Jefferies Research lowered its target price for Sun Art Retail Group (06808) to HK$9.8 from HK$12.7 and maintained its "hold" rating.
The research house is positive on Alibaba's stake increase in Sun Art and believes the latter will be able to benefit from any collaboration with Ali's online initiatives, especially when Lin Xiao Hai takes on a bigger role in the company.
However, in the short to mid-term, heavy investments, especially in group community purchase in the market, and the weaker macro environment has hurt offline companies' SSS. Jefferies lowered its net profit by 4%-10% for 2020-22 to reflect such investment and slightly slower growth for rental income.
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