Daphne BELLE Shoe Shoe Interest Rate Is Recovering

< p > two big China < a target= "_blank" href= "//www.sjfzxm.com/" > shoes < /a > track industry Daphne (0210) and BELLE (1880) will announce their 2012 results respectively on 20 and 25 March.

We expect the two companies to record a steady profit growth, with Daphne at 2% (in line with market expectations) and BELLE at 1% (3% lower than market expectations).

Considering that both companies have guided market expectations, we expect no surprises.

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< p > in the performance announcement, the main concerns are 2013 guidelines (same store sales and store growth) and profitability outlook.

The operating profit margin was depressed in 2012, almost offset the increase in revenue (Daphne 20% and BELLE 15%), including: 1) because of weak sales growth in the same store, low sales leverage, and 2) a larger discount rate and a longer price reduction.

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< p > for Daphne, in addition to the above factors, another reason for the increase in operating costs is that the company continues to increase investment in the upgrading of its operating system and change its store portfolio (to increase its proprietary stores).

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In the case of BELLE P, we think that the company will expand its stores in the light of the industry prospect, and will increase and extend the loss of new stores, which will further reduce operating costs.

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< p > < strong > profit rate is recovering < /strong > < /p >.

In the future, although the industry outlook will remain weak in the short term, Daphne is still the first choice in the footwear industry from the perspective of risk return. The reason is that the company's profitability is recovering and its valuation is not high enough. P

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< p > maintaining Daphne's buying rating and target price of 11 yuan (yesterday's closing price of 9.24 yuan).

On the BELLE side, we believe that the risk of self encroachment and profit margins will limit the rebound in the same store sales, making the profit margin difficult to grow significantly.

Plus the valuation is not attractive, we maintain a neutral rating and target price of 13.8 yuan (yesterday's closing of 13.42 yuan).

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