The Zhitong Finance App learned that DBS released a research report saying that by giving Sasha International (00178) a “buy” rating, it is expected that its operating profit margin will have more room for expansion. There has been an improvement of more than 40% since October 2022. The target price was raised 18.7% from HK$1.93 to HK$2.29, mainly due to continuous improvement in gross profit margin, operational efficiency, and more streamlined costs.

According to the report, Salsa International's business in Hong Kong and Macau has remained profitable. Since the second half of 2019, due to the impact of the pandemic, most performance has been pressured and has had a low base effect on the 2023-24 fiscal year. Coupled with the current monthly rent reduction for its Hong Kong business to around HK$30 million, the company is in an advantageous position as sales leverage as revenue rebounded.

The bank pointed out that after January 8, 2023, Sasha's sales in Macau showed double-digit weekly growth. The Macau business accounted for about 20% of its sales, and it is optimistic about Sasha's performance. Since the latter half of the Lunar New Year holiday, the flow of mainland tourists in Hong Kong may begin to pick up markedly, visa approval will gradually be normalized, and transportation links between the mainland and Hong Kong will gradually attract the return of tourists. Since pre-pandemic travel consumption accounted for more than 60% of Hong Kong and Macao's revenue, the bank believes that sales will have a lot of room for recovery in the next few years.