德意志银行-xx食品零售-sun art and yh-expecting better growth in q2 on margin expansion-20170718-deutschebank.pdfVIP

Deutsche Bank Markets Research Asia Industry Date China Food retailer 18 July 2017 Consumer preview Forecast Change Anne Ling Mark Yuan Sun Art and YH- expecting better Research Analyst Research Analyst (+852 ) 2203 6177 (+852 ) 2203 6181 growth in Q2 on margin expansion anne.ling@ mark.yuan@ GPM expansion drives earnings growth for food retailers Key Changes SSSg in food retail began to show a gradual improvement in 2Q17. Yonghui is Company Target Price Rating now showing margin expansion as well (as is Sun Art but to a lesser extent) 601933.SS 6.50 to 8.20(CNY) - and this has become the major driver for earnings growth. Following YH’s Source: Deutsche Bank positive earnings alert, we lift our TP by 26% on account of accelerating earnings growth of 25%-34% for 17-19E. Along with better margins, the Top picks business is also gaining from improving operating leverage. We believe the Yonghui Superstores Buy major players have both the range of product category and supply chain (601933.SS),CNY6.72 management expertise to withstand the threat of online retailers’ move into