Event
The company released its 2008 annual report, in which it showed business turnover of Rmb8649mn (+24.28% yoy), net profit attributable to parent of Rmb172mn (+36.62% yoy), and EPS of Rmb0.35.
Our Analysis and Estimation
In 2008, the company set up 23 storage supermarkets and 69 community supermarkets in Hubei province, whose income surged by 25.59% yoy and 23.70% yoy respectively.
Instead of the “general merchandise + supermarket” operation mode, the company wholly devoted to the supermarket business and kept maintaining the general merchandise. In 2008, income of the general merchandise business increased by 13.22% yoy, and not any clear expansion plan has been carried out yet.
Investment Suggestion
We predict its EPS in 2008-2010E to be Rmb0.37, Rmb0.48 and Rmb0.58 respectively. Despite difficulties of off-site expansion in Chongqing, we are still optimistic with its development prospect within Hubei province. We hereby maintain rating of “Recommended” for the counter.