BELLE International Maintains Buy Rating

　　百丽国际（1880，买入）：集团收入稳步增长，盈利能力持续提高，维持买入评级。 2009全年收入198亿元，毛利率上升1.6个百分点：公司2009年全年收入为197.6亿元人民币，同比增加10.7%，毛利为105.4亿元，毛利率从2008年的51.7%上升为53.3%；权益持有人应占利润为25.3亿元，同比增加26%；净利率为12.8%，增长1.5个百分点。

Footwear business grew by 21%, and sportswear business declined slightly. The company's income from footwear business in 2009 was 11 billion 700 million yuan, an increase of 21.4% over the same period last year, and its share of total revenue rose from 54.1% to 59.4%. The income from sportswear was 8 billion 30 million yuan, a decrease of 2% over the same period last year, accounting for 40.6% percentage points of the total revenue of the company and a decrease of 5 percentage points.

The company's footwear business has opened 681 new stores throughout the year, and its store has increased by 10.9%. The same store grew by about 8% throughout the year.

The same store growth throughout the year showed a trend of first suppression and post promotion.

In the first 3 quarters, the growth of the same store was negative because of the market downturn and the relatively high base period. The fourth quarter began to turn to positive growth.

On the retail network, there were 295 outlets in the first 3 quarters, and 117 stores in the fourth quarter.

Future profitability is expected to further improve: for footwear business, it is expected that with the expansion of the original core footwear brand shops and growth of the same store, there will be further development, especially the new stores of core brands will focus on the relatively low penetration of the two or three tier cities, will support the growth of income support.

Sports apparel business is expected to have a compensatory growth after inventory and market adjustment in 2009.

As for the company as a whole, with the continuous adjustment of the business structure, the proportion of footwear business with high profit rate and turnover rate will continue to rise. The proportion of first-rate sports apparel brands with high profit margins will increase relative to the second tier brands.

At the same time, the newly acquired brand will also gradually merge, and the new brand will also have a certain opening space.

To maintain the buy rating: the results of the comprehensive absolute valuation method and the relative valuation method, we raise the target price to HK $11.65, which is equivalent to 25 times PE in 2010, maintaining the buy rating.