HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Sa Sa International Hldgs / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International Hldgs (178 HK)</a>'s 1H FY25/26 profit came in at the top-end of the guidance. Its 3Q sales growth has so far increased 11.3%, a further acceleration.</li>
<li>Hong Kong and Macau should capture some of the diverted traffic as Sino-Japanese relations soured, while a weaker USD, as rates are cut, should make shopping cheaper.</li>
<li>With its ROE reaching 10-13% in FY26-28F (the best ones since FY21), its 5-year-low P/B multiple makes the stock a bargain.</li>
</ul>



Sa Sa International Hldgs (178 HK)'s 1H FY25/26 profit came in at the top-end of the guidance. Its 3Q sales growth has so far increased 11.3%, a further acceleration.
Hong Kong and Macau should capture some of the diverted traffic as Sino-Japanese relations soured, while a weaker USD, as rates are cut, should make shopping cheaper.
With its ROE reaching 10-13% in FY26-28F (the best ones since FY21), its 5-year-low P/B multiple makes the stock a bargain.


Sa Sa Intl (178 HK): Positive Trend Beyond the Results

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International Hldgs (178 HK)</a>'s 1.63x P/B is near-trough level, but the recovery in earnings in FY26 (+56.4%) and improving industry figures suggest earnings have bottomed. </li>
<li>Its 2Q FY26 turnover grew 8.4%, accelerating from 4.7% in 1Q and -9.7% in FY25. The 1H turnover equals 49.3% of FY26F (vs. 47.2% historically). We see upgrade potential.</li>
<li>With net cash amounting to 19.3% of the share price, its 15.9x and 12.4x PERs for FY26F and FY27F do not look stretched.</li>
</ul>



Sa Sa International Hldgs (178 HK)'s 1.63x P/B is near-trough level, but the recovery in earnings in FY26 (+56.4%) and improving industry figures suggest earnings have bottomed. 
Its 2Q FY26 turnover grew 8.4%, accelerating from 4.7% in 1Q and -9.7% in FY25. The 1H turnover equals 49.3% of FY26F (vs. 47.2% historically). We see upgrade potential.
With net cash amounting to 19.3% of the share price, its 15.9x and 12.4x PERs for FY26F and FY27F do not look stretched.


Sa Sa Intl (178 HK): Seemingly Too Conservative

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International Hldgs (178 HK)</a>'s 1Q FY26 update provides evidence for a business recovery as turnover grew 4.7%, against a YoY drop in the last 5 quarters.  </li>
<li>Resurgence in mainland tourist arrivals is a driver. The start of 2Q FY26 also looks good, as this has increased 21.8% YoY in the last 15 days.</li>
<li>At 1.55x P/B, it is only 7% above the trough since 2020. Also, it traded at a higher multiple in FY20-22 when it was loss-making. </li>
</ul>



Sa Sa International Hldgs (178 HK)'s 1Q FY26 update provides evidence for a business recovery as turnover grew 4.7%, against a YoY drop in the last 5 quarters.  
Resurgence in mainland tourist arrivals is a driver. The start of 2Q FY26 also looks good, as this has increased 21.8% YoY in the last 15 days.
At 1.55x P/B, it is only 7% above the trough since 2020. Also, it traded at a higher multiple in FY20-22 when it was loss-making. 


Sa Sa Intl (178 HK): Looking Better Forward

<ul>
<li>Despite missing market consensus, <a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International Hldgs (178 HK)</a>'s FY24 result still have silver linings. Its resumption of dividends with a 70% payout ratio is welcoming.</li>
<li>Tax credit in 2H23 has distorted comparison. At pre-tax level, 2H24 profit has gone up by 29.5%. Cost management is solid, generating a 0.9pp FY24 operating margin expansion. </li>
<li>While overall 1Q25 sales have dropped, mainland China sales surged 83.9%. The macro environment should have bottomed and government efforts to attract tourists will pay off.  </li>
</ul>


Despite missing market consensus, Sa Sa International Hldgs (178 HK)'s FY24 result still have silver linings. Its resumption of dividends with a 70% payout ratio is welcoming.
Tax credit in 2H23 has distorted comparison. At pre-tax level, 2H24 profit has gone up by 29.5%. Cost management is solid, generating a 0.9pp FY24 operating margin expansion. 
While overall 1Q25 sales have dropped, mainland China sales surged 83.9%. The macro environment should have bottomed and government efforts to attract tourists will pay off.  


