[ET Net News Agency, 19 September 2019] Goldman Sachs lowered its target price for Sa
Sa International Holdings (00178) to HK$1.5 from HK$1.8 and maintained its "neutral"
rating.
Following the release of a profit warnings by Sa Sa, the research house views Sa Sa as
highly vulnerable to the current situation given its significant exposure to HK & Macau,
aggressive promotions for inventory clearance and market share losses.
Looking ahead, visibility remains low though the base should be getting easier toward
the end of the year; operating deleverage from SSSG declines could be partially offset by
rental reduction, staff cost savings and A&P cut, Goldman noted.
It lowered its FY2020/21/22 sales estimates by 7-11% to reflect continuous weakness in
the retail market and competition. Net income forecasts in FY2020-22 were cut by 21-37%
due to negative operating leverage. (KL)