BELLE International: Avoiding The Risk Of Macro Tightening

In view of the rapid growth of China's economy and excess liquidity, the price of stock and property market is high, and the risk of inflation is rising. The central working conference called for greater macroeconomic regulation and control to adjust monetary policy to "tight".

The object of macroeconomic regulation and control is overheated economy, and the result of regulation must be the decrease of investment growth rate.

At present, the accelerating growth of trade surplus has constantly injected liquidity into our country, and the government is also trying to ease export growth by reducing export rebates.

On the other hand, with the rapid growth of the residents' disposable income and the wealth effect of the stock market, the consumption demand of our country is exuberant, and the social retail volume has increased rapidly. In November, it increased by 18.8% to a new high.

Consumer stocks will become a safe haven for investors in tight regulation.

And the advantage brands with pricing power will benefit most.

We believe that BELLE International (1880.HK) has investment value.

As a multi brand excellent operator, BELLE international is becoming the industry integrator of China's high-end brand leather shoes.

In the 2006 brand footwear ranking, BELLE International's BELLE, Teenmix, Staccato, and others have entered the top 10, and are now frequently buying other footwear brands.

In October 29, 2007, BELLE acquired the brand of "Miu Li"; in November 23rd, BELLE acquired Jiangsu.

As of October 31, 2007, BELLE had 4799 brands of leather shoes retailers, far more than 210.HK, which runs the Daphne brand and H14.SI, which runs the brand.

BELLE takes the activities of the whole value chain in the brand leather business. From design, manufacture to distribution, until the last retail, the gross profit rate of leather shoes business is up to 64.5%, and the control of the retail terminal is very strong.

The ability to manage the entire value chain to expand to other businesses such as sports apparel will continue to expand BELLE's profitability.

It is estimated that China's annual per capita annual income of 3000 dollars or more, the annual growth rate of consumption capacity can reach 22%.

This means that the composite annual growth of the middle and high-end footwear market will exceed 20%.

BELLE has a wide range of domestic sales networks. When people's disposable income is growing rapidly and time is getting more and more intense, more retail outlets can get closer to consumers. BELLE will surely benefit most from the upgrading of Chinese leather shoes.

In addition, BELLE is the largest seller of Nike and Adidas in China, and has long experience in sportswear.

In August 14, 2007, BELLE acquired the trademark rights of Fila in China and plans to build Fila into the company's top sports brand.

With the promotion of the 2008 Olympic Games and the upgrading of consumption, the demand for sportswear will also increase rapidly, and it is expected to reach 26% in the next three years.

Among them, fashion sportswear is still new in China, and the growth rate is even more alarming.

We expect BELLE and Nike to grow rapidly, and its own brand Fila will grow more staggering.

In conclusion, we believe that sales of BELLE will increase rapidly, whether in footwear or sportswear business, and the influence brought by extensive retail network will further enhance the bargaining power of BELLE and its partners such as department stores, so as to further reduce the cost. Therefore, BELLE's net profit growth will exceed the growth of sales.

We expect BELLE's profit growth rate to exceed 50% in the next two years.