报告名称：SA SA International(00178.HK)1Q17 SSS decline narrowed but GPM lowered driven by
报告类型：港股研究
报告日期：2016-06-24
研究机构：德意志银行
股票名称：莎莎国际
股票代码：00178
页数：12
简介：Maintaining Hold due to limited downside
We have fine-tuned our FY17/18 NP forecasts given a better-than-expected1QFY17 SSS performance (decline in SSS narrowed), offset by lower-thanexpectedGPM guidance for FY17 due to increasing parallel imports to drivetraffic (which is working). Our TP increases by 11% as we roll forward our firstforecast year in our DCF calculations. Our TP implies FY17/18E PE of 18x/16x,yielding 6% as we assume a 100% payout. Maintaining Hold.
We expect sales in HK to stabilize in FY17 as 1Q was better than expected
The company announced a profit warning on 4 May that its FY16 NP woulddecline by more than 50%. The actual result was NP down 54% to HKD384m.Although FY16 NP was 11.8%/7.8% behind DB/market forecasts, mainly due toa lower-than-expected GPM, we only fine-tune our FY17/18 forecasts andintroduce our FY19 forecast. This is because the 1QFY17 (up to 19 June) SSSperformance was better than expected at -4.6%, vs. a double-digit decline inthe previous three quarters. Unless performance deteriorates in the remainingquarters, we expect the sales performance in HK to stabilize.
GPM likely under pressure from increased parallel imports to drive traffic
GPM, however, was lower than we expected due to a change in product mix,with higher sales from lower-margin parallel imported products (30% in FY16,vs. 27-28% a year ago). This will continue in FY17 as management hopes todrive traffic. So far it has worked. We also expect a mid-single-digit decline inrental cost.
Increasing TP by 11% to HK$2.45; implies FY17E PE of 18x
We roll over and use FY18 as the first forecast year in our DCF model, leadingto an increase in our target price. We maintain our Hold rating. Our DCF valueis based on a HK market COE of 7.5% and a TGR of 0%. We use a beta of 1, inline with other consumer players’ (range: 1.0 to 1.3). Key downside risk:slower-than-expected GPM improvement. Key upside risks: better-thanexpectedHK SSS growth and a PE re-rating on Chinese growth potential.

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