[ET Net News Agency, 28 September 2018] UBS Global Research initiated coverage of Sun
Art Retail Group (06808) with a "buy" and a target price of HK$11.43, implies 13x 2019
EV/EBITDA, given a 2018-20 EBITDA CAGR of 13%.
It believes that the market may be underappreciating its earnings growth potential from
the "online and offline" strategy (i.e. New Retail) from 2020 onwards, with Alibaba as its
second-largest shareholder since November 2017.
Findings from six Focus Group Discussions (FGDs) held in August in Shanghai, Shenzhen
and Chengdu on "New Retail" store formats suggest investors may have underestimated the
value of brick 'n mortar assets. Potentially higher returns - supported by online delivery
growth and offline reshuffling - could lead to economies of scale, UBS said.
Sun Art is trading at 10x 2019 EV/EBITDA, in line with its historical average; this
looks attractive given faster revenue growth and market share gains. (KL)
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06808 SUNART RETAIL
Nominal 
1.560 +0.020 (+1.299%) Others
28/09/2018 14:01
[I-bank focus]UBS starts Sun Art Retail (06808) at HK$11.43
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