SSI Credit Suisse Analysis
17 December 2014
Asia Pacific/Philippines
Equity Research
Specialty Softlines
SSI Group, Inc.
(SSI.PS / SSI PM)
Rating
OUTPERFORM* [V]
Price (17 Dec 14, P)
9.13
Target price (P)
11.30¹
Upside/downside (%)
23.8
Mkt cap (P mn)
30,246.5 (US$ 676.4)
Enterprise value (P mn)
34,801
Number of shares (mn)
3,312.86
Free float (%)
26.1
52-week price range
9.32 - 7.73
ADTO - 6M (US$ mn)
4.3
*Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.
¹Target price is for 12 months.
[V] = Stock considered volatile (see Disclosure Appendix).
Research Analysts
Karim P. Salamatian, CFA
852 2101 7996 karim.salamatian@credit-suisse.com Danielo Picache
632 858 7758 danielo.picache@credit-suisse.com INITIATION
Specialist in retailing
■ Initiating coverage with OUTPERFORM and TP of P11.30. SSI is the largest specialty retailer in the Philippines operating 672 stores (>4x larger than the No. 2 player) representing 106 brands. Sales from Fast Fashion and
Luxury are expected to represent 35% and 22% of 2014 sales respectively, but over the next three years Fast Fashion should grow 1.5-2x faster than other categories. SSI has a 30% economic interest in PH FamilyMart (PFM), which is capable of becoming No. 2 in the convenience store sector.
■ Unique combination of rising relevance and value enhancement.
Retailers that can aggressively expand their store base and selling space while driving ROIC higher offer investors a unique proposition and warrant premium valuations. SSI fits this bill, as 24% annual selling space growth will be accompanied by ROIC reaching 19% in 2016, which will put it comfortably ahead of its relevant peers. Pushing returns higher while becoming more relevant is the key value proposition for shareholders.
■ 44% annual earnings growth through 2016. Among retailers covered by
Credit Suisse in NJA, SSI presents the strongest earnings growth profile on the back of 18% top-line growth, expanding gross and operating margins,
Asia Pacific/Philippines
Equity Research
Specialty Softlines
SSI Group, Inc.
(SSI.PS / SSI PM)
Rating
OUTPERFORM* [V]
Price (17 Dec 14, P)
9.13
Target price (P)
11.30¹
Upside/downside (%)
23.8
Mkt cap (P mn)
30,246.5 (US$ 676.4)
Enterprise value (P mn)
34,801
Number of shares (mn)
3,312.86
Free float (%)
26.1
52-week price range
9.32 - 7.73
ADTO - 6M (US$ mn)
4.3
*Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector.
¹Target price is for 12 months.
[V] = Stock considered volatile (see Disclosure Appendix).
Research Analysts
Karim P. Salamatian, CFA
852 2101 7996 karim.salamatian@credit-suisse.com Danielo Picache
632 858 7758 danielo.picache@credit-suisse.com INITIATION
Specialist in retailing
■ Initiating coverage with OUTPERFORM and TP of P11.30. SSI is the largest specialty retailer in the Philippines operating 672 stores (>4x larger than the No. 2 player) representing 106 brands. Sales from Fast Fashion and
Luxury are expected to represent 35% and 22% of 2014 sales respectively, but over the next three years Fast Fashion should grow 1.5-2x faster than other categories. SSI has a 30% economic interest in PH FamilyMart (PFM), which is capable of becoming No. 2 in the convenience store sector.
■ Unique combination of rising relevance and value enhancement.
Retailers that can aggressively expand their store base and selling space while driving ROIC higher offer investors a unique proposition and warrant premium valuations. SSI fits this bill, as 24% annual selling space growth will be accompanied by ROIC reaching 19% in 2016, which will put it comfortably ahead of its relevant peers. Pushing returns higher while becoming more relevant is the key value proposition for shareholders.
■ 44% annual earnings growth through 2016. Among retailers covered by
Credit Suisse in NJA, SSI presents the strongest earnings growth profile on the back of 18% top-line growth, expanding gross and operating margins,