Outlook for Ajisen's profitability still bleak

The company's Hong Kong operations experienced a drop of 2.5% in same store sales growth and overall sales showed no improvements.  

According to the research by Maybank Kim Eng, Ajisen reported its March SSSG was negative 23.8% and negative 2.5%, respectively, for its PRC and HK operations. Hence, overall sales were down by 11% yoy in China and flat yoy in HK. Overall, the SSSG recovery was as weak as expected.

Maybank projects 0.4%/8.0%/23.4% net profit growth in FY12-14E as they believe its turnover growth ahead is unlikely to offset rising OPEX pressure. In short, it takes time for the company to restore its profitability per store and shorten the new store breakeven period.