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.
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