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Investment Suggestion Subscribe
Estimate EPS HK$0.16 Estimate 2012PE 9.7-13.5X
Fundamental
英语qq名字Market Cap HK$1.6-2.2B Share Offering 0.25Bstore是什么
Offering Price HK$1.60-2.22 Application Period 10/02-15/02 noon
Sponsor BNP Paribas Cap-ital (Asia Pacific) Lot Size
2000
Analyst Sissi Wang
（86755）3336 0713 - 125 Analyst Rei Zeng
（86755）3336 0713 - 126
Income Statement
Year ended 31 Dec 9 months ended 31 Sep
（Thousand RMB ） 2008
2009
20102011年高考试卷
2010
2011father的音标
美籍华人英语
Revenue 1,000,660
1,050,140
tanabata festival1,284,458 894,789
986,456 YOY (%) N.A 4.94% 22.31% N.A 10.24% Gross Mar-gin (%) 56.36% 53.94% 50.47% 52.99% 52.44% Operating profit 192,746
154,959 116,800 94,753 107,978 YOY (%) N.A (19.60)% (24.63)% N.A 13.96% Profit for this year 127,132 115,747 88,349 70,067 80,034 YOY (%) N.A (8.96)% (23.67)%
N.A 14.22% EPS 0.172 0.154 0.118 0.093 0.107 YOY (%)
N.A
(10.46)%
(23.38)%
N.A
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15.05%
Christine is a leading bakery chain operator in the PRC. Stores mainly located in Yangtze River Delta region, including 513, 232 and 153 retail outlets in Shanghai, Jiangsu province and Zhejiang province, respectively. Offering a diver and innovative product line of more than 2,200 varieties of breads, cakes, moon cakes, pastries. As of the Latest Practicable Date, Christine had five centralized bakeries in major cities of the Yangtze River Delta region, including Shanghai, Nanjing and Hangzhou. Each of the bakeries supports their nearby retail locations through their logistics network, utilizing both in-hou delivery capacity as well as third-party rvice providers to ensure maximum efficiency and profitability. For example, good neighbor stores are their most important retail format and are primarily located in high density residential areas with a stable customer ba of houhold consumers. Christine also maintains subway stores and flagship stores, each targeting different customer groups, such as white-collar workers in need of a quick snack or meal.
The multichannel retail network primarily consists of good neighbor stores, subway stores and flagship stores, each targeting different customer groups, to provide compre-hensive consumer coverage. Christine directly operates all of their stores to maintain ef-fective control and promote operational efficiency. Their revenue incread from approxi-mately RMB894.8M(USD142.1M) for th
e nine months ended September 30, 2010 to ap-proximately RMB986.5M(USD 156.6M) for the nine months ended September 30, 2011, among which approximately 53.2% was generated from the redemption of coupon sales. The profit and total comprehensive income for the year decread from approximately RMB127.1M(USD20.1M) for the year ended December 31, 2008 to approximately RMB115.7M(USD18.3M) for the year ended December 31, 2009, and to approximately RMB88.3M(USD14.0M) for the year ended December 31, 2010. The profit and total com-prehensive income incread from approximately RMB70.1M(USD11.1M) for the nine months ended September 30, 2010 to approximately RMB80.0M(USD12.7M) for the nine months ended September 30, 2011.
Investment Suggestion
Christine, the first Bakery IPO in Hong Kong. Breadtalk, another bakery company listed in Singapore as the first in the industry in 2003, 85C also became a pioneer as the first bakery IPO in Taiwan in 2007, trading at TWD400; compare to its IPO price at 168, accumulated growth 138%. Christine is not the first bakery IPO in the region, but it is the first in Hong Kong and may probably attract investor’s interest.
Christine holds cond largest market share in this highly fragmented industry. Bakery industry is well known on keen competition, lack of leading brand, low entry level and plenty local-ized small companies. SMEs contain over 90% of the major companies in the industry, projecting a highly fragmented environment. According to data provide by Euromonitor, Christine lines up at the cond place by its numbers of stores and revenue, just behind the largest bakery store Holiland; at the same time leading far way with Breaktalk and 85C at the third and forth place. Benefiting from the on growing consumer market in China, it was being forecast that Christine sales will dra-matically grow in the coming three years at a yearly rate of 13%. Estimate reaching RMB20B (USD3.17B) at 2013.
On the past three years, Christine was affected by increasing cost on raw materials and labor. Gross profit dropped from 56.4% in 2008 to 50.5% in 2010. Net profit dropped from 12.7% to 6.9%. It is being questioned that if the cost control program and management will be effective, since the supplie
subject怎么读rs for the company are all connected/related personnel with the compa-ny; with conflict of interest. The major suppler of Christine is Shenzhen ichiban Food Co.,Ltd., Ichiban’s owner is the sister in law of Christine’s owner. Other suppliers also have relationship with Christine board of directors. KAB Rearch expects due to fragmented market competition, the increasing costs can hardly transfer to their customers, in additional to difficult internal cost control. The dropping trend of net profit is inevitable.
A substantial portion of the revenue was generated from coupon sales. Company sales and revenue will be affected if PRC prohibit certain activities. We have obrved Christine currently have RMB861M outstanding coupons, equal to total revenue of first three quarter in 2011. Accord-ing to development of law in China, it is likely that such sales method being restricted; then the company will be greatly affected negatively. PE levels at 9.7-13.5x in 2012, market capitali-zation estimated 1.83-2.8B, compared to overall PE 15-20x in the industry, Christine is reasonable valuated. Hong Kong condary market is continuing the uptrend started from January. Previous IPOs also ended up with good results on the first day. Since Christine is the first bakery IPO in Hong Kong, KA
B Rearch suggested subscribe on cash.
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Source: company prospectus, KAB rearch Date : 07/02/2012
