Main points of investment
Sasha International announces FY2022Q4 results:
In the quarter ended March 31, 2022, the Group realized quarterly income of 830 million yuan (yoy+1.9%), of which Hong Kong and Macao SAR income was 510 million yuan (yoy-4.7%), online business income was 180 million yuan (yoy+27.2%), mainland China income was 83 million yuan (yoy-6.5%) and Malaysia income was 65 million yuan (yoy+11.5%).
Hit by the fifth wave of the epidemic in Hong Kong during the season, retail in Hong Kong is expected to reduce its losses with the relaxation of epidemic prevention:
(1) in the Hong Kong Special Administrative region, Hong Kong was hit by the fifth wave of the epidemic during the quarter, and the flow of people and the number of shop days decreased. FY22Q4 retail sales were + 9.4% year-on-year. The increase in demand for epidemic prevention materials led to same-store sales + 22.6% year-on-year, and the loss of business days accounted for 7% of the total business days in the quarter. (2) Macao, affected by the epidemic in Guangdong from January to March 2022, the number of passengers decreased significantly, and FY22Q4 retail sales were-22.9% compared with the same period last year.
Looking to the future: customs clearance between Hong Kong and the mainland is expected to slow down again. The relaxation of epidemic prevention measures in Hong Kong from April 21 is expected to help local retail recovery, and Hong Kong business is expected to break even in one month after climbing for 1-2 quarters. At the end of the quarter, the number of stores in the Hong Kong SAR tourist area decreased compared with the same period last year, and some stores in the tourist area were in a state of loss. In December 2021, Hong Kong and Macao are close to break-even in one month. at present, the break-even point is that the income of the Hong Kong and Macao Special Administrative region is about HK $2.3-240 million a month (of which HK $1.5-160 million in Hong Kong and HK $8000-HK $90 million in Macau) and a gross profit margin of 40%. In March 22, due to the drag of the epidemic, the monthly revenue of the Hong Kong and Macao SAR was about HK $1.5 billion to HK $160 million. In the future, with the relaxation of social distance restrictions and cost savings (closing loss shops, rent reduction, etc.), local retail is expected to support the balance of Hong Kong business, but it will take time to climb the slope.
Our view:
In FY22Q4, the Hong Kong and Macao Special Administrative region was hit by the fifth wave of the epidemic in Hong Kong. The social distance restrictions in Hong Kong will be relaxed from April 21, and the relaxation of social restrictions and consumption coupons distributed by the SAR will help Hong Kong's local retail recovery. Hong Kong's business is expected to break even after climbing for 1-2 quarters. In the future, the company's online business will continue to promote its own channel (Mini Program + Hong Kong website), go hand in hand with the cross-border shopping business of platforms such as tmall/JD, and integrate online and offline omni-channel operations. The focus of the future lies in the recovery of local retail in Hong Kong, the control of the epidemic in the mainland and the resumption of customs clearance.
Risk hints: repeated epidemic situation, weak consumption environment, deteriorating competition pattern, less than expected promotion of new products, and so on.