招商证券*港股研究*Ports(0589.HK)-Lower-than-expected annual result, downgrade to “NEUTRAL”*00589**赵晓

报告名称：Ports(0589.HK)-Lower-than-expected annual result, downgrade to "NEUTRAL"
研究员：赵晓
报告类型：港股研究*公司报告
报告日期：20100408

行业/子行业：
公司名称及代码：宝姿(00589)
投资建议：中性

【内容摘要】

Ports Design Ltd ("Ports" or "the Company") announced FY09 annual result on 29th Mar. 2010. The net profit was up 11% YoY to RMB468mn on 3% revenue growth. This was primarily caused by the less-than-expected retail turnover and sharply decreasing in OEM and export business. Basic EPS was RMB0.83. The Company proposed a final dividend of RMB0.24, together with an interim dividend of RMB0.49, representing 88% dividend payout ratio.

Margins continued to improve Profit margin continued to increase in 2009, the GM and OM rose 4.9% and 0.8% to 81.6% and 33.9% respectively, and it was due to increased contribution from the higher-margin retail segment. During 2H09, the Company granted additional employee stock options leading to an extra charge of RMB36.4mn. This was partly offset by additional government grants of RMB25mn. The impact of stock option expense will come down in 2010. With additional outlets will open in 2010, we expect the profit margin to keep the growing momentum in 2010.
Sales momentum is picking up In 1Q2010, SSS rose 15% from 13% in 2009, which was mainly driven by 5% ASP increase and double-digit volume growth. We estimated the revenue per store grow at a rate of 10% in 2010. Store closures will be over by the end of 2010 and around 10% increase by 2011. We are looking for 20.9% increase in retail top line in 2010.
New business division setup The Company has set up a new business division called Licensed Brands Division. It will distribute six brands namely BMW lifestyle, Armani, Vivienne Tam, MaxMara, Ferrari and Versace. The Company management believes the new division will contribute 20% of the total revenue within the next five years to offset the decreasing on OEM and exports business. However, we think the new business will only have limited impact on the Company in the first 1-2 years.
Downgrade to "NEUTRAL" We downgrade the Company rating to "NEUTRAL" base on lower ASP increase and further stores closure guidance. Historically, the store closure tends to happen in the 1H of the year implying less revenue improvement. Then a new TP will be HKD21.23 base on 18X 2010PE.


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