Deutsche Bank Maintains Hold on Foschini

Deutsche Bank maintains its Hold rating on Foschini Group (Other OTC: FHNIF.PK) after 1H11 results. DB writes, "The 1H11 results were slightly weaker than anticipated driven by marginally lower turnover growth and lower interest received on debtors. Features of the result included strong topline growth, particularly in clothing (+11.7% yoy), home (+15.9% yoy) and the more discretionary jewellery and cell phone categories. The debtors' metrics continued to improve with arrears and net bad debts falling. Growth in RCS has been constrained due to a lack of funding over the last year." DB values Foschini using a P/E-relative methodology employing a normalized two-year forward P/E of 8.5x to obtain our fair valuation. Rolling this value forward at COE-dividend yield DB arrives at its 12-month price target of 8000cps.