Department Stores, Mass Consumption, Prosperity &Nbsp, Midwest Business Rise

The real purchasing power of residents is expected to increase.

Residents during the "12th Five-Year" period

With the rapid development of online shopping, the physical department stores in the central and western regions are facing little impact.

In the 3 quarter of 2011, the volume of online retail pactions exceeded the 200 billion yuan mark in the single quarter, accounting for 4.7% of the quarter's zero.

In 2015, net retail sales will account for more than 9% of the total retail sales of social consumer goods.

In China's central and western regions, network penetration rate is low, online shopping is not popular, the number of online shopping, paction volume and so on are far lower than those in the eastern region, and local entity department stores are less affected by online shopping.

Industry concentration has steadily increased, mergers and acquisitions are active, and urbanization provides development opportunities:

In recent years, in order to share the rapid development of consumption, the expansion of department stores has accelerated in two ways: annexation and reorganization and the establishment of new stores.

The advantages of annexation and reorganization lie in the rapid expansion of cross regional, cross industry and cross ownership. The secondary business circles and new towns in the process of urbanization provide incremental space for the department store industry, and provide an opportunity for regional department stores to achieve cross regional expansion or nationwide chain stores to complete the nationwide layout.

Inflation is a double-edged sword for department stores. If the price of clothing is lowered or the discount is increased, the "price to volume" will achieve a win-win situation.

The survey found that 2010-11 years in the department store sales of high-end clothing prices rose nearly 40%, has suppressed sales of clothing.

The growth of revenue in department stores came mainly from the increase in prices rather than the increase in sales.

With the improvement of consumers' purchasing power, the price of clothing has been reduced or the discount has increased.

Pressure test for employees in department stores is increasing:

Selected 16 department stores listed companies as a sample, when employees pay increased by 10%, operating income increased by 4.7% can make business profits unchanged; salaries rose 30%, income increased by 14%.

Investment strategy: the dynamic PE of the plate in 2011 was 23.9 times, close to the historical low point.

At present, the stock price corresponds to the dynamic PE of 2012 only 18.4-19.1 times, and the valuation increases greatly.

In 2012, we suggested that we should select stocks along 3 main lines: 1, fully benefit from the prosperity of mass consumption or the rapid development of the central and western regions. At the same time, companies with excellent management and storefront echelons will strongly recommend Tianhong shopping malls and Wangfujing; 2, from revaluation, PS, CFO/NI and other angles, companies that are seriously undervalued and those who are likely to be repaired in the future will recommend Eurasian Group, Nanjing Zhongshang and Ginza shares; 3, assets reorganization is completed, management is expected to be upgraded, and scale efficiency and synergy effect will soon be reflected in the company. The Chongqing department store and the first business share are strongly recommended.

Risk warning: 1, the economy has fallen sharply, the enterprises can not afford to increase the wage costs, resulting in low income growth expectations; 2, the development speed of online shopping exceeds expectations, seriously affecting the physical department stores.