veeko 1173.hk

veeko 1173.hk
2010年12月15日 星期三
at 0.475 hkd, market cap 970m

-seasonality implies sales 1H:2H is 1:3, probably net profit FY10/11 is 80m-100m

-same store sales similar to luk fook, but much quicker than bonjour and sasa
-networkwise, it has more outlets already then bonjour, second in hong kong

-gross margin expansion: colder weather will give higher ASP for their wanko, veeko apparel; by having more self-owned brands; by having more exclusive brand names
-operating margin expansion:when SKU increases from the 17,000 units level; when there are more customers visiting per shop; one note that colourmix is very quiet compared to the incumbents, however their op growth yoy was already 90%
-secular trend where hk clients are displaced by chinese. ticket sales, chinese customers 600, hong kong 100. now only 30% of sales are chinese

-valuation wise, FY10/11 11x based on 88m profit, 80% dividend payout means 7.3%, 60% means 5%
-relative valuation, 0178.hk (5 hkd) is 25x PE for 40% growth, 0653.hk (1.52 hkd) is 20x PE for 30% growth, 1173.hk (0.475 hkd) is 11x PE for 90% growth
-in terms of sales mix, 1173.hk sells apparel in china, already making profit. sasa china business is LBIT until 2 years later (2013), bonjour has just started first cosmetic shop in guangzhou, even make profit first year, it will be small. and because SKU is lot (thus quarantine, distribution, etc), they need a lot more effort to replicate to other places in china.
-one note that most of their shops they are benefited from chinese 'free-walkers', e.g. causeway bay and canton road, are new only in 2010/2011 financial year
-investors now include VP and CAM. they have very strong track record in buying undervalued stocks. CAM top up price is 0.45 hkd