bj_toread_wang_fengToread spokesperson and rocker Wang Feng sings the praises of the adventure equipment firm. Photo: Beijing ToreadUBS: BEIJING TOREAD a ‘Buy’

UBS Investment Research reiterated its "Buy" recommendation on Beijing Toread Outdoor Products (SZA: 300005) with a target price of 18.2 yuan (recent share price 14.4).
Toread’s 2012 revenue and net profit were up 47% and 57%, respectively, in line with the research house's expectations.

“We believe Toread’s better-than-sector average (35%) revenue growth was due to its successful brand building, continued product improvement, and supply chain integration.

"Inventory fell 8%, inventory turnover days declined by eight days, and net operating cash inflow increased by 74%, indicating steady growth,” UBS said.

Meanwhile, Toread’s Q1 2013 revenue/operating profit/net profit were up 36%/39%/45% year-on-year, below UBS’s estimates.

beijing_toread_camping_equipment2Toread listed on the ChiNext in 2009.    Photo: ToreadWe believe continued sluggish end-market demand was the main reason for the lower-than-expected earnings.”

UBS said it believes Toread’s sold-out rate in 2012 was essentially flat year-on-year, remaining at the best level among the various apparel and home textile sub-sectors.

“As of end-March, the 2013 spring-summer order execution rate was 57%, also a good level.

“We maintain our 'Buy' rating as Toread’s valuation may be being dragged down by the downward shift of the sector average valuation.”

toread_mets3Toread recently 14.4 hkdBeijing Toread Outdoor Products specializes in the development and sale of outdoor products including tents, hiking boots, all-weather jackets and protective gear. Its business model is based on a combination of outsourced manufacturing, franchising, and directly managed distribution. The company has a self-owned brand: 'Toread'. At end-2012, it operated 1,395 stores, including 159 directly managed stores and 1,236 franchised stores.

magic_mets4Magic recently 3.66 hkdGuoco: MAGIC Still ‘Buy’ at 52-wk High

Guoco Research said it is maintaining its “Buy” call on cosmetic facial mask maker Magic Holdings (HK: 1633) with a target price of 4.05 hkd (recent share price 3.66).

“The share price recently surpassed a previous high at 3.55 hkd and closed at its 52-week high with exceptional turnover,” Guoco said.

The research house added that Magic’s 9-day RSI standing above 80 signaled a pullback in the near term for accumulation.

Guoco’s cut loss for Magic Holdings is 3.33 hkd with a consensus 2013 P/E of 14.7 times.

See also:

TOREAD: Outdoor Products Hiking Up Sales Amid Urbanization

MAGIC Shines

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