报告名称：Intime Retail Group(01833.HK)Omni-channel synergies crystalizing but underapprec
报告类型：港股研究
报告日期：2015-10-19
研究机构：高盛集团有限公司
股票名称：银泰商业
股票代码：01833
页数：15
简介：What's changed
While department stores are clearly structurally challenged, we still see acompelling investment case for Intime. It currently trades at 1.3X 2016EP/B vs. 6% dividend yield (vs. China retail peers’ avg of 1.7X/4%). Overall,we see company-specific factors such as 1) improving core business, 2)omni-channel (O2O) synergies, and 3) solid capital management, setting itapart from peers and driving a better core EPS growth of 12% CAGR for2015-18. We expect the “trio of positives” to continue to play out andprovide a rich pipeline of catalysts in the next 6 months. We reiterate Buywith our 12-month target price of HK$11.1 offering 32% upside potential.
Implications
1. Core business improved in 3Q: SSSG accelerated to 4% yoy (ex closedstores) vs. 3% in 2Q, despite a slowdown in the consumer sector. Webelieve fewer store openings (1 in 2H15) will also allow Intime to focus onturning around younger stores, driving 2H15 core EPS growth of 12% yoy.
2. O2O bearing fruit, more Alibaba involvement to come: Two recentO2O initiatives continue to drive Intime’s outperformance: 1) Inventorydigitalization enabled Intime to connect store offerings to its online app(Miaohuo), improving customer conversion rate (Wulin store SSSG turnedpositive). 2) The imported goods mart “Choice” is generating 10% OPM;we anticipate 9% OP contribution by 2017. We expect more collaborationbetween Alibaba and Intime, with media reports citing that Tmall may setup counters in “Choice” with its cross-border e-commerce offering.
3. Asset disposal could translate to special dividend: We expect it togenerate Rmb600mn cash via disposals in 2H, and think it may pay half (2%of market cap) as dividends (similar to 1H after selling Wushang shares).
Valuation
We raise 2015-17 net income 5%-8% to factor in stronger OPM (but cut EPSin 2016-17 due to share count dilution on CB conversion). We fine tune our12-month SOTP target price to HK$11.1 (from HK$11.2).
Key risks
Worse-than-expected new store losses, higher opex.

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