Lianhua Supermarket 0980

Re: Lianhua Supermarket 0980

Postby winston » Fri Jan 08, 2010 2:52 pm

Not vested. PE 32 for a supermarket ?

DJ MARKET TALK: DB Raises Lianhua Target 34.5% To HK$26.45

1429 [Dow Jones] STOCK CALL: Deutsche Bank raises Lianhua Supermarket (0980.HK) target price to HK$26.45 from HK$20.30 after increasing FY10-11 earnings forecasts by 8%-11% as believes previous same-store sales growth assumption of 2%-3% too conservative, doesn't reflect in-house CPI assumptions; says Lianhua's SSS growth related to CPI, there is also correlation between SSS growth and profit growth by segment.

Adds, this backed by Lianhua's 4Q09 SSS growth, which turned positive. Keeps at Buy. Stock +1.1% at HK$22.60 midday.

Source: Dow Jones Newswire
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Re: Lianhua Supermarket 0980

Postby winston » Mon Feb 01, 2010 7:27 am

This counter has been on my watchlist for a long time.

I have not bought because of their high valuation. Sometimes, I even try to justify to myself why I should buy even when their valuation is quite high.

Anyway, I visited one of their supermarkets recently. They have renovated the place and they have made it upper-end, instead of the mass-market typed before.

I can see that it's cleaner but there's so much less people as prices have also increased a lot.

If there's a strategy to go upper end, I will be taking them off my watch-list.
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Re: Lianhua Supermarket 0980

Postby stilicon » Mon Feb 01, 2010 4:35 pm

What about Jingkelong (0814.HK) then ?
Of the 3 supermarkets co I follow (LIANHUA 0980, WUMART 8277 and JINGKELONG 814), Jingkelong seems the least expensive. I don't know whether it is because of a perceived lower growth perspective, or because of a too small size to interest big international investors ?
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Re: Lianhua Supermarket 0980

Postby winston » Mon Feb 01, 2010 7:16 pm

Hi Stilicon,

1) I dont really follow Jingkelong. Have not seen any of their stores.

2) Not too sure about Wumart. It did soar when a Chinese Hedge Fund Manager paid a lot of money to have lunch with Warren Buffett. At that lunch, he supposedly gave some info on Wumart to WB.

Even though WB did not follow up on Wumart, rumors were flying around that WB was looking at it. That Hedge Fund manager owned a lot of shares in Wumart and he made many times the millions that he paid to have lunch with WB :D

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Winston
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Re: Lianhua Supermarket 0980

Postby stilicon » Mon Feb 01, 2010 8:22 pm

Sometimes to be far away from a study topic has its advantages !
I didn't know nothing about the funny Wumart story !
All I knew was that Wumart has a P/B ratio of about 5,75 (which is really a lot for a supermarket chain) versus 1,65 for Jingkelong.
As for estimated FY10 P/E, I had 30 (sorry, correction : 30 for FY09 and about 22-25 for FY10) for Wumart and again about 13 for Jingkelong.
So I never took Wumart seriously.
Last edited by stilicon on Mon Feb 01, 2010 8:31 pm, edited 2 times in total.
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Re: Lianhua Supermarket 0980

Postby stilicon » Mon Feb 01, 2010 8:27 pm

Until now Jingkelong has posted decent growth and good financial results years after years.
It is only developing in the Greater Bejing region, and maybe you do not travel there, but in the Shanghai region ? If you ever visit a Jingkelong supermarket, please tell us how it looks !
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Re: Lianhua Supermarket 0980

Postby winston » Mon Jun 07, 2010 7:35 am

Not vested. From Fosun's website:-

Friendship Co., Ltd (600827.SH) is a large diversified listing commercial enterprise under which are Lianhua Supermarket, Homemart, Friendship Department Store, etc.

Friendship Fosun is the largest shareholder of Lianhua(980,HK), which invests in Century Mart, Quik Convenience Store, Carrefour. With over 3800 outlets including Century Mart, Quik, Lianhua is the largest retail chain in China.
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Re: Lianhua Supermarket 0980

Postby stilicon » Fri Sep 24, 2010 6:44 pm

04/08/2010 18:03
DBS Vickers raises Lianhua (00980) target to HK$36.85, "buy"

DBS Vickers raised its target price for Lianhua Supermarket (00980) to HK$36.85 from HK$32.22, and maintained its "buy" call.

The house expects a healthy interim results due on August 24, with a 23% earnings growth to RMB307m. It also looks for further synergies from earlier acquisition of Hualian Supermarket to flow through to 2H10.

In addition, DBS said potential injection of Hualian GMS Shopping Centre in coming months could also boost earnings by another 6%. (KL)

-> my 2c take : DBS's TP was HK$19,91 (see how really precise those super-analysts can be !) on 18/12/2009. Now it is HK$36,85.

Did the then-perceived growth perspectives and rentability really change that much ? Or is it the usual post-price increase justification from analysts who follow the market more than lead it ?

For exposure on Supermarkets, I would now prefer CRE (291.HK) over Lianhua. It adds Food & Beverage exposure ("Snow Bier" + water + also meat supply). P/B ratio is above 6.0 for Lianhua vs a still rich 2.7 for CRE. P/E and P/OCF (at around 14,5 and 9-10 for est.FY10) are more down to earth for CRE.

And yet revenue and NAV increase at about the same rate over the last 3-4 years for both companies. But right now, I probably would simply wait, for a small correction to take a position.
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Re: Lianhua Supermarket 0980

Postby winston » Mon Nov 14, 2011 11:46 am

not vested

DJ MARKET TALK: UOBKH Cuts Lianhua Supermarket Target To HK$15
Sep 21, 201


0923 [Dow Jones] STOCK CALL: UOB KayHian cuts its target for Lianhua Supermarket (0980.HK) to HK$15.00 from HK$18.00, with the new target based on 16.5X FY12 P/E.

While the house has not revised its earnings estimates, it's aware of the stock's recent weakness, after it fell 37.5% following the announcement of its 1H11 results on August 10, versus the HSI's 10% decline in the same period.

"Management confirmed that the company's fundamentals are still the same and daily operations are as usual. There are no quality or corporate governance issues."

Competition in the supermarket industry in Yangtze Delta has intensified as more international retailers enter the market, but Lianhua will continue to focus on this area to become a regional leader, it notes.

It keeps the stock at Buy.

Source: Dow Jones Newswire
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Re: Lianhua Supermarket 0980

Postby winston » Mon Nov 14, 2011 11:49 am

not vested

DJ MARKET TALK:Macquarie Cuts Lianhua Supermarket Target To HK$14.60
August 16, 2011


1027 [Dow Jones] STOCK CALL: Macquarie cuts Lianhua Supermarket's (0980.HK) price target to HK$14.60 from HK$20.00, after revising down its 2012 earnings forecast by 10% due to fierce competition, slower business growth and a sluggish store expansion plan.

The house keeps a Neutral rating on the stock, after the Chinese supermarket chain reported above-view first-half earnings Wednesday on the back of one-off gains.

It notes Lianhua's same-store-sale growth was solid at 8.6% in the first half, helped by inflation, but was still lower than peers, such as Beijing Jingkelong's (0814.HK) at 10.4% and Springland International's (1700.HK) supermarkets at 14.4%.

Source: Dow Jones Newswire
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