InvestIdeas

I shop there quite abit whenever I'm in China. Not vested. From DB:-

* Lianhua Supermarket -

Dec SSS growth update - (Hold, 0980.HK, HK$9.57): After an update with Lianhua management, we estimate that sss growth for Dec was flat at c. 1% yoy.

This is compared to mid single digit in Oct/Nov. We believe this might be partly due to Chinese consumers holding up their budget for Spring festival.

Consumers are expected to start shopping for this big festival one week or so prior to the festival.

DJ MARKET TALK: UBS Keeps Lianhua At Buy, Target HK$13.07

1234 [Dow Jones] STOCK CALL: UBS keeps Lianhua (0980.HK) Buy with target HK$13.07 after company says two shareholders will sell shares to Bailian Group, which will control about 65% of Lianhua's total outstanding shares, up from 44%. Says, equity transfer is one of the initiatives taken by State-owned Assets Supervision and Administration Commission to enhance local retailers' competitiveness in Eastern China.

"We believe potential restructurings in this region will help further consolidate existing retail business into Bailian Group and reduce any internal competition among Lianhua and other state-owned supermarkets." Stock +4.3% at HK$8.40.

DJ MARKET TALK: Nomura Cuts Lianhua Target To HK$7.40 Vs HK$8.50

1008 [Dow Jones] STOCK CALL: Nomura cuts Lianhua's (0980.HK) target to HK$7.40 from HK$8.50 after cutting 2009-10 earnings forecasts by 2.3%-2.4% on concerns of slower growth in Shanghai and nearby regions.

"We continue to expect decelerating same-store-sales growth and a margin squeeze as a result of the economic slowdown, aggressive promotional activities since 4Q08 and falling inflation.

Lianhua's thin operating margin and high expense ratio lend it a smaller buffer against the market downturn." Keeps Reduce. Stock +0.5% at HK$8.12.

Up 11% now ...

DJ MARKET TALK: Lianhua Likely To Rise On CNY492M Buy Of Hualian

0814 [Dow Jones] Lianhua Supermarket (0980.HK) likely to rise on announcement of buying rival Hualian Supermarket from controlling shareholder Bailian Group for CNY492 million.

Market participants say move likely considered as killing two birds with one stone; purchase decreases competition pressure with synergies to be realized. Lianhua owns more than 3,000 outlets, number will jump to more than 5,200 after buy.

Also, price tag translates into 14.9X historic earnings, below 18.8X Lianhua trading at based on Friday's close of HK$11.68 (+5.6%). Lianhua will pay for acquisition in cash; deal subject to government approvals

Wonder what was GIC's strategy in June-11 Not enough market intelligence

"GIC cuts stake in Lianhua (00980) to 4.8%
18:54 15 June 2009

(Infocast News) Government of Singapore Investment Corporation Pte Ltd (GIC) has reduced its long position in Lianhua Supermarket (00980) from 11.192 million shares (5.41%) to 9.942 million shares (4.80%), after it sold 1.25 million shares of the company on June 11 at $10.326 per share on average, the Stock Exchange's SDI information shows.

The shares changed hands on the Stock Exchange for a total of $12.91 million."

Presently trading at $12.96 level.

DJ MARKET TALK: Lianhua +10.1%; DBS Ups To Buy, HK$15.19 Target

1117 [Dow Jones] STOCK CALL: Lianhua Supermarket (0980.HK) will instantly scale up market share in Yangtze River Delta region, especially in Shanghai after buying rival supermarket chain Hualian, says DBS Vickers; synergies from increasing economies of scale should raise company's bargaining power, lower average procurement costs.

House estimates deal to at least boost Lianhua' revenue by 13% to CNY28 billion, net profit by 9% to CNY477 million for 2010; bumps target price to HK$15.19 from HK$10.93 based on 18X FY10 P/E vs 15X previously, upgrades stock to Buy from Hold. Lianhua +10.1% at HK$12.86

Not vested.

DJ MARKET TALK: CICC Keeps Lianhua At Buy; Target At HK$18.80

1547 [Dow Jones] STOCK CALL: China International Capital Corp keeps Lianhua (0980.HK) at Buy, target at HK$18.80 (24X FY09 P/E), after in-line 1H results (net profit +10% on-year at CNY250 million).

"The trend of food price indices bottoming out will be much clearer in 2H09, though the magnitude is still uncertain." Thinks earnings performance will be much better in 2H09, mainly driven by positive same-store-sales growth. Stock +1.2% at HK$15.50.

DJ MARKET TALK: UBS Raises Lianhua Supermarket Target To HK$18.41

1539 [Dow Jones] STOCK CALL: UBS maintains Lianhua Supermarket Holdings (0980.HK) at Buy, raises target price to HK$18.41 from HK$17.15; says 1H net profit was CNY249.7 million, higher than broker's estimate of CNY223.8 million, due to improved hypermarket operating margins, higher income from term deposits.

"The hypermarket EBIT margin improved from 1.4% in H108 to 1.7% in H109 as a result of fewer loss-making stores and strengthening operating efficiency." Broker remains optimistic on Hualian Supermarket acquisition as says stores mainly located in Yangtze River Delta region, further consolidation in Eastern China will likely help Lianhua's overall operating margins.

Revises up EPS estimates to CNY0.82/1.01/1.31 from CNY0.76/1.02/1.27 in 2009/10/11, due to higher income from term deposits.

Not vested. PE 24

DJ MARKET TALK: Lianhua To Rerate If Restructuring Succeeds -UOB
Sept 29, 2009

1607 [Dow Jones] STOCK CALL: Lianhua's (0980.HK) acquisition of Hualian from its parent for CNY492 million will underpin margins with stronger bargaining power with both customers and suppliers as well as achieving economies of scale in logistics, UOB KayHian says.

Notes deal will boost market share in Shanghai to over 30% from 20%, boost store count to over 5,300 from 3,932. "Lianhua is entering into a fast growth phase where store count for hypermarkets has reached a critical mass and contribution from semi-new stores is ramping up."

Estimates stock trading at 20X 2009F P/E, 16X 2010F P/E vs peers Wumart (8277.HK) at 27.5X, 23X and Times Ltd. (1832.HK) at 21.7X, 17.1X. Tips stock to rerate closer to Wumart's level if restructuring and turnaround of hypermarket segment successfully boost efficiency and earnings growth. Keeps at Buy, target at HK$20.00 based on 20X 2010F P/E.

Source: Dow Jones Newswire

Not vested.

DJ MARKET TALK: UBS Raises Lianhua Target 18.3% To HK$23.42

1427 [Dow Jones] STOCK CALL: UBS raises Lianhua Supermarket (0980.HK) target to HK$23.42 from HK$19.79, with same-store-sales growth now expected at 4.1% for 2010 vs previous 3.7% forecast.

Raises 2010 EPS forecast to CNY0.98 vs CNY0.95, raises 2011 EPS forecast to CNY1.23 vs HK$1.19. "Recent headline news on rising edible oil prices and liquor selling prices reminded us about the inflation cycle in 2007... consumers tend to buy more during the period of inflation."

Adds, Carhua, JV between Lianhua and Carrefour, also benefits from improving SSS growth, Shanghai Expo next year.

Source: Dow Jones Newswire