Optional consumer goods industry has potential for revaluation

Shenwan Overseas Research Department Wanghaitao conducted a review of the investment strategy of the Hong Kong consumer goods industry in mid-March, we advised investors to begin to pay attention to the stocks in these industries. In spite of the gloomy mood at the time, we judged that the central government's stimulus to the economy would have a role, further inferring that domestic consumption would remain strong.　　Considering that the consumer stocks were not very active at the time, we proposed the strategy of stock accumulation. Specifically to the sub industry, we prefer the optional consumer stocks, that is, textile apparel, retail and catering companies listed. The main reasons include the relative low valuation, revaluation potential and the annual report catalyst and other factors. In fact, the optional consumer stocks we recommend have won 20%-30% in the past 2 months, with Li Ning (02331.HK), Parkson Group (03368.HK) and Polaroid (00589.HK). On the other hand, must select consumer stocks such as China's need for 00151.　　HK) and Master Kang (00322.HK) Although the trend is good, but ran lost the market. In this review, we still look at the whole consumer goods industry. We believe that in the next 3-6 months, Chinese consumption can continue to benefit from the steady growth of stimulus policies and per capita disposable income, thus maintaining the desired growth rate.　　Specific to the sub industry, we still like the optional consumer goods stocks, on the grounds that relative valuations are still attractive and revaluation potential. In terms of relative valuations, the main reason for the rise in stock prices for early-stage consumer stocks is valuation fixes, as the industry's vendor analysts have rarely raised earnings forecasts for the period, so the rise in share prices is unlikely to be driven by changes in fundamental expectations. After considerable gains, the dynamic valuations of Hong Kong's optional consumer stocks are still below the required consumer stocks. The former's 09-year overall P/E ratio is now about 18 times times the 09-year overall price-to-earnings ratio of about 22 times times. Historically, the dynamic valuation of the optional consumer industry is not less than the consumer sector, which is more than 1 time times more dynamic than the 2006-2007-year boom.　　We feel that since there has not been a fundamental change in the overall direction of the Chinese economy, investors in Hong Kong equities are currently valuing the stocks of optional consumer goods too low. It is worth mentioning that we recently conducted a study using data from the National Bureau of Statistics, which shows that the monthly earnings volatility of China's optional consumer industry is less than that of the required consumer sector, which fully reflects the rigid demand in the context of sustained and steady growth of the disposable income of the population. We therefore believe that investors should not apply the pricing of alternative consumer stocks in developed markets to the pricing of alternative consumer goods stocks in Hong Kong.　　The latter's valuations are still too low. With regard to the potential for revaluation, we think that as China's economic growth continues to rebound in the next few quarters, analysts and investors will see more and more exciting consumer data, whether at the macro level or at the company level, the company's management mood will also become optimistic, which will certainly have a higher profit forecast. According to the industryHabits, analysts tend to be bolder in predicting the performance of selected consumer goods and more conservative in predicting the performance of alternative consumer goods.　　It can be seen that the latter has a greater potential for revaluation, which is another factor driving up the share price. In terms of stocks, we now prefer the optional consumer goods industry to the Hundred-Li International (01880.HK) and Li Ning (02231. HK). We believe that the hundred Li 09 years of women's shoes business can achieve a more than expected growth, mainly because from the history of this business will increase with the growth of the national economy, the elasticity coefficient is about 1:1.2. In 09, sports operations could be stabilized. So the biggest aspect of the company is the revaluation potential of performance.　　We predict 09 and 10 EPS is 0.3 yuan and 0.36 yuan, 3-6 months target is 6.8 Hong Kong dollars. Li Ning in the success of the feather ball business, the basic "Occupy" the domestic indoor sports market, achieved with the International N brand and international a brand rival core competitiveness.　　We believe that the company should be given a 1.25 times-fold peg in 09, which is similar to the valuation of the leading Hong Kong consumer goods industry, with a target price of HK $23 for 3-6 months. The consumer goods industry is not as popular as consumer goods at the moment, but we do not think there is any chance. We recommend the Yurun Food (01068.HK).