Sa Sa International"Lack of catalyst; maintain Neutral rating"
FYH109 results: flat earnings growth as expectedSa Sa reported FYH109 NPAT of HK$88m from continuing operation, down 0.5%YoY, accounting for 32% of our full-year FY09 forecast, and in line with its backend-loaded earnings trend in the past. Sa Sa declared an interim and special interimDPS of HK$0.06, flat YoY, implying 94% payout ratio. Rental cost peaked in FYH109 and should ease starting FYH209Rental cost to sales in HK/Macau was 11.2%, up 30bp from a year ago, and due tothe economic slowdown, Sa Sa is confident of negotiating lower rents in FYH209to achieve rental cost to sales below 11% for full-year FY09. FYQ309 updates: no slowdown in sales momentumIn FYQ209, Sa Sa anticipated the possible impact from the global financial crisisto high-end spending, and made strategic changes in product mix to focus more onthe mid- to low-end products (lower ASP) than high-end. As a result, HK/Macaureported 8.9% YoY sales growth for up-to-date FYQ309 (ended 23 November), up40bp from FYQ209, and we forecast total sales to grow 9% YoY in FYH209. Valuation: Maintain Neutral rating, and price target of HK$1.44Given Sa Sa’s earnings uncertainty driven from the financial crisis, coupled withthe significant decline in bank deposits, we expect Sa Sa to cut back on specialdividend, and lower our FY09E DPS assumption by 45% to HK$0.11. Our DCFbasedPT of HK$1.44 implies 7x CY09E PE and an attractive dividend yield of8%. However, we don’t expect any near-term catalyst for the stock, and maintainour Neutral rating.瑞银证券有限责任公司
【特别推荐】: 战上海：反弹中的龙头—上海本地股
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【特别推荐】: 战上海：反弹中的龙头—上海本地股
【相关链接】: 证券
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