Clothing, Footwear, Luxury And Other Retail Sectors China Can Enter The World Class.

The key to China's sustainable economic development is to expand domestic consumption, and the retail industry will become a direct beneficiary.

China is the second largest economy in the world.

Can companies become world-class retailers? Goldman Sachs believes that China has the ability to make winners in the three retail sectors of hypermarkets, clothing, footwear and luxury goods.

Goldman Sachs sees 3 major retail sectors

Goldman Sachs divides the world's 20 largest retailers into 6 categories, namely, hypermarkets,

Footwear, luxury goods, chain restaurants, pharmacy and durable goods.

Goldman Sachs pointed out that Gao Xin retail (quotes, information, commentary) (06808), BELLE (01880) and Zhou Dafu (quotes, information, commentary) (01929) will represent the leaders of domestic hypermarkets, clothing, footwear and luxury goods sectors. Due to their obvious scale effects, their market capitalization is about 12 billion to 15 billion US dollars, but it is still below the level of at least 30 billion US dollars of the 20 largest retailers worldwide.

In addition, Goldman Sachs pointed out that if retailers want to reach international level, they need to show their alienation, low cost structure or both, and their ability of sustainable development is more important than growth rate.

For example, retail companies want to reach US $30 billion from market capitalization of US $10 billion, the average annual compound annual growth rate (CAGR) is 12%, and the average period is 8.3 years.

Finally, relative valuations show that multiple compression is no longer a major threat to target stocks.

Recommend Gao Xin BELLE Zhou Dafu

Goldman Sachs believes that Gao Xin, BELLE and Zhou Dafu have the potential to reach US $30 billion in 2020. They all have the characteristics of global market leaders, with low cost and ability to distinguish peers.

Goldman Sachs believes that Gao Xin has the greatest potential for growth. BELLE and Zhou Dafu's lead will be partly due to the continued growth of the retail network from 1500 to 1800 to 3000.

Among them, Zhou Dafu's network expansion has room for growth. BELLE's growth will depend on the growth ability of the existing smaller brands.

Goldman Sachs proposal

Those who buy more than 3 shares will be able to grow at a reasonable price, taking into account China's cyclical low tide.