Global Hunter Comments On QKL Stores Q1

According to Global Hunter Securities, QKL Stores QKLS released Q1 performance yesterday, which beat consensus on the top line but was in line with consensus on EPS, due to increased expenses associated with new store openings. Global Hunter Securities said that it is encouraged to see stores opened within one year made a significant contribution to the quarter. “Management expects to likely open a couple of more stores than originally guided before the end of this year. Our updated estimates reflect greater gross margin improvement and higher SG&A expense assumptions related to newly opened stores. American retail chain peers are trading at low teens levels while QKLS is trading at 9x FY11 EPS, which we believe is undervalued given its growth potential. We reiterate our Buy rating and price target of $4.00, or 13x our FY11 EPS estimate.” QKL Stores closed yesterday at $2.49.