EAST ASIA SECURITIES COMPANY LIMITED
Recommendation:
Trading Buy
9/F, 10 Des Voeux Road Central, Hong Kong.
Dealing: 3608 8000 Research: 3608 8098 Facsimile:
3608 6132
HONG KONG RESEARCH
Analyst: Kelvin Li 8th March 2006
This
report has been prepared solely for information purposes and we are not
soliciting any action based upon it. Neither
this
document nor its contents shall be construed as an offer, invitation,
advertisement, inducement or representation of
any
kind or form whatsoever. The information is based upon information, which we
consider reliable, but accuracy or
completeness
is not guaranteed. Opinions expressed herein are subject to change without
notice. At time of this report,
East
Asia Securities Company Limited has no position in securities of the company or
companies mentioned herein, while
its
group companies may from time to time have interests in securities of the
company or companies mentioned herein.
Main Board Listing - Research
金鷹商貿集團有限公司
Golden
Eagle Retail Group Limited [Stock Code: 3308]
Joint Sponsors : Goldbond Capital (Asia)
Limited
ABN AMRO
Rothschild
Joint Global Coordinators, Joint Bookrunners : Goldbond
Securities Limited
and Joint Lead Managers ABN AMRO
Rothschild
Sector : Retailing
Business : Department store operator in the
PRC
Total share offer: 450,000,000 shares
(25.0% of the enlarged share capital)
(including 112,500,000 New shares &
337,500,000 Sale shares)
Public Offer: 45,000,000 shares (10%)
Placing: 405,000,000 shares (90%)
Greenshoe: 67,500,000 shares
Price: HK$2.50 - HK$3.15 per share
Market Cap.: HK$4,500 million - HK$5,670
million
FY2005E P/E: 20.8x-26.2x (pro-forma
fully diluted)
Adjusted NTA per share: HK$0.29-HK$0.33
Staffing: 2,336 (as of 3rd March
2006)
HK Public Offer period:
8th March 2006
- 13th March 2006 noon
Receiving bank: Bank of China (HK)
Standard
Chartered Bank (HK)
Share registrar: Computershare Hong Kong
Investor
Services Limited
Listing date: 21st March 2006
Business of Golden Eagle (“the Group”)
The Group is a private
enterprise, mainly engaged
in the development and
operation of a department
store chain in Mainland
China. The Group’s
department stores are
characterized by “shop in
shop” and
customer-oriented concepts, offering
quality merchandise and
services. As at 31st
January 2006, the Group
operates six department
stores with gross floor
area and operating area of
over 159,000 square metres
and 115,000 sq m,
respectively, situated in
prime shopping areas in
their respective cities.
Jiangsu province is
currently the Group’s principal
market. The Group opened
its first department
store in Nanjing, namely
Nanjing Xinjiekou Store,
in 1996, and has extended
its department store
chain into other cities in
the province since 2000.
In July 2005, the Group
expanded outside Jiangsu
province and controlled a
store in Xi’an, Shaanxi
province.
The Group’s department
stores offer a wide range
of merchandise, ranging
from daily necessities like
apparel and food to
luxuries like jewellery and
wine, while merchandise is
sold via concessionaire
counters and direct sale
counters.
Major Shareholders after Listing (Assuming
the over-allotment option is not exercised)
Mr. Wang
Hung, Roger (chairman of the Group) 75.0%
75.0%
2
EAST ASIA
SECURITIES COMPANY LIMITED
Use of Proceeds
Net proceeds from the
offer are estimated to be HK$920 million.
(Assuming an issue price of HK$2.825 each, which is
the mid-point of the indicative price range, and the over-allotment
option is not exercised.)
HK$
million
For establishment of three
new stores, namely Xi’an Gaoxin Store, Nanjing Xuanwu Store
and Taizhou Store
320
For acquisitions and/or
opening of three to four department stores in the PRC in the next 2-
3 years
300
For repayment of bank
borrowings. 200
For the upgrade of the
hardware and software of the Enterprise Resources Planning (ERP)
system
30
For improvement in the
exterior and interior decorations of the Group’s department stores 30
For general working
capital 62
Remark: The Joint Lead Managers have undertake to
transfer, on behalf of the Selling Shareholder of the 337.5 million sales
shares, RMB750 million of the net proceeds to the
Group one day before the Listing Date, in order to settle the Outstanding
Loan (RMB750 million) due from the Selling
Shareholder to the Group.
