Bank of America Merrill Lynch pointed out that it reiterated Parkson's (03368.HK) “outperformed the market” rating; although the first quarter was the peak season, the company recorded a loss of 18 million yuan in the first quarter, which fell short of expectations. The bank lowered the company's 2016 profit forecast from 94 million yuan to a loss of 80 million yuan to reflect lower same-store sales, and lowered the target price from 0.8 yuan to 0.68 yuan. Considering adverse factors in the industry, the company's unique problems, and short-term profit pressure.

The bank pointed out that Baisheng's same-store sales fell 9% in the first quarter, close to the double-digit decline in the fourth quarter of last year. The trend was in line with industry conditions and was mainly affected by macroeconomic slowdown, online competition, and weather factors. Furthermore, gross margin remained 15.9% during the period.

Bank of America Merrill Lynch believes that the company lacks a catalyst in the short term and still faces adverse macroeconomic and industry factors, putting pressure on profits. Coupled with Baisheng's aging store portfolio, lack of clustering effect, and higher losses and lower interest income from new stores, it will take longer for it to recover. If same-store sales continue to decline, the possibility that the company will close stores further is not ruled out, and the current transformation plan will take time to have a positive impact.