According to a research report published by UBS, the shift is optimistic that there are more popular shopping malls than high-end shopping malls, so it maintains the 12-month target price of 2.4 yuan for Suibao Department Store (00312-HK) and maintains a “buy” investment rating.

UBS pointed out that Suibao announced the acquisition of operating rights for two department stores in Dongguan for 29 million yuan (RMB, same below), increasing the total floor area by 8.6%. UBS assumes that new stores can achieve profits similar to those of existing stores. Considering that the net profit of the 13 existing stores reached 959 yuan per square meter in 2010, the transaction price of 1,611 yuan per square meter for the new store has a high margin of profit and appreciation.

UBS expects the brand integration to end in October. The company plans to open two branches in Humen this year, with a total floor area of about 12,800 to 60,000 square meters.

UBS expects Suibao's return on investment in 2011, 2012 and 2013 to be negative 273.9%, 90% and 44.5% respectively; price-earnings ratios of 13.7 times, 11.3 times and 10.4 times, respectively; and dividend ratios of 2.4%, 2.9% and 3.2% respectively

Suibao Department Store closed at HK$1.58 yesterday.