Goldman upgrades Belle (HKG:1880) to Buy


Goldman Sachs has upgraded Belle International (HKG:1880) to Buy from Neutral and raised its target price for the stock to HK$15.7 from HK$14.4. Same-store-sales (SSS) are stabilizing in the second quarter of 2012, and year-to-date operating margins appear better than expected, the brokerage says.

Stocks usually start to outperform a few months before consensus bottoming; now is a good time to buy Belle, Goldman Sachs says.

On catalyst for Belle, the brokerage says that Belle's management is guiding 8% SSS growth in the second quarter of 2012, a meaningful recovery from 2.8% in the first quarter of 2012. Goldman Sachs' analysis shows Belle's operating margin has been more resilient than peers thanks to its strong brands and large scale.

Goldman Sachs tweaks its 2012, 2013 and 2014 EPS forecasts for the stock by -1%, -4% and -7% respectively, driven by lower sales in sports, and the brokerage's conservative view of a slow retail recovery in 2013.

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