Sa Sa International 0178

[winston]

DJ MARKET TALK: CLSA Upgrades Sa Sa To Outperform From Sell

1220 [Dow Jones] STOCK CALL: CLSA upgrades Sa Sa International (0178.HK) to Outperform from Sell. Says, Sa Sa has responded to weakening consumption through significant efforts to move downmarket via merchandising downgrades as opposed to an outright discounting approach.

"This will importantly increase its exposure to the relatively inelastic low-end market segment and we expect resilient sales growth at minimal margin expense." Raises target to HK$2.01 from HK$1.93 after raising same store sales growth forecasts in FY09 to 4% from 2% and to +1.5% from 1% fall in FY10, resulting in 6% rise in FY10 EPS. Stock off 1.9% at HK$1.03; HSI down 0.7%.

[winston]

Not vested. From Dr. Check, The Standard HK:-

Locally, many retailers have posted weaker earnings because US consumers are saving more. But there are exceptions.

Sa Sa International (0178) reported unexpectedly good earnings last week.

Cosmetics are now a necessity. Mainland tourists, for instance, are often seen packing Sa Sa outlets.

So despite the slump, the cosmetics retailer's net profit dropped only 9.3 percent from a year ago to HK$316 million. A final and special dividend of 17 HK cents took the full-year dividend to 23 HK cents, providing a decent 8 percent yield.

Sa Sa closed 5.1 percent higher at HK$2.89 on Friday. If the firm pays a dividend of 20 HK cents as forecast this year, it will be able to provide a yield of 7 percent, which under current market conditions look very attractive.

[winston]

Not vested.

DJ MARKET TALK: CS Raises Sa Sa International Target To HK$3.23

1004 [Dow Jones] STOCK CALL: Credit Suisse maintains Sa Sa International (0178.HK) at Outperform, raises target price to HK$3.23 from HK$1.97 on better-than-expected FY09 results; says full-year FY3/09 results were "classic example of its disciplined execution." Notes FY earnings +21% on-year, accelerating from a flat 1H09 on-year; says full-year results were 16% higher than broker's forecast as broker originally tipped earnings to be low single-digits on-year.

"The top line proved very consistent with our forecasts but a positive surprise came from the improvement in margins as Sa Sa swiftly tightened operating control and fine-tuned its merchandising as the financial crisis unfolded last September/October." Expects company to continue to pay good dividend going forward; tips HK$0.22/share in FY10 vs HK$0.23 in FY09. Shares last +1.7% at HK$2.94.

[stilicon]

Sa Sa posted a note on its 1st quarter in july. Group turnover increased by 6,6%, with same store sales growth pretty anemic at +1,6%. Meanwhile, it keeps increasing its number of counters/stores, in HK, Macau, obviously in PRC but also in Taiwan, Singapore and Malaysia.

It has now 156 such counters/stores versus 150 at March, 30 2009.

It has no debt, and even a decent cash war-chest.

It seems to me a serious and stable business, with some huge possibilities of increase over the next decade.
The management team seems fine. It is always hard for me to assess this, but they appear prudent and very respectuous of their shareholders, which is always a good thing !

As for the numbers, to make it short, their B/S and P&L over the last three years, look like as one of the most remarquable that I computed recently for all markets.

As for the super-analysts views, well ... apart from CS who posted on 29/06/2009 a Target Price of HK$3,23, I have not been able to track any other reco. Which could mean that Sa Sa is not very trendy at present, which could be seen as a good thing ...

Does anyone know something more specific about them ?

[winston]

Hi stillcon,

1) I think Sephora is giving Sa Sa a run for their money, especially in China. If you go to the better malls in China, you will see Sephora occupying the better locations. BTW, Sephora is not their only competitor ..

2) I have checked with a few people and somehow they believed that the products at Sa Sa are close to expiry. I dont know how true that is but that's the perception that I'm getting on the ground.

3) Not vested

Take care,
Winston

[stilicon]

Thanks a lot, winston,

So, if Sa Sa specializes in the inelastic low-end mass market, and Sephora (or any other) keeps the hip high-end part with better margins for themselves, in the end, Sa Sa will have to struggle against the mass-market retailers/supermakets chains ? Seen like this, they seem like doomed ... Sad story ... It was one the few counters I was contemplating at present.

Everything seems expensive today, with this stupid nonsense rally everywhere. Even the S-Reits, which I used to like a lot, seem pricey today.

[kennynah]

buy high....then sell higher lor....

[winston]

So, if Sa Sa specializes in the inelastic low-end mass market, and Sephora (or any other) keeps the hip high-end part with better margins for themselves, in the end, Sa Sa will have to struggle against the mass-market retailers/supermakets chains ?

No, not true. I think they are both going after the low-end mass market. The　high end are dominated by the foreign brands.．

[winston]

Not vested. I'm not as positive as UOBKH. Sephora is giving them a good challenge ..

DJ MARKET TALK: UOB Raises Sa Sa Target To HK$4.80; Keeps At Buy

1145 [Dow Jones] STOCK CALL: UOB KayHian raises Sa Sa (0178.HK) target to HK$4.80 from HK$4.30, keeps Buy call. Says HK, Macau operations "staged a strong recovery" in August, with growth coming from both local consumers, mainland visitors, after previous setback due to swine flu worries.

Adds, Sa Sa has reactivated store expansion program after slower pace seen in 1H09. House raises Sa Sa's FY09-11 earnings forecasts by 12%, 13%, 12% respectively.

Notes, Sa Sa preparing to launch Sa Sa Selective (mid-tier to high-end cosmetic shops), Sa Sa Teenie (targets younger consumers), thinks gross margin will be higher than overall margin as both chains sell mostly in-house, exclusive products, are "potential growth drivers."

[stilicon]

27.11.2009 08:14:19 - MARKET TALK: Sa Sa +0.2%; Strong Results,UOB Will Raise Target

0714 GMT [Dow Jones] Sa Sa (0178.HK) +0.2% at HK$4.41, vs HK$4.36 midday close and HSI's 4.5% fall, after company reports fiscal 1H10 results (April-September) during lunch break, with net profit +40.9% on-year at HK$124 million.

UOB KayHian says net profit much better vs expected HK$100 million, while dividend at HK$0.09/sare (HK$0.03 as interim dividend, HK$0.06 special dividend), representing 50% rise vs HK$0.06 in 1H09.

House says it will raise earnings forecasts and will also roll over target base to FY11.

Target price currently at HK$5.00, with analyst Tommy Ho saying he is going to raise it to at least HK$6.00 (based on 18X FY11 vs historical average of 18.9X).

"We are going to raise our target price, but the level has not been confirmed yet." Keeps at Buy, as stock trading at below 13X FY10 P/E and 7% dividend yield.