What the broker says
Giordano International runs a chain of casual clothes stores in Asia selling under its own label.
Salomon Smith Barney recently put a buy recommendation on the stock on the strength of the recovery in its sales in Taiwan and the mainland.
In the first three quarters of this year Taiwan sales jumped 35 per cent, while those in the mainland fell only 2 per cent - a sharp improvement on a 14 per cent first-half drop.
Sales growth in Hong Kong in the same period was also strong at 15 per cent.
Salomon has a six-month price target of $9, but it said the strength of the recovery in the third quarter could see Giordano's stock reaching $10.
The brokerage forecasts net profit will more than quadruple this year, to $318 million from last year's $76 million.
Giordano has a net cash position of $600-$650 million, which will enable it to make acquisitions.
At the moment it is involved in a bidding war with YGM Trading for Theme International.
Salomon's report says the market would prefer Giordano not to win the bid.
Yet Giordano's management believes Theme offers a cheap alternative outlet to launch another line of clothing aimed at working women.
Giordano's shares could fall if it is successful, which Salomon recommends as a buying opportunity.
Stephen Seawright
