Please see important notice on the last page. 1 of 3Company BriefingCHINA DONGXIANG(03818.HK) China Dongxiang (“China Dongxiang” or the “Company”)’s Same Store Sales (SSS) has a significant improvement, which recorded a growth of 4% YoY in 1Q2010 as compared to a growth of 1% in 4Q099. Retail discount rate increased slightly to 15% off comparing to 17% off in 4Q09. The inventory to sales ratio was 4.6x in 1Q2010. Because of the extreme weather impact, the sales in northern parts was not very satisfactory, the inventory in March was higher than the past two months. At the end of March, the Company has 3,636 retail outlets with a net increase of 126. Extreme weather impact the northern region sales The sales were worse than the Company expected in March. It was mainly because of the extreme weather. Especially for Northeast region and Inner Mongolia, which was recorded a negative SSS growth in 1Q2010. However, for less affected region, Southern and Eastern parts are still able to maintain growing momentum. The management was aware of this situation. They sent some marketing staffs to those areas to increase the local advertising and to create a better selling atmosphere. For Northern region (i.e.: Heilongjiang), the Company decides to hold spring products and to sell the products which were stored from Chinese New Year. The resignation of CFO has little impact on the Company Due to personal career development. CFO, the Company secretary and a member of the executive committee, Mr. Wang Zhiqiang was resigned from China Dongxiang. It will take effect from April 24, 2010. The Company is in the process of confirming appointments of a new CFO, meanwhile the Executive Director Mr. Qing will take over CFO position until the new appointment is confirmed. One of major competitor Li Ning, the resignation news of former CFO had a negative effect on the stock. However, this time will only has little impact on the Company’s stock, for long term the impact can be ignored. We think the Company possesses strong capability in branding management and marketing differentiation. We reiterate "OUTPERFORM" rating, with a one year TP of HKD6.35. Financials RMB mn 2008 2009 2010E2011E2012ERevenue 3,322 3,970 4,8785,9597,320Growth 94.2% 19.5% 22.8%22.2%22.8%Gross Profit 1,944 2,399 2,9823,6704,538Net Profit 1,368 1,460 1,7602,1162,456Growth 86.8% 6.7% 20.6%20.2%16.1%EPS(RMB) 0.24 0.26 0.31 0.37 0.43 DPS(RMB) 0.13 0.16 0.190.220.26P/E(X) 20.71 19.39 16.08 13.38 11.53 ROE 19.4% 20.9% 13.6%15.7%32.2%Source: Company data, CMS (HK) estimates Outperform (prior：Outperform) TP：HK$ 6.35 Current price：HK$5.67 China Merchants Securities (HK) Ivy Zhao 0755-82944682 zhaox@cmschina.com.cn 11 Apr 2010 Key data HSI Index 21867.04HSCEI Index 12855.31S/O（mn） 5666S/O (HK)（mn） 5666Mkt cap (HK) (mn) 32128BVPS（HKD） 1.30Major share holder Holding (％)Chen Yihong 49.28Free float 46.98Industry ApparelShare performance %1m 6m12mAbsolute return 2 1084Relative return -1 947 -2002040608010 012 0Apr-09Aug-09Nov-09Mar-10(%)03818. HKHS I Ind ex Source：Bloomberg Related research 1.FY09 annual result announcement-25/03/2009 2.2010Q2 Trade Fair order sales briefing-16/11/2009 3. Sales increased significantly in first half of the year, upgrade-09/09/2009 Retail sales improved, CFO resignation has little impact 请务必阅读正文之后的免责条款部分 2 of 3公司简报中国动向(03818.HK) 中国动向在上个星期五公布其2010年第一季度同店销售同比增长为4%，比09年第四季度的1%增长有明显的改善。零售终端折扣率为85折，比09年第四季度的83折略有提高。2010年前三个月的库销比为4.6x，由于公司春季产品上架时间较早，北方较寒冷的天气影响了部分地区的销售情况，因此第一季度的库存情况比一二月份略有增加。截止2010年3月底，公司拥有零售网点3636家，净增长126家。 极端的天气影响公司北方地区的销售情况 三月份的销售情况差于公司预期，主要是因为受到极端的天气影响。影响较为严重的地区为东北和内蒙古，其第一季度的同店销售同比为负增长。而受天气影响较弱的华北华东以及华南地区的终端销售情况良好。公司已针对其情况派遣市场销售小组去终端销售部理想的地区进行一些产品宣传的活动，加大当地的广告宣传力度，营造一个理想的销售氛围。另外，对于较北的地区(例如：黑龙江)。公司计划存起部分春季产品，清理部分春节期间积压的库存。 首席财务官辞职对于公司股价影响微 在公布零售终端销售情况的同时，公司宣布王志强先生以发展个人事业为由辞去首席财务官、公司秘书和执行委员会成员职务，并于2010年4月24日起生效。公司对于王志强先生的离职表示遗憾，同时公司正在积极寻找新的合适人选，而在未有新首席财务官的这段时间将会由执行董事秦大中代兼替其职位。公司其主要竞争对手李宁的前任首席财务官辞去曾短期对于公司的股价造成了一定的不利影响。我们认为此消息可能在今日开盘对于股价有轻微的负面影响，但长远来看我们认为影响可以忽略。我们相信公司在品牌管理、市场细分和营运管理方面的能力。维持对于公司“优于大市”的投资评级，一年目标价为6.35港元。 盈利预测及估值 人民币百万元 2008 2009 2010E2011E2012E营业额 3,322 3,970 4,8785,9597,320同比增长 94.2% 19.5% 22.8%22.2%22.8%毛利润 1,944 2,399 2,9823,6704,538净利润 1,368 1,460 1,7602,1162,456同比增长 86.8% 6.7% 20.6%20.2%16.1%每股盈利（元） 0.24 0.26 0.