UOB scrutinized 76 key HK-listed consumer plays and says three worthy of attention are Bosideng, Le Saunda and Giordano. The criteria include: a) earnings resilience to downturn, b) strong cash flows, and c) high and growing dividend.

FANS OF Eratat Lifestyle, which has a surprisingly low valuation of around 2X PE on the Singapore bourse, should like to learn more about the businesses and relatively high valuations of 3 retail clothing and apparel plays listed on the HK Stock Exchange.

These are Bosideng, Le Saunda and Giordano which were recently highlighted by UOB Kayhian after it scrutinized 76 key HK-listed consumer plays.

Excerpts from latest analyst reports...

UOB: BOSIDENG'S 38% Market Share Tops In China

Bosideng International Holdings Ltd (HK: 3998) is the largest down apparel firm in the PRC with 7,579 retail outlets.

Its six core brands are "Bosideng," "Snow Flying," "Kangbo," "Bengen" (previously known as "Bingjie"), "Shuangyu" and "Shangyu."

Capturing the leading position in China’s down apparel market with a 38% market share, Bosideng generates steady cash flow of around one bln yuan a year from operations.

Bosideng recent price: 1.85 hkd

"Upside earnings surprise could come from the rapidly-growing (30% pa) menswear business, which only made up 12% of EBITA last year," UOB Kay Hian said.

With 4.4 bln yuan (0.74 hkd/share) of net cash as at 31 Mar 11, Bosideng offered 11% dividend yield for FY11 (year ending 31 Mar 11).

"Despite earnings turbulence in FY08-09, dividend per share (DPS) grew steadily from RMB 8.7 cents in FY08 to 19.3 cents in FY11 with a payout ratio of 60-120%," UOB added.

See also: ERATAT LIFESTYLE: Wow! More sophisticated apparel and footwear designs


Le Saunda, founded in 1977 and listed in 1992, continuously expands its retail network through the operation of self-owned and franchised outlets. Photo: Le Saunda

UOB: Shoe Retailer LE SAUNDA Has China-wide Footprint

Hong Kong-based Le Saunda applies a vertically-integrated business model with a focus on the PRC and Hong Kong markets.

Le Saunda, founded in 1977 and listed in 1992, continuously expands its retail network through the operation of self-owned and franchised outlets.

In the early 1990s, Le Saunda opened its first retail outlet in Shanghai and as of March 1, it had 766 outlets across the PRC, Hong Kong and Macau, with a presence in all 27 provinces and municipalities in Mainland China.

"We saw the across-the-board resilience of ladies’ footwear retailers year-to-date, including Belle, Stella and Daphne. This shows the sector’s stability given the inelastic demand for ladies’ footwear.

"This time, we turn the spotlight on Le Saunda," UOB Kay Hian said.

"Le Saunda owns and operates a chain of ladies’ footwear stores under the famous brands Le Saunda and CnE in China."

Le Saunda current price: 1.85 hkd

The company’s profit tumbled by 23% from FY07 (year ending 28 Feb 07) to FY08-09, and then doubled through FY11. DPS remained steady at 7.5 HK cents during the tough times of FY08-09 and grew to 13 HK cents in FY11, implying 3.3% dividend yield and an almost-50% payout ratio.

"Le Saunda also undertakes OEM operations with an aim to explore the international market, manufacturing high-end premium footwear for a number of recognized brands with strong strengths in production," the company said.

See also: COMTEC SOLAR: HK-listco's 1H Profit Soars 48.1% On Vibrant Wafer Sales


Photo: Giordano

UOB: GIORDANO Trading At Only 13.8x

UOB Kay Hian said it has a 'buy' call on clothing and apparel giant Giordano International Ltd (HK: 709) with a target price of 9.0 hkd.

"While its China operations were still in restructuring mode in 1H11, other markets (which contribute over two-thirds of the group’s earnings) performed strongly as a result of a successful pricing strategy and marketing campaign," UOB said.

Over the longer term, the Giordano’s focus on product, marketing and pricing should ensure better financial achievements going forward, UOB added.

"The group has declared a substantially higher regular interim dividend rather than a smaller regular dividend plus special dividend as management expects to pay strong dividends in future in view of the promising outlook and strong cash flow.

Giordano recent price: 6.26 hkd

"The stock is trading at only 13.8x 2011F PE with a 6% dividend yield," UOB said.

Hong Kong-based Giordano International Ltd, through its subsidiaries, retails and distributes casual apparel and accessories under the Giordano, Giordano Ladies, Giordano Junior, BSX and Concepts One brands.

See also: What Bear Market? 11 IPOs Eye 77 Bln Hkd In Sept, Including Hongguo


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