News alert: 1H FY24 preliminary results below expectations with net loss of RMB370m-380m
- Sun Art announced a profit warning with net loss of RMB370m-380m in 1H FY24 (vs. net loss of RMB87m in 1H FY23).
- Preliminary results were below expectations with larger-than-expected sales discount and lower-than-expected ticket size.
- Sales pressure may continue to linger in the near term. Our last rating was HOLD, with TP under review. Full results of 1H FY24 are expected on Nov 14.
Profit warning. Sun Art announced preliminary results of 1H FY24 with net loss of RMB370m-380m (vs. net loss of RMB87m in 1H FY23). The expanded net loss was mainly due to (i) the decline in both supply chain business with Alibaba and guaranteed supply business during COVID-19, (ii) increased sales discount and (iii) lower ticket size in 1Q FY24 on a high base.
Lingering sales pressure. While the company has recorded sequential improvement in 2Q FY24, near-term sales pressure may continue given the current operating environment. Our last rating was HOLD, with TP under review. Interim results are expected to be released on Nov 14.