DBS: Sa Sa International Holdings Ltd – Buy TP HK$1.93
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<News Alert> Sa Sa – 1Q FY23 Operating Data below
Group revenue dropped by 4.6% y-o-y to HK$800m in 1Q FY23 (i.e. 3 months ended Jun 2022).
Apart from HK and Malaysia, all other operations including Macau, Mainland China and online division saw sales decline during the quarter amid COVID-19 resurgence and stringent anti-COVID-19 measures.
We will review our rating and TP upon receiving more updates on latest performance for July.
Please refer to the following for more details:-
Group revenue dropped by 4.6% y-o-y to HK$800m in 1Q FY23 (i.e. 3 months ended Jun 2022), or down 61.2% comparing to pre-pandemic period of 1Q FY19 in local currency terms (4Q FY22: down 58.2% vs. pre-COVID-19, local currencies).
HK/Macau saw 10.1% y-o-y sales decline to HK$507m in 1Q FY23 (down 71.9% vs. pre-COVID-19, local currencies), attributable to -4.2% SSSG. Average ticket size dropped by 1.8% while total transaction number also declined by 8.1%.
Specifically, HK alone scored a double-digit y-o-y sales growth in 1Q FY23 despite the reduction of store number, largely driven by this year’s launch of the Government’s Consumption Voucher Scheme (Phase I) in Apr 2022. SSSG reached +40% in April, followed by double-digit SSSG in May and June. Yet, Macau was severely hit by the COVID-19 pandemic given a sharp reduction of Mainland tourist arrivals and saw substantial sales decline during the quarter.
Mainland China saw 16.2% y-o-y revenue decline to HK$60m in 1Q FY23 (or down 12.6% versus pre-COVID-19, local currencies), on the back of a -22.1% SSSG amid the pandemic resurgence and weak consumption, prompting its closure of 6 loss-making stores during the quarter. Sa Sa aims to further optimise its store network and strictly control overall costs in Mainland China so as to support a firm development in the longer run.
Online business registered 3.4% y-o-y revenue decline to HK$157m during 1Q FY23 (or up by 58.4% vs. pre-COVID-19, local currencies) along with the COVID-19 outbreak and lockdowns in selected cities of Mainland China. Such lockdowns significantly affected cross-border logistics and stock replenishment at its e-commerce warehouses in Mainland China, and delayed end-to-end deliveries including the period of “618 Shopping Festival”. Yet, HK’s online sales alone more than doubled y-o-y in 1Q FY23, driven by its own online store.
Malaysia scored a strong rebound and achieved 108.1% y-o-y increase in sales to HK$76m in 1Q FY23 (down 8.8% vs. pre-COVID-19, local currencies). The Malaysian government loosen up its anti-COVID-19 policies hence business rebounded swiftly on a low base.
By Jun 2022, total store number was reduced by 1 store y-o-y to 223, inclusive of 82 stores in HK/Macau, 71 stores in Mainland China, and 70 stores in Malaysia.
Net cash reached HK$125m as of Jun 2022, and total loan facilities available was c.HK$480m (including HK$280m from banks and HK$200m from controlling shareholders).
