Morgan Stanley to give Poly-Mei excellent products holding a wait-and-see rating target price 23 USD

Beijing time October 29 afternoon news, Morgan Stanley published a study today, the Nyse:jmei stocks into the scope of the study, given its "hold-see" rating, as well as the 23 dollar target share price.

The following is the full report:

In the process of becoming a leader in China's beauty makeup market, poly-US excellent products in a good position. However, the short-term profit margins will be under pressure as a result of the termination of the third party's beauty business and a total shift to proprietary business. We believe that this factor will begin to be reflected in the share price.

Attractive long-term prospects

Poly-Mei Excellent products are China's largest manufacturers of the United States and the vertical electric dealer. With proven profitability, Poly-Mei products will be able to gain a higher market share. The company's competitive advantage lies in its well nurtured brands and products, as well as innovative marketing approaches that resonate with young consumers. In our concern of the electric companies, Poly-Mei products have the youngest user groups, more than 80% customers aged less than 30 years old. Poly-beauty products are seeking to use the rapid growth of user groups, cross-selling apparel and accessories products.

The impact of the termination of the third party's beauty makeup business

We believe that with the end of the third party cosmetics business in August, as well as the sales of Low-margin third party garments and accessories, the profit margin of poly-Mei products will be under pressure in the short term. In the coming quarters, the increase in marketing spending across the industry and investment in the mobile business will likely continue to affect operating margins. Our 2014-year profit forecast is more than the net profit outlook for the US, which is 81 million to 87 million US $4%. We expect the profit margin to remain flat for the third quarter of 2014. In addition, November 14, some of the shares of the United States, the lock will periodically expire, which will bring pressure in the short term.

Profit/Valuation

We expect that from 2014 to 2017, the adjusted net profit of Poly-Mei products will grow at a compound rate of 42%. Our target share price of $24 is based on DCF valuations of $25 a discount of 10% per share, which is mainly to take into account the likely volatility of recent stock prices. Our target share price is equivalent to 23 times times the 2015-adjusted forward earnings ratio, and 17 times-fold forward earnings for 2016, and 0.9 times-and 0.8 times-fold growth ratios (PEG) respectively. (D-Gold)