In addition to "Wangding is not prosperous", Sasha's "sunset" is under pressure from purchasing and preparing goods.
Sasha released sales figures for Hong Kong and Macao during the Spring Festival (February 5-11), which were further worse than 18Q4, with retail revenue down 4.8% from February 16-22, 2018, and same-store sales down 7.9% from a year earlier. During the Spring Festival, although the number of mainland visitors to Hong Kong soared 31.6% compared with the same period last year, there was no "wave of money". TVB said that cosmetics, pharmacies and jewelry did not grow at the same time. The number of tour groups increased by nearly 50%, but mainly overnight tourists. "Wangding not prosperous wealth" spread throughout the Hong Kong and Macao market. Both Sasha's trading volume and unit price fell, with the trading volume falling 2.8%, of which the trading volume of mainland tourists fell 3.4%; the trading unit price fell 2.3%, and the trading price of mainland tourists fell 3.6%. Reflect the customer consumption attributes and goods are becoming low-end.
We believe that the biggest problem with Sasha at present is that in the battle for "low-end" commodity consumers, as overseas prices become more and more transparent, mainland cross-border e-commerce platforms represented by Tmall International, NetEase, Inc koala, Shunfeng Haitao, Meilihui, Foreign Wharf, Xiaohongshu and so on are rising rapidly in a standardized and large-scale manner. We can lower prices through large-scale procurement and give full play to the advantages of deep cultivation of inland warehousing and logistics and e-commerce networking. To provide multi-channel comparison supply for mainland consumers. Relying on the limited Hong Kong retail market, Sasha faces fierce competition from the beginning of purchasing stock, which limits the attractiveness of the product mix and leads to a rise in costs, reflecting the "sunset" of the entire Hong Kong retail market.
The "sanitary napkin economy" brought about by the "taste new" effect of the new infrastructure is difficult to save retail in Hong Kong.
The consumption attribute of tourists to Hong Kong has shifted from "buying" and "eating" to "low-end" consumption of daily necessities and "differentiation" of alternative scenic spots, while the increase in passenger flow at the lower end attracted by the new infrastructure is difficult to translate into actual purchasing power. The "bridge effect" brought about by the opening of the Hong Kong-Zhuhai-Macao Bridge has further spawned the "sanitary napkin economy". Low costs and high transport capacity have led to a continuous influx of tourists into Tung Chung, Hong Kong. There are also "bridge one-day tours" on the west coast of the Pearl River Estuary, including Zhuhai, Zhongshan, Foshan and Jiangmen, as well as low-cost groups from Guangxi, Sichuan and other provinces around Guangdong along the "Pearl-Macao-Hong Kong" route. And with the government traffic dredging, tourism group control after the taste effect will also be weakened. However, the ability of low-cost groups to move to the old urban areas of Hong Kong, including Hung Hom, to Kwa Wan and Kowloon City, is limited, and the concentration of compulsory consumption in low-end rebate stores is also difficult to promote the improvement of the overall retail market.
Our emphasis on the new infrastructure passenger flow "Wangding is not prosperous" has been confirmed in many ways. The new mainland tourists on the Hong Kong-Zhuhai-Macao Bridge are mainly sightseeing, which does not match the spending power under the "taste fresh" effect. Moreover, apart from the "poor wealth", the increasingly low-end consumption attribute has been reflected in the decline in the single sum of money. after the opening of the bridge, daily necessities such as sanitary napkins and painkillers were swept away in the Tung Chung market in Hong Kong, but the "sanitary napkin economy" is not the way of retail in Hong Kong.
Even so, Sasha did not fully enjoy the increase brought about by passenger flow, and only has a store in Tung Chung Tung Hui City, where the Hong Kong-Zhuhai-Macao Bridge enters Hong Kong. In the radiation area along the high-speed rail station, in addition to the high-speed rail station, shops in Tsim