Morgan
Giordano International | November 24, 2014
MORGAN STANLEY RESEARCH
MORGAN STANLEY ASIA LIMITED+
November 24, 2014
Robby Gu
Giordano International
Robby.Gu@morganstanley.com
Tough Outlook for 2015, Downgrade to
UW
Industry View
In-Line
Stock Rating
Underweight
Price Target
HK$3.50
+852 3963-0277
Angela Moh
Angela.Moh@morganstanley.com
+852 2848-5405
Morgan Stanley appreciates your support in the Institutional
Investor 2015 All-Asia Research and Sales Team Survey. Voting will open in January.
Giordano International ( 0709.HK , 709 HK )
We see limited improvement in 2H14 and 2015 in view of a challenging retail environment and Giordano's eroding pricing power. New headwinds in Hong Kong and ASEAN retail could also cause near-term weaknesses.
What's Changed?
Giordano International
Net profit, 2014e
Net profit, 2015e
Price Target
Rating
From:
To:
HK$586mn
HK$606mn
HK$4.80
Equal-weight
HK$414mn
HK$449mn
HK$3.50
Underweight
Limited effects from new initiatives so far: We see muted improvement in
Giordano's sales performance into 2H14 and 2015. The various initiatives to counter sales declines in core markets in Greater China have been in place for a year, but results have been mixed. We see good feedback from the crossover campaign with Lowe Alpine. After a few licensing attempts (Jack Wolfskin in
2013, Hello Kitty and Lowe Alpine in 2014-2016), we expect Giordano to introduce more crossovers in 2015 to enhance brand and diversify revenue streams. Rollout of the new brands (Beau Monde, Eula) is under way but the visibility on their impact remains low.
New headwinds add to the pinch: Our main concerns for Giordano are increasing competition, stagnant brand development, and weakening pricing power. Post 3Q14 trading update, we saw some worrying trends that further plagues the near-term fundamentals and triggers our downgrade: 1) negative impact from Occupy Central in Hong Kong. Due to the protests in Hong Kong,
Giordano is seeing 20% sales decline in its
MORGAN STANLEY RESEARCH
MORGAN STANLEY ASIA LIMITED+
November 24, 2014
Robby Gu
Giordano International
Robby.Gu@morganstanley.com
Tough Outlook for 2015, Downgrade to
UW
Industry View
In-Line
Stock Rating
Underweight
Price Target
HK$3.50
+852 3963-0277
Angela Moh
Angela.Moh@morganstanley.com
+852 2848-5405
Morgan Stanley appreciates your support in the Institutional
Investor 2015 All-Asia Research and Sales Team Survey. Voting will open in January.
Giordano International ( 0709.HK , 709 HK )
We see limited improvement in 2H14 and 2015 in view of a challenging retail environment and Giordano's eroding pricing power. New headwinds in Hong Kong and ASEAN retail could also cause near-term weaknesses.
What's Changed?
Giordano International
Net profit, 2014e
Net profit, 2015e
Price Target
Rating
From:
To:
HK$586mn
HK$606mn
HK$4.80
Equal-weight
HK$414mn
HK$449mn
HK$3.50
Underweight
Limited effects from new initiatives so far: We see muted improvement in
Giordano's sales performance into 2H14 and 2015. The various initiatives to counter sales declines in core markets in Greater China have been in place for a year, but results have been mixed. We see good feedback from the crossover campaign with Lowe Alpine. After a few licensing attempts (Jack Wolfskin in
2013, Hello Kitty and Lowe Alpine in 2014-2016), we expect Giordano to introduce more crossovers in 2015 to enhance brand and diversify revenue streams. Rollout of the new brands (Beau Monde, Eula) is under way but the visibility on their impact remains low.
New headwinds add to the pinch: Our main concerns for Giordano are increasing competition, stagnant brand development, and weakening pricing power. Post 3Q14 trading update, we saw some worrying trends that further plagues the near-term fundamentals and triggers our downgrade: 1) negative impact from Occupy Central in Hong Kong. Due to the protests in Hong Kong,
Giordano is seeing 20% sales decline in its