XTEP International First Rating "Buy"

　　　5月18日讯 特步国际(01368HK)估值吸引，首次评级“买入”

Rating: Buying

6-18m target price: HK$7.32

  　　  报告摘要

XTEP international is China's leading sports apparel company.

The company is mainly engaged in the design, development, production and marketing of sportswear. Its main products include footwear, clothing and accessories.

Its brands include XTEP, Disney sports series and Colin.

Among them, XTEP brand was founded in 2002, and its sales accounted for 93.9% of total sales in 2009.

We believe that the composite growth rate of XTEP brand and other brands in 09-12 can reach 21.3% and 5.9% respectively.

The composite growth rate of total sales reached 20.5% in 09-12, and the growth was mainly driven by channel construction and same store growth.

We expect that the operating margin will stabilize at around 20%, mainly due to the increase in gross margin and expense rate.

It is believed that the composite growth rate of EPS will reach 19.5% in 09-12.

Income growth and lifestyle changes have become the driving force for the growth of sporting goods consumption. China's sporting goods market is expected to maintain rapid growth in the next 5-10 years.

We believe that XTEP will win the market share in the mass sports apparel market through its brand recognition in the two or three tier cities.

However, the overall competitiveness of XTEP still lags behind that of Lining and Anta.

We believe that XTEP has a reasonable discount on 15%-20% compared to Lining and Anta.

At present, the valuation of Lining and Anta is 22 times and 21 times the 10 year forecast price earnings ratio.

We offer XTEP target price of HKD7.32, corresponding to 18 times and 15.1 times FY10-FY11 P / E, or 0.9 times 09-12 PEG.

Recommend buying.