Goldman Sachs Sees 3 Major Retail Sectors

The 20 largest retailers in the world are divided into 6 categories, namely, hypermarkets,

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

Goldman Sachs pointed out that Gao Xin retail, BELLE and Zhou Dafu 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 they are still below the level of at least 30 billion dollars of the 20 largest retailers in the world.

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.

Goldman Sachs believes that Gao Xin,

And Zhou Dafu has the potential to reach US $30 billion in 2020, with the characteristics of global market leaders, 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 advised investors to buy more than 3 shares, considering that China could grow at a reasonable price (GARP), considering China's cyclical low tide.