Sa Sa's sales up 0.9% after declining since 2015

Profit margin will be management’s top priority.

According to Maybank Kim Eng, Sa Sa’s sales stabilised in 3Q17 (Dec end) rising 0.9% after declining since 2015.  

Here's more from Maybank Kim Eng:

Sa Sa aims to negotiate better terms with landlords and to improve gross margins by adjusting its private labels. Its GPM fell to 40.8% in 1H17 from the peak of 47% in 1H14. Sa Sa raised its payout to 278% in 1H17 (from 167% in 1H16) and now offers a 5.7% yield. The market doesn’t think Sa Sa’s sales recovery is meaningful. 

Catalyst: rental reduction and gross margin rebound. Sa Sa is the most sensitive to rental reduction among HK retailers with a market cap of over USD1b.

Risks: Sales continue to fall as China lowers its import tax amid the rising impact from e-commerce.