20150623-CLSA-利丰（0494）：INCREASING_HEADWINDS-758596

Li & Fung is facing increasing headwinds.The softer retail environment in the US，lower raw material prices，FX impact from a weaker Euro，and the higher investments in VSS should weigh on margins and COP in FY15.While we believe ROE should continue to improve post spin-off of GBG，slower earnings growth in the short-term and further downgrades should put pressure on stock performance.We arrive at our new price target of HK$7，based on 15x CY16 earnings.Downgrade from O-PF to U-PF.