The local retail industry is hit by the economic downturn and the social atmosphere, and business is under pressure
Retail stocks continue to be bearish on the market. JPMorgan Chase and UBS issued a report yesterday to be bearish on retail stocks. JPMorgan’s outlook for the retail sector in 2020 is still conservative. The bank also downgraded its retail leasehold rating to “Sell”.
Motorola maintains conservative views, worries continue
Motorola pointed out that the social events that began in June last year became the “black swan” of the market, which made the bank’s original positive view on local retail stocks prudent, and believed that the market’s risk appetite for restarting retail stocks is still too early, mainly due to the existence of Certain “gray rhino” factors, including the possibility that demonstrations may continue throughout the year, the renewed Sino-US trade war, the devaluation of the renminbi, and the bursting of the property market bubble will affect consumer spending.
Motorola said that looking forward to 2020, the bank’s conservative view on the retail sector, the recovery is affected by the uncertainty of when social conditions will stabilize, mainland consumer sentiment, and the actual situation of cost pressure decline, and believes that cost reduction and market share Competition will be a major factor this year.
The bank is optimistic about local retail stocks with a large proportion of business in the Mainland
It preferred Chow Tai Fook (01929) and gave it an “overweight” rating with a target price of 10 yuan.
If local social conditions are relieved, the share prices of Sa Sa (00178) and Rifle (01212) are expected to rise, although the fundamentals of the two may not have improved significantly. Sa Sa is rated as “Neutral” with a target price of 1.7 yuan. Fu rating is “overweight” with a target price of 13 yuan.
UBS bluntly stated that local retail cannot recover in the next three years. As the tourism industry generally takes at least 18 months to rebuild business confidence, and the mainland government has adopted measures to reduce taxes and fees and crack down on overseas purchasing, it hopes to stimulate domestic demand; At the same time, the tax reduction and weakening of the renminbi may narrow the price difference between Chinese and Hong Kong merchandise, and reduce the incentives for mainland consumers to shop in Hong Kong. Therefore, even if social turbulence is eased, it will not make the retail industry in the short term. recovery.
High-end mall rents fall, Hysan is too affected
UBS expects that local retailer rents will decrease by 15% year-on-year this year, while rents in high-end shopping malls will fall between 10% and 15%. The bank downgraded the ratings of Hysan (00014), Swire Properties (01972), Wharf Real Estate (01997) and Guanjun (02778) to “Sell”.