According to the Credit Suisse report, Gome Electric's (2.18, 0.03, 1.40%) (00493.HK) first-quarter profit rose more than 9% to 290 million yuan, beating market expectations. Same-store sales rose 4.2%, higher than the annual guideline of 3%. Gome's two-year average same-store sales were about 6.2%, significantly higher than Suning's 0.8%.

According to the bank, Gome's gross margin rose to 18.2% due to adjustments in the product portfolio benefiting from. At the same time, the group promoted omni-channel sales, particularly department stores, Internet and WeChat stores, etc., and expanded its logistics and retail finance business. The goal was to increase the share of third-party logistics revenue from 10% in the first quarter to 35% in 2017.

Credit Suisse said that Gome raised its earnings forecasts per share from 2015 to 2017 by 5.2%, 4.4% and 7%, respectively, and raised the target price from $1.35 to $2.7. This is valued based on the cash flow discount rate. This is equivalent to 2 times the market bill ratio (PB), maintaining the “outperform the market” rating.