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Retail:Impact from real-estate rules to be short-lived

十一月 30th, 2019  |  财经

永利网站平台,New real-estate regulations to weigh on consumption? The government on
Jun19 unveiled measures to curb speculation in overheated areas of the
real-estate market.

    Price hikes in that market have lost some steam since the
announcement, negative in thatconsumption is influenced by changes in
asset prices.

    That said, the government is targeting bringing the housing market
under control, notputting a chill on consumption. Moreover, the measures
are also aimed at keepinghousehold debt in check and from going bad—a
possibility if overheating is notaddressed—which, of course, would be
highly negative to consumption in the long run.

    Retail shares to bounce back: Following a steady rally since early
this year, retailshares are pulling back due to the new real-estate
measures. Yet, we expect shares tobounce back, believing: 1) the new
regulations will not affect consumption much; 2) retailshares are still
undervalued, with a sector staying around 10.2x P/E; and 3) earnings
willkeep enjoying solid momentum into 2018. The correction should be a
modest one andretail shares should return to an uptrend from late this
month or early next month onprospects of solid performances in 2Q.

    Among large players, we like Lotte Shopping for likely benefits from
its transformationinto a holding company and Shinsegae for prospects of
growth at its duty-free businessand a recovery of earnings. Among small
caps, Lotte Himart has the most appeal for itsrobustly growing online
sales, normalizing handset sales, and remarkable homeelectronicssales.
Among home shopping players, we recommend CJ O Shopping basedon the
firm’s improving earnings and stake in CJ HelloVision, noting the
subsidiary issharply undervalued.

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