HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Market expectation for FY23/24 earnings of <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> is overly conservative. It achieved HK$110-125m of profit in 1H, and 2H is the normal peak season.</li>
<li>Offline sales in 2Q23/24 recovered to 47.2% of the 2019 level and the rebound in mainland tourist arrivals should boost sales over the next 12 months. </li>
<li>Lower rent costs should allow for higher operating leverage as revenue revives. Its gross margin for 1H23/24 has further expanded and we think this trend can be sustained. </li>
</ul>


Market expectation for FY23/24 earnings of Sa Sa International Hldgs (178 HK) is overly conservative. It achieved HK$110-125m of profit in 1H, and 2H is the normal peak season.
Offline sales in 2Q23/24 recovered to 47.2% of the 2019 level and the rebound in mainland tourist arrivals should boost sales over the next 12 months. 
Lower rent costs should allow for higher operating leverage as revenue revives. Its gross margin for 1H23/24 has further expanded and we think this trend can be sustained. 


Sa Sa Intl (178 HK): Revival Well on Track

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>The share price of <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a> has not moved and lagged behind other transport operators in Asia.</li>
<li>High-Frequency numbers from the company has shown improvement and signs that the Chinese tourists are gradually returning.</li>
<li>The reopening of the checking in facility in downtown Hong Kong is another sign that more tourists are expected to come. </li>
</ul>


The share price of MTR Corp (66 HK) has not moved and lagged behind other transport operators in Asia.
High-Frequency numbers from the company has shown improvement and signs that the Chinese tourists are gradually returning.
The reopening of the checking in facility in downtown Hong Kong is another sign that more tourists are expected to come. 


Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. </li>
<li>Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.</li>
<li>The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. </li>
</ul>


Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. 
Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.
The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. 


<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

<ul>
<li>We think <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 risk-return payoff still look favourable even after the recent rally, which rides on the expectations of HK-mainland China border opening.  </li>
<li>Assuming net profit returns to 70% of pre-pandemic level in FY25, and applying a peak PER of 25x over 2011-2018, its share price still has 63% upside.</li>
<li>Release of pent-up demand, stabilisation of gross margin trend, improved cost dynamics and manageable financial position are all positive factors for Sa Sa. </li>
</ul>


We think Sa Sa International Hldgs (178 HK)'s risk-return payoff still look favourable even after the recent rally, which rides on the expectations of HK-mainland China border opening.  
Assuming net profit returns to 70% of pre-pandemic level in FY25, and applying a peak PER of 25x over 2011-2018, its share price still has 63% upside.
Release of pent-up demand, stabilisation of gross margin trend, improved cost dynamics and manageable financial position are all positive factors for Sa Sa. 


Sa Sa Intl (178 HK): Is It Too Late to Buy Now?

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): Revival Well on Track

Market expectation for FY23/24 earnings of Sa Sa is too conservative. Strong 1H profits and rebounding sales indicate growth potential. Lower rent...

Osbert Tang, CFA

MTR (66): Should Start to Move

MTR share price has not moved up although the statistics have improved tremendously. This is probably a good buying opportunity although it may be...

Henry Soediarko

Poya International: Key Catalysts

Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market...

Douglas Kim

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 Intl (178 HK): Is It Too Late to Buy Now?

It is still not too late to get into Sa Sa now, even after the sharp rally since end-Nov. Consensus profit forecasts may have underestimated the...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Sa Sa Intl (178 HK): Revival Well on Track

​Market expectation for FY23/24 earnings of Sa Sa is too conservative. Strong 1H profits and rebounding sales indicate growth potential. Lower rent...

Osbert Tang, CFA

MTR (66): Should Start to Move

MTR share price has not moved up although the statistics have improved tremendously. This is probably a good buying opportunity although it may be...

Henry Soediarko

Poya International: Key Catalysts

Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market...

Douglas Kim

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 Intl (178 HK): Is It Too Late to Buy Now?

It is still not too late to get into Sa Sa now, even after the sharp rally since end-Nov. Consensus profit forecasts may have underestimated the...

Osbert Tang, CFA

Market expectation for FY23/24 earnings of Sa Sa is too conservative. Strong 1H profits and rebounding sales indicate growth potential. Lower rent...