Nomura lowered its target price for Sa Sa International (00178) to HK$1.5 from HK$2.1 and maintained its "reduce" rating.
The research house said Sa Sa's 2Q FY2020 SSSG for Hong Kong and Macau further deteriorated from -15.3% in 1Q FY2020 to -28.5%. The SSSG for Hong Kong was even weaker
at -36.8% versus +5.2% for Macau mainly due to the decline in tourist arrivals.
Further, management guided that the transaction volume from mainland tourists during the golden week in Hong Kong was down 76.9% versus 51.2% drop in 2Q FY2020.
Nomura thinks Sa Sa is one of the most PRC tourist-reliant retail names and may record the highest operational pressure among all Hong Kong peers given the impact of intensified protests. It lowered its SSSG assumption for Hong Kong and Macau from -8% to -21% for FY2020.
It also cut its FY2020/21 earnings forecasts by 55%/31% to reflect lower sales and GPM.
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