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Hong Kong retail sales:August retreated from calendar shifting issue

类型:行业研究  机构:麦格理证券股份有限公司   研究员:麦格理证券研究所  日期:2016-10-11
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Event

    August Hong Kong retail sales declined 10.5% YoY, below the consensusestimate of a 6.9% YoY decline. This marks 18 consecutive months ofrecording retail sales decline. On a month-over-month basis, the declinewidened from the -7.7% seen in July. Following the +2.6% YoY tourism arrivalgrowth in July, August dipped back into negative territory again at -9.4% YoY.

    We believe the August retreat could be attributable to a calendar shift as wehave one less weekend in August this year vs last August. This impact isequivalent to three to four operation days.

    Impact

    August retail sales growth worsened to -10.5% YoY from -7.7% in July.

    Retail sales value and volume declined by 10.5% and 12.7%, belowconsensus estimates of -6.9% in value and -7.6% in volume. Jewellery andluxury item sales decline remained the same as July with a 26.2% YoYdecline in August. With lack of near-term catalysts in sight, we don’t expectjewellery sales to break away from the negative streak in the near term.

    Furthermore, 3Q16 is shaping into a tough quarter for the gold & jewellerysegment in light of the gold price rally that drove customers away frompurchasing gold products along with the high comp base last year.

    Widening decline across board. Retail sales (excluding gold & jewellery)registered a 6.3% decline in August, widening again after the 3.2% declineseen in July. The August department store sales decline expanded from -6.9% YoY in July to -10.7% YoY in August. Similarly, the decline also returnedto double digits at -11.3% YoY in August on volume terms. Apparel turnednegative in August after resuming YoY growth last month partially due to alower comparison base in the same period last year. Apparel sales decreasedto -3.7% YoY from +1.4% in July. Meanwhile, medicine and cosmeticsdecreased 0.9% YoY after positive growth for the past five months.

    Short-lived tourism arrival recovery, Aug down 9.4% YoY. After breakingthe 13-month negative streak in July, Hong Kong tourism arrival recorded a9.4% YoY decline in August. Mainland Chinese tourist arrivals were the keydrag with an 11.3% YoY decline in August. The Hong Kong Tourism Boardpointed to disrupted flights in early August due to typhoons in southern Chinaas a key reason behind the sluggish August numbers.

    Outlook

    The gold & jewellery sector experienced a rally driven by the rising gold price.

    Nevertheless, we still worry about earnings downside from operatingdeleverage, as most of the companies will announce interim reports inNovember. We stand by our cautious view.

    We reiterate our Outperform rating on Lifestyle (1212 HK, OP) given its strongFCF, high commission rate and improvement in CWB and TST Sogo.

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