecurities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular rcontinuing or additional information from Nomura relating to such securities and/or companies.SECTORSA 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of thstocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a weighted average recommendation of the stocks under coverage is) a negative absolute recommendat

Target PriceA Target Price, if discussed, reflect in part the analyst's estimates for the company's earnings. The achiother risks related to the company or the market, and may not occur if the company's earnings differ fro

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