[ET Net News Agency, 15 May 2018] Nomura upped its target price for Sa Sa International
(00178) to HK$6.5 from HK$4, and retained its "buy" rating.
The research house expects Sa Sa to sustain the strong trend of 4Q FY2018 SSS growing
15.1% from 3.7% in 3Q FY 2018, thanks to the pick-up in PRC tourists inbound to HK. In
January-March, PRC tourist arrivals increased by 12.6%, thus driving a 17.3% increase in
transactions from mainland tourists.
SSSG accelerated further to 31.7% during the Labour Day holiday. Nomura raised its
FY2019 HK SSSG assumption to 10% from 8% previously.
With strong SSSG and the completion of its store and warehouse relocations, it expects
Sa Sa's operating profit margin to expand by 2.4pp to 8.7% in FY2019.
Nomura expects Sa Sa to be the greatest beneficiary of the Guangzhou-Shenzhen-Hong Kong
Express Rail Link, due to commence operations in 3Q 2018. The railway will reduce the
travel time from Guangzhou to Hong Kong from two hours to 48 minutes.
Nomura increased its FY2018-20 net profit forecasts by 3-14%. (KL)