Sa Sa Intl (178 HK): Every Coin Has Two Sides

<ul>
<li>We observed that businesses at <a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International Hldgs (178 HK)</a> have picked up during the Chinese New Year, but a significant overall significant recovery is still lacked.</li>
<li>The full relaxation of mainland-HK border control has brought about a 110% surge in mainland arrival between 6 Feb and 11 Feb. This suggests that momentum is clearly building up. </li>
<li>Sa Sa has embarked on strategies like re-opening important stores, selectively increase store counts and re-adjusting staff arrangement and opening hours to capture the opportunities.</li>
</ul>


We observed that businesses at Sa Sa International Hldgs (178 HK) have picked up during the Chinese New Year, but a significant overall significant recovery is still lacked.
The full relaxation of mainland-HK border control has brought about a 110% surge in mainland arrival between 6 Feb and 11 Feb. This suggests that momentum is clearly building up. 
Sa Sa has embarked on strategies like re-opening important stores, selectively increase store counts and re-adjusting staff arrangement and opening hours to capture the opportunities.


Sa Sa Intl (178 HK): On-Ground Observations and Outlook

Hong Kong

Sa Sa International Holdings Limited, through its subsidiaries, retails and wholesales cosmetics. The Company also provides beauty and health club services to members.

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Sa Sa International Hldgs (178 HK)

Sa Sa Intl (178 HK): Positive Trend Beyond the Results

Sa Sa's strong 1H FY25/26 profit and 3Q sales growth, combined with favourable market conditions, make it a bargain with a healthy dividend yield....

Osbert Tang, CFA

Sa Sa Intl (178 HK): Seemingly Too Conservative

Sa Sa issued a positive profit alert, saying that 1H FY25/26 net profit will reach HK$48.5-50.5m, a 50-56% YoY growth. This is driven by a rise in...

Osbert Tang, CFA

Sa Sa Intl (178 HK): Looking Better Forward

Sa Sa shows signs of business recovery in 1Q FY26 with 4.7% turnover growth, driven by better mainland tourist arrivals. Trading at 1.55x P/B,...

Osbert Tang, CFA

Sa Sa Intl (178 HK): Every Coin Has Two Sides

During the first 5 days of the Golden Week, over 980,000 mainland visitors arrived in Hong Kong, up 35% YoY. Macau's growth was 19% YoY. Stronger...

Osbert Tang, CFA

Sa Sa Intl (178 HK): On-Ground Observations and Outlook

Sa Sa's businesses have picked up during the Chinese New Year and we believe the momentum will further improve with the complete relaxation of...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Sa Sa Intl (178 HK): Positive Trend Beyond the Results

​Sa Sa's strong 1H FY25/26 profit and 3Q sales growth, combined with favourable market conditions, make it a bargain with a healthy dividend yield....

Osbert Tang, CFA

Sa Sa Intl (178 HK): Seemingly Too Conservative

Sa Sa issued a positive profit alert, saying that 1H FY25/26 net profit will reach HK$48.5-50.5m, a 50-56% YoY growth. This is driven by a rise in...

Osbert Tang, CFA

Sa Sa Intl (178 HK): Looking Better Forward

​Sa Sa shows signs of business recovery in 1Q FY26 with 4.7% turnover growth, driven by better mainland tourist arrivals. Trading at 1.55x P/B,...

Osbert Tang, CFA

Sa Sa Intl (178 HK): Every Coin Has Two Sides

During the first 5 days of the Golden Week, over 980,000 mainland visitors arrived in Hong Kong, up 35% YoY. Macau's growth was 19% YoY. Stronger...

Osbert Tang, CFA

Sa Sa Intl (178 HK): On-Ground Observations and Outlook

Sa Sa's businesses have picked up during the Chinese New Year and we believe the momentum will further improve with the complete relaxation of...

Osbert Tang, CFA

Sa Sa's strong 1H FY25/26 profit and 3Q sales growth, combined with favourable market conditions, make it a bargain with a healthy dividend yield....

Sa Sa shows signs of business recovery in 1Q FY26 with 4.7% turnover growth, driven by better mainland tourist arrivals. Trading at 1.55x P/B,...