Hendry released its results for the first half of 2015. Sales were 6754 million yuan, down 6.3% from the same period last year. Excluding the excess, sales are down 8.6% from a year earlier. Shareholders' net profit fell 8.8% year-on-year to 255 million yuan. The weak performance was mainly due to the weak performance of Chinese mainland and the overall performance of luxury retail in Hong Kong.

Change of strategy. We don't think high-end consumption will improve in the second half of 2015. As a result, management intends to focus on mid-range products to cope with changes in the luxury market and slow down store opening to control spending. In addition, the company plans to strengthen its watch repair and maintenance services to open up this huge after-sales service market.

Investment rating "Collection", with a target price of HK $1.29. We forecast basic earnings per share of RMB 0.096, 0.103 and 0.116 for fiscal year 2015-2017. As the largest Swiss watch retailer in China, the company is adjusting its strategy to meet market demand and explore new profit growth points. With the rise of per capita disposable income and the rise of the middle class, we are optimistic about the long-term prospects of the company. The target price corresponds to 10.6 times 2015 p / e and 10.0 x 2016 p / e.