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雷达卡
Long-term thesis intact; no near-term catalyst
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The January headline PMI of 45.3 (the highest since October 2008)
indicates China’s economic slowdown may be bottoming out. Even if
this is true, however, private consumption should lag by months in
terms of both fundamentals and share prices. For long-term investors
looking to take a meaningful stake in superior industry leaders, good
buying opportunities may emerge in the next three to six months.
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Recent statistics show China’s retail sales increased 13-14% YoY in
both the three-day 2009 New Year holiday and the seven-day Chinese
New Year public holiday, notably softening from the 20%+ growth rate
in previous months. In 2009, a contraction in economic activity and
concerns about potential job losses/salary cuts should continue to
depress domestic consumer confidence. Deflationary headwinds could
also drag domestic consumers’ spending.
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The prospect of a sharp deterioration in consumption, however, is very
limited, in our view, given: 1) Chinese households’ balance sheets are
still very healthy; 2) monthly mortgage payments are substantially
reduced for urban households, thanks to interest rate cuts and higher
discounts offered; 3) multiple consumption-boosting government
measures, including tax rate cuts and consumption coupons. In
addition, the rising January headline PMI may indicate the bottoming
out of China’s economic slowdown, and hence further strengthen our
confidence in China’s consumption in the long run.
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We believe China’s department store operators are in for a rough ride,
especially in 1H09, due to 1H08’s high base. However, expectations of
weakness are more or less engrained in the market, in our view, as
reflected in major players’ historical low valuation levels. We maintain
our MARKET WEIGHT on the sector, but expect to see sound buying
opportunities in the next three to six months for long-term investors.
We maintain our NEUTRAL rating on Parkson and upgrade our rating
on Golden Eagle to NEUTRAL from Underperform as valuations are
becoming interesting.
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