BELLE'S Weak International Sales Will Weigh On Its Profitability.

< p > based on the weakness of domestic consumer confidence, the bank expects BELLE International (1880, $11.18) interim results and the company's year-round same store sales target to be downregulated.

Although the company's 0.5% quarter growth in the second quarter of the same store recorded an increase of 0.5% over the expectation, the pace of expansion of its new store began to slow down (an annual increase of 13.7% in the first half of retail outlets, while an increase of 20.4% in the same period last year).

Based on the uncertainty of China's economic outlook, the bank believes that domestic consumption climate has not rebounded significantly in the second half of the year. Therefore, the bank believes that BELLE may reduce its sales growth in the same year in 2013, which will be no less than 4% in 2012.

In the short term, there will still be pressure, because 1) low profit sports, a target= "_blank" href= "//www.sjfzxm.com/" > dress < /a > sales growth is higher than < a target= "_blank" href= "http:// http://" > shoes > business; 2) in the past 12 months, new stores opened in three or four line cities may take a long time to achieve balance of payments, because the average sales volume of each district is lower than that of the first tier and second tier cities and 3. The discount offered by BELLE may remain at a high level to maintain competitiveness. At the same time, the bank also expects the profit margin of the company to be

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< p > our bank's growth in the same store sales of footwear and sportswear in 2013 has been reduced to 3% and 5% respectively. It is estimated that the same store sales growth of the two major businesses in 2014 will be slightly reduced to 5%.

Under this assumption, turnover growth is expected to fall to 8% in 2013 and rise to 12% in 2014.

At the same time, we expect that the new business of the company and the low profitability of the three or four tier cities and the increase in staff spending will not be completely offset by the slowdown in the turnover growth, so the operating profit margin will fall from 16.4% in 2012 to 15% in 2013.

However, the bank expects that the company's operating profit margin will return to double digit level next year and the growth of the number of stores will slow down and stabilize.

As a result, the bank expects earnings per share to drop slightly from 0.5% to 0.514 yuan in 2013, and increase 10.8% to 0.569 yuan in 2014, which is lower than the 6% and 7% consensus of the market respectively.

The company's current price is equivalent to 17.4 times the 2013 price earnings ratio and 15.7 times the 2014 price earnings ratio, and the valuation is very high. After all, the annual compound growth rate of the company's earnings per share from 2012 to 2014 is only a single digit level.

The bank lowered BELLE to a rating of only $10.0, equivalent to 15.5 times earnings in 2013 and 14 times earnings in 2014.

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