德银-港股-零售业-有利的签证政策和强劲的人民币惠及香港零售商-20180205-11页_841kb

Summary of Hong Kong Retail Industry Update (February 5, 2018)

Core Content

This document provides an update on the Hong Kong retail industry, focusing on the impact of recent visa policy changes and the appreciation of the RMB on consumer travel and retail sales. It also includes Deutsche Bank's research recommendations and financial analysis for key retail companies.

Main Points

• Visa Policy Change:

  • Effective from February 2018, Guangdong Province Hukou holders can now apply for Hong Kong visas via EEA self-service machines without being subject to the "two passes every two months" restriction.
  • The machines now offer 24-hour service and issue visas immediately to qualifying applicants.
  • For cities outside Guangdong, there is no compulsory time interval between visa applications, though processing times vary.

• Impact on Travel and Retail:

  • The policy is expected to benefit Hong Kong retailers by potentially increasing the number of visitors from Guangdong, especially those staying overnight.
  • It may also help business travelers from Guangdong, but there is no expectation of an immediate surge in visitor numbers.
  • The document suggests that the weak recovery in mainland same-day visitor arrivals may be due to the previous restrictions on entry.

• RMB Appreciation:

  • A gradual RMB appreciation of 8% since January 2017 is expected to support outbound travel, including to Hong Kong.

• Deutsche Bank's View:

  • The bank is positive about the potential for growth in same-day visitor arrivals and their impact on the retail sector.
  • It highlights the recovery in the Hong Kong retail market since the second half of 2017.
  • The policy change and RMB appreciation are seen as complementary factors that could benefit the retail sector.

• Key Retail Companies:

  • SA SA International (0178.HK):
    • Recommended as "Buy" with a target price of HKD 3.38.
    • Financial metrics: P/E 26.6 (2017A), 23.4 (2018E), 16.2 (2019E); EV/EBITDA 15.2 (2017A), 14.5 (2018E), 10.5 (2019E); Price/book 5.1 (2017A), 5.6 (2018E), 5.6 (2019E).
  • Chow Tai Fook (1929.HK):
    • Recommended as "Buy" with a target price of HKD 8.91.
    • Financial metrics: P/E 19.6 (2017A), 22.0 (2018E), 18.8 (2019E); EV/EBITDA 11.6 (2017A), 14.3 (2018E), 12.1 (2019E); Price/book 2.4 (2017A), 3.0 (2018E), 2.8 (2019E).
  • Lifestyle International (1212.HK):
    • Recommended as "Buy" with a target price of HKD 11.76.
    • Financial metrics: P/E 11.1 (2016A), 7.7 (2017E), 11.1 (2018E); EV/EBITDA 12.4 (2016A), 12.1 (2017E), 11.4 (2018E); Price/book 8.7 (2016A), 6.4 (2017E), 4.8 (2018E).

Key Information

• Industry Focus: Retail and wholesale trade in Hong Kong.

• Research Analyst: Anne Ling.

• Equity Rating Key:

  • Buy: Indicates a positive outlook with potential for total shareholder return.
  • Sell: Indicates a negative outlook with potential for loss.
  • Hold: Neutral outlook, no specific recommendation.

• Recommendations and Target Prices:

  • SA SA International: HKD 3.38 (Buy)
  • Chow Tai Fook: HKD 8.91 (Buy)
  • Lifestyle International: HKD 11.76 (Buy)

• Disclosure Information:

  • Deutsche Bank AG and its affiliates may have financial interests in the subject companies.
  • The report includes important disclosures about potential conflicts of interest and the source of financial data.
  • The report is subject to various legal and regulatory requirements in different jurisdictions.

• Additional Information:

  • The report is provided for informational purposes only and does not consider individual investment objectives.
  • It includes various risk warnings regarding financial instruments, derivatives, and foreign exchange transactions.
  • Deutsche Bank's research is independent of other business divisions and is subject to certain legal and regulatory constraints.

Figures and Data

• Figure 1: Mainland same-day/overnight visitor arrivals trends.
• Figure 2: Mainland same-day/overnight visitor arrivals YoY growth trends.
• Figure 3: Mainland same-day visitor arrivals trends 2014-2017 by month.
• Figure 4: Mainland overnight visitor arrivals trends 2014-2017 by month.
• Figure 5: HK retail sales growth and mainland visitor arrivals trends.
• Figure 6: HK cosmetics and gold & jewelry YoY sales growth and mainland same-day visitor arrivals trends.

Analysts and Leadership

• David Folkerts-Landau: Group Chief Economist and Global Head of Research.
• Raj Hindocha: Global Chief Operating Officer.
• Michael Spencer: Head of APAC Research.
• Steve Pollard: Head of Americas Research.
• Anthony Klarman: Global Head of Debt Research.
• Paul Reynolds: Head of EMEA Equity Research.
• Dave Clark: Head of APAC Equity Research.
• Pam Finelli: Global Head of Equity Derivatives Research.
• Spyros Mesomeris: Global Head of Quantitative and QIS Research.

Contact Information

• Australia: Deutsche Bank AG, Deutsche Bank Place, Level 16, Sydney, NSW 2000.
• United Kingdom: Deutsche Bank AG London, 1 Great Winchester Street, London EC2N 2EQ.
• Germany: Deutsche Bank AG, Mainzer Landstrasse 11-17, Frankfurt am Main.
• United States: Deutsche Bank Securities Inc., 60 Wall Street, New York, NY 10005.
• Hong Kong: Deutsche Bank AG, Hong Kong Branch, International Commerce Centre, 1 Austin Road West, Kowloon.
• Japan: Deutsche Securities Inc., 2-11-1 Nagatacho, Sanno Park Tower, Tokyo 100-6171.

Disclaimer

• The information and opinions are based on public sources and may not be accurate or complete.
• Deutsche Bank does not provide investment, legal, tax, or accounting advice.
• The report is not an offer to buy or sell any financial instruments.
• All transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction.
• The report is subject to various legal and regulatory requirements in different jurisdictions.