Financial Highlights
Year ended 31st December 9 months ended
30th
September
2002 2003 2004 2005
RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000
Gross sales proceeds
1,036,573 1,442,121 2,107,054 1,939,381
Turnover 235,685 303,540
481,699 497,353
Gross profit 141,090
203,780 327,074 349,227
Operating profit 41,864
75,231 156,497 231,058
Attributable profit 5,910
35,345 91,970 145,381
Basic EPS RMB0.0035 RMB0.0209 RMB0.0545 RMB0.0862
Strengths/Opportunities
�� Consumer
spending continues to grow favourably in China and shows little sign of
slowdown, thanks to
strong economic growth, rising personal income and higher propensity to
spend, which should provide
department store operators with good business opportunities and
potential for further expansion.
�� Jiangsu province, the Group’s principal market, is one of the PRC’s most
economically established
provinces, with the third highest GDP in the country in 2004. Since
opening its first store in Jiangsu
province, the Group has established a store network with 5 outlets in
the province, making it wellpositioned
to compete with peers.
�� Pricing at 20.8x-26.2x FY2005E P/E, Golden Eagle’s valuations are lower
than rival Parkson (HKEx:
3368)’s 36x FY2005A P/E. Golden Eagle’s operating margin for the first
nine months of 2005 was near
46%, compared with Parkson’s 33% in FY2005, making it more attractive in
terms of better profitability.
Weaknesses/Threats
× Competition is expected to become more intense, after the PRC fully
opened its retail market to foreign
retailers last year, in order to comply with WTO requirements. The Group
said it would look for other
second-tier cities to open new stores, where rivalry is less severe.
× 75% of the total shares offer would be sales shares from existing
shareholders for loan repayment to
the company. Although the proceeds from sales of the sale shares will be
repaid to the company, the
existing shareholders had in fact long been withdrawing resources for
expansion of the company if not
for the listing.
Recommendation:
Trading Buy
3
EAST ASIA SECURITIES COMPANY LIMITED
Important Disclosure / Analyst Certification
/ Disclaimer
This document is published by East Asia Securities Company Limited, a
wholly-owned subsidiary of The
Bank of East Asia, Limited (BEA). At time of this report, East Asia
Securities Company Limited has no
position in securities of the company or companies mentioned herein the
report, while BEA and / its
associated or affiliated companies may from time to time have interests
in securities of the company or
companies mentioned herein.
The research analyst primarily responsible for the content of this
report, in part or in whole certifies that the
views on the companies and their securities mentioned in this report
accurately reflect his/her personal
views. The analyst also certifies that no part of his/her compensation
was, is, or will be, directly, or
indirectly, related to specific recommendations or views expressed in
this report.
This report has been prepared solely for information purposes and has no
intention whatsoever to solicit
any action based upon it. Neither this report nor its contents shall be
construed as an offer, invitation,
advertisement, inducement or representation of any kind or form
whatsoever. The information is based
upon information, which East Asia Securities Company Limited considers
reliable, but accuracy or
completeness is not guaranteed. Opinions expressed herein are subject to
change without notice. Any
recommendation contained in this report does not have regard to the
specific investment objectives,
financial situation and the particular needs of any specific addressee. This
report is not to be taken in
substitution for the exercise of judgment by respective readers of this
report, who should obtain separate
legal or financial advice. East Asia Securities Company Limited and / or
The BEA Group accepts no
liability whatsoever for any direct or consequential loss arising from
any use of this report or further
communication given in relation to this report.
At time of this report, East Asia Securities Company Limited has no
position in securities of the company
or companies mentioned herein the report, while BEA along with its
affiliates and/or persons associated
with any of them may from time to time have interests in the securities
mentioned in this report. BEA and
its associates, its directors, and/or employees may have positions in,
and may effect transactions in
securities mentioned herein and may also perform or seek to perform
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more of any class of common equity
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and may, within the past 12
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to obtain compensation for
investment banking services from the subject company or companies
mentioned in the report.
回憶
一輩子總有許多回憶，好的也好，不好的也好，但那都已經是過去的事情了
在快樂與悲傷之間，我會選擇逃避
就像那個風鈴一樣，靜靜的掛在窗邊
也許當風吹起那風鈴，敲醒心裡深埋的往事，但那都已經是好久之後的事情了....