HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>While <a href="https://www.smartkarma.com/entities/sa-sa-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa (178 HK)</a>'s share price reacted positively to its good FY26 result, trading on 2.08x P/B, this is still undemanding relative to the 5-year average.  </li>
<li>Overall turnover surged 24% in 1Q FY27, sustaining a solid momentum. Coupled with cost disciplines, there is good room to surpass market earnings forecasts in FY27.</li>
<li>Its 7.3% dividend yield for FY27 is attractive. With net cash equalling 18.3% of the share price and no outstanding debt, it can maintain a high payout. </li>
</ul>


While Sa Sa (178 HK)'s share price reacted positively to its good FY26 result, trading on 2.08x P/B, this is still undemanding relative to the 5-year average.  
Overall turnover surged 24% in 1Q FY27, sustaining a solid momentum. Coupled with cost disciplines, there is good room to surpass market earnings forecasts in FY27.
Its 7.3% dividend yield for FY27 is attractive. With net cash equalling 18.3% of the share price and no outstanding debt, it can maintain a high payout. 


Sa Sa Intl (178 HK): Sustaining Its Strengths

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lung-fung-group-holdings-limited" target="_blank" data-smartkarma-citation="entities:46142:1" rel="noopener">Lung Fung Group (2290 HK)</a>, a leading Hong Kong-based chain retail store of beauty, health and pharmaceutical products, is seeking to raise HK$672m net proceeds.</li>
<li>When compared with <a href="https://www.smartkarma.com/entities/sa-sa-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa (178 HK)</a>, it has higher operating and net margins, and also better net profit for FY27.  </li>
<li>At the high-end of IPO price range (HK$6.38), it trades on 9.2x FY27 PER. At par to Sa Sa's 12x, there will be a 29% upside potential to HK$8.25. </li>
</ul>



Lung Fung Group (2290 HK), a leading Hong Kong-based chain retail store of beauty, health and pharmaceutical products, is seeking to raise HK$672m net proceeds.
When compared with Sa Sa (178 HK), it has higher operating and net margins, and also better net profit for FY27.  
At the high-end of IPO price range (HK$6.38), it trades on 9.2x FY27 PER. At par to Sa Sa's 12x, there will be a 29% upside potential to HK$8.25. 


Lung Fung Group (2290 HK) IPO: Too Cheap to Ignore

<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

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Perfect Medical Health Management / Equity Bottom-Up

Perfect Medical Health Management (1830 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">Perfect Medical Health (1830 HK)</a>, post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&amp;investments representing 24% of the market cap.</li>
<li>HK is experiencing a dip in consumer sentiment, and <a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">t</a>he company isn't immune to it, but flat sales/profitability, a 24% net margin, and &gt;40% ROE provide great margin of safety.</li>
<li>The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.</li>
</ul>



Perfect Medical Health (1830 HK), post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&amp;investments representing 24% of the market cap.
HK is experiencing a dip in consumer sentiment, and the company isn't immune to it, but flat sales/profitability, a 24% net margin, and &gt;40% ROE provide great margin of safety.
The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.


Perfect Medical: Post Card From HK, Yield of 11.5%

<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> has an encouraging 4Q FY 26, supporting a massive net profit surge. We expect its 3-year EPS CAGR to be 10.1%. </li>
<li>Improved store efficiency and stronger tourist arrivals have led to a revival in sales. The strength of Rmb against the HKD is another positive factor.</li>
<li>With ROE of 16-18%, against -5.1% in the last 5 years, the stock's 1.8x P/B is very cheap relative to the historical range of 1.4-6.1x.</li>
</ul>



Sa Sa International Hldgs (178 HK) has an encouraging 4Q FY 26, supporting a massive net profit surge. We expect its 3-year EPS CAGR to be 10.1%. 
Improved store efficiency and stronger tourist arrivals have led to a revival in sales. The strength of Rmb against the HKD is another positive factor.
With ROE of 16-18%, against -5.1% in the last 5 years, the stock's 1.8x P/B is very cheap relative to the historical range of 1.4-6.1x.


Sa Sa Intl (178 HK): Seeing a Clear Revival

Hong Kong

Sa Sa International Holdings Limited is a leading beauty product retailing group in Asia, engaged in the retail and wholesale of cosmetic products. The company offers a wide range of skincare, fragrance, make-up, body care, hair care, inner beauty, personal care, health and fitness products, and beauty equipment through its retail stores and e-commerce platforms. Sa Sa was founded in 1978 and is headquartered in Chai Wan, Hong Kong.

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Sa Sa (178 HK)

Sa Sa Intl (178 HK): Sustaining Its Strengths

Sa Sa just announced an 1Q FY27 offline sales growth of 29.3% (HK and Macao +31%). Its total turnover (offline and online) surged 22.9%. It added 2...

Osbert Tang, CFA

Lung Fung Group (2290 HK) IPO: Too Cheap to Ignore

Lung Fung Group seeks to raise HK$672m in IPO, showing higher margins and profit compared to Sa Sa, with potential 29% upside at IPO price range.

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

Perfect Medical: Post Card From HK, Yield of 11.5%

We provide an update on Perfect Medical (1830 HK). The stock trades at 9.3x FY24 PE/11.5% yield (assuming a 110% payout) with a growth option once...

Sameer Taneja

Sa Sa Intl (178 HK): Seeing a Clear Revival

Sa Sa Intl posted FY26 earnings of HK$200.5m, at the high end of the positive profit alert range. Besides the final DPS of HK$0.034, a special DPS...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

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Dividend (Yield)

Sa Sa Intl (178 HK): Sustaining Its Strengths

Sa Sa just announced an 1Q FY27 offline sales growth of 29.3% (HK and Macao +31%). Its total turnover (offline and online) surged 22.9%. It added 2...

Osbert Tang, CFA

Lung Fung Group (2290 HK) IPO: Too Cheap to Ignore

​Lung Fung Group seeks to raise HK$672m in IPO, showing higher margins and profit compared to Sa Sa, with potential 29% upside at IPO price range.

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

Perfect Medical: Post Card From HK, Yield of 11.5%

We provide an update on Perfect Medical (1830 HK). The stock trades at 9.3x FY24 PE/11.5% yield (assuming a 110% payout) with a growth option once...

Sameer Taneja

Sa Sa Intl (178 HK): Seeing a Clear Revival

Sa Sa Intl posted FY26 earnings of HK$200.5m, at the high end of the positive profit alert range. Besides the final DPS of HK$0.034, a special DPS...

Osbert Tang, CFA

Lung Fung Group seeks to raise HK$672m in IPO, showing higher margins and profit compared to Sa Sa, with potential 29% upside at IPO price range.