Macquarie Research lifted its target price for Li & Fung (00494) to HK$5.15 from HK$4.8, and reiterated its "outperform" rating.
The research house said Li & Fung's 2017 revenue came in at US$13,534m, down 8.3% YoY, but core operating profit (COP) was up by 11.8% to US$356m. If adding back US$78m of Product Verticals business, the COP would have been US$434m, 2% ahead of Macquarie's estimates.
Macquarie said Li & Fung does not necessarily suffer from a trade war; operating
efficiency improvement continues. Li & Fung globally has >15,000 suppliers spanning >40 countries with very long-term business relationships.
It believes that the trade war against China, if it indeed happens, is not necessary negative to Li & Fung, as they can help their customers to swiftly shift to other sourcing destinations such as ASEAN or Central America.
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