Suning Appliance And Gome Who Invest More Advantages? - Suning, Gome - Hc Network Appliance Industry

Basic conclusions, the value of assessment and investment advice

U.S. home appliance chain competition in the retail industry has gone through three stages:

Less competition, rapid growth phase, the competitive phase of industry consolidation and competition pattern of relatively stable stage.

BESTBUY Phase II took in seven years to establish the leading position, stability, competitive landscape.

Phase II, the U.S. home appliance retail industry demand growth rate is only 8.41%, while phase II, at the end of the second CIRCUITCITY even as the industry has maintained a 17% annual growth.

China, Suning and Gome now and can be selected to ensure the growth stage.

Chinese home appliance chain industry since 2005 entered the stage II.

Our preliminary estimate around five years to complete the determination of market competition. This five-year expected growth rate even close to the U.S. industry, stage II, 2 times the industry growth rate.

We believe that the market structure

Gome and Suning steady growth in business at least not less than 20%.

We will both do a very detailed financial data split, and adjust the important factors are not comparable, are the core of this view:

Country the size of the U.S. advantage is that the United States from the country excellent strategic vision, and good use of other resources. The country's most dazzling glittering United States will continue to bring the country in the future the United States first-mover advantage.

Suning advantage lies in its intensive cultivation of the details of the management and service management.

Country strategy and scale advantages the United States have not yet reached the point where impeccable. 1, the strategic layout of the most important East region is the weakest. 2, the gap size of 25% of the market at this stage sufficient to enable suppliers to take too much policy tilt. The higher its profitability is not caused by the size advantage, but the use of other resources cost savings.

We believe that the country's strategic layout of the United States and the challenges of scale there is room. The subsequent challenge will be to establish who is more in the two core competencies.

We are now difficult to judge, but the U.S. price-earnings ratio tends to the country a small amount of premium.

Suning 2006,2007,2008 years we expect to achieve EPS1.498, 2.028 and 2.621 yuan. Also tend to Suning 20X06PE, and 18X07PE, get company stock valuation range of 29.96-36.50 dollars, buying recommendations.

I. Industry Overview 1.1 reference to the U.S. market, industry, stage of the

Most of our history of development of commercial activities are very similar to follow the U.S. trend to the development of commercial activities. So we choose the U.S. home appliance retail chain market as a sample, to determine in which our country is now home appliance chain industry competition stage.

U.S. electronics retail chain market is divided into the following three stages:

I, rapid development and initial integration phase (before 1993). Most of the home appliance chain enterprises as sources of comparative advantage in the overall high-speed development period. Small home appliance chain enterprises has been eliminated, large home appliance chain enterprises are starting the National layout, but not direct competition.

II, leading the integration between the competition phase (1993-2001). Bestbuy in 1994, have 45% and CircuitCity stores in direct competition. Meanwhile, revenue for the first time in 1996 BBY more than CC. (Phase II, the U.S. industry average growth of 8.41% composite, while income growth BBY and CC were 27% and 20%, profits rose by 43% and 17%)

III, a relatively stable industry structure to approximate an oligopoly phase (2001 - present). BBY begun to stabilize in 2001, its leading position, to reach this stage when 54% of CR3, CR3 now more than 65%.

Phase II, we will be at identifying the causes for 2000 is: to the end of the year, BBY last seven years in the face of competition, then behind the CC repeatedly exceed sales and downs, to determine their market leader status, competition pattern of stability at this time.

Since 2005, China has entered the first phase II. Reason: .. GOME and Suning direct competition since 2005.

2005 the first three years of industry estimates of market concentration of 10%.

We expect this integration initial period of five years or so.

These five years is most critical to the end of this stage, China's market has been stable, when new entrants or the challenger will be less chance of winning.

Now in direct competition in the first tier to the enterprise only country the United States and Suning. The second tier is quite difficult to come from behind, but still have a chance.

Industry growth in the United States where only 8.41%, II stage of the end of the second CC is still living in the market to maintain a 20% revenue growth and 17% profit increase.

We think it is more obvious advantages of the country the United States, but is not a business investment in any one of the end of time.

From the industry point of view, we do not tend to trade only within a country worth investing in the United States, Suning has no opportunity to view; we recognized national strategies and resources the United States because of lead has been established, but do not think this lead is unassailable.

But again, we follow-up analysis also shows that the current did not become BESTBUY come from behind Suning inevitable sign of the emergence of GOME and Suning .. if any one of enterprise at this stage can not be the absolute end of the lead, we estimate the income and compound average growth rate of profits will be 20% or more, are worth the investment variety.

1.2BBY and CC battle for seven years

BBY and CC since 1993, began to face competition in one, until only the first time in 1996 BBY income than CC, then the four or five years, not a gap, until 2001, formally established itself as the leading edge .

We found a negative growth of the industry to achieve the year and the following year, the income ratio of BBY and CC will significantly increase, BBY every negative growth in the industry than are the current and following year. Our competitive advantage for both the key point is: to control risk in the face of adversity to ensure growth can be achieved final victory.

Suning Appliance and Gome who invest more advantages?

Our Annual Report on both these seven years were studied, their main business strategy very similar:

Lowest market commitment. BBY has not abandoned its core price strategy, commitment to price higher than competitors, the return of 110% difference.

by: gaga

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