Injection of CP Lotus provides instant presence in Greater Shanghai and reinforces its regional expansion strategy.
Without earnings / loss data on the acquired business, we prudently expect the deal to dilute FY14 net profit by 8%.
More importantly, synergies from merchandising and cost savings should strengthen performance in medium-term.
As large gets larger, we revise up our TP to HK$13.27 by benchmarking 22x FY14 PE (previous: 20x 12-mth rolling PE). Upgrade from Fully Valued to HOLD.