In Less Than A Month, UBS Cut Prices Twice For Li And Feng.

As a global

And even the barometer of the economy Li&FungLtd. (0494.HK).

The company has been having a bad time recently. UBSAG (UBSN.VX) UBS lowered its price twice in less than a month. The latest target price for Li Feng is only HK $2.8.

On the 25 day of last month, the report lowered the target price of Li Feng from HK $3.5 to HK $3. On Monday, UBS once again lowered its target price of HK $3 by 6.7%, two times the cumulative reduction of 20%.

UBS analyst Liang Yuchang pointed out in the report that most of the supplier's customers had fewer orders in the three quarter of this year than in the previous two quarters, and that the orders for the four quarter are also not optimistic. Therefore, Li Feng expects sales to fall 3.6%, 4.1% and 4.1% in the next three fiscal year.

In addition, UBS also pointed out in its report that from a number of retailers, retailers were asked to receive 3%-10%'s voluntary cash rebates from the two quarter to the four quarter of this year. Retailers even asked for a rebate for earlier shipment.

UBS points out that although cash rebates are voluntary, most suppliers will accept them.

In view of the increasing challenges in the global retail industry, retailers have taken various measures to reduce procurement costs. Therefore, the profit margin of the company in the next three years will fall from 2.7% in the previous fiscal year to 2.4%, 2.5% and 2.5% respectively.

In the UBS report, retailers purchase "new ideas" has been reported, especially the second largest discount department store retailer TargetCorp. (NYSE:TGT) in Taghit, the most representative of the new supply chain, and TargetCorp. Taghit is one of Li Fung's main customers.

UBS's report, though not pointed out in connection with the recent supply chain new deal in TargetCorp. Taghit, is obviously not tied to this.

Over the past quarter, TargetCorp. Taghit has been constantly pressing suppliers, demanding suppliers to deliver on time. Penalties for fines for late deliveries will also be imposed.

The supplier's penalty for information asymmetry is up to 10000 US dollars. Recently, the company has asked suppliers to pay extra 3%-5%'s clearance fee before allowing new goods to be on shelves.

In response, suppliers hinted that they could only sacrifice quality to deal with it, because "doing business with TargetCorp. Taghit also needs to make money".

According to the data, in 2015, the US market accounted for more than 60% of Li&FungLtd.'s total profit of 11 billion 500 million, and the group of Li Feng Group in the United States basically covered all large retailers, including Wal-MartStoresInc. (NYSE:WMT) WAL-MART, Macy 'sInc. (NYSE:M) Messi general merchandise.

Because of the strong dollar, tourists are down, the local economy is recovering slowly and consumption is cautious. The retail industry in the US has been staggering for nearly three years. As consumers are more inclined to discount and low price products, as well as the low price and fast logistics competition of Amazon.comInc. (NASDAQ:AMZN) Amazon, the traditional American retailers are starting to implement a low price strategy. Previously, WAL-MART has pressed Chinese suppliers to reduce procurement prices, including the company of FungGroup Feng Group and GlobalBrandsGroupHoldingLtd. (0787.HK) Li brand limited.

In addition, under the difficult retail market, retail companies in Europe and the United States began to implement the cost reduction plan. The most important channel was the supply chain's internal management, while Li Feng lost the KateSpade&Co. (NYSE:KATE) customer last year.

In view of the setbacks in outward development, Li Feng has hoped to expand the Chinese market in the past year. Its strategies include the cooperation of Shanghai Bailian Group and BeijingWangfujingDepartmentStoreGroupCo. (600859.SH) Beijing Wangfujing department store group, and the establishment of a joint venture. Li Feng relies on its own supply chain and brand advantage to help the above two department store groups to develop their own brands.

However, due to the slowdown in China's economy and the decline of the department stores, the cooperation results of Li Feng still need to be observed.

Li&FungLtd. (0494.HK) Li Fung shares closed at HK $3.76 on Monday, down 4.326% from a day ago. The stock has plunged more than 21% so far this year, and has slumped 40% in the past year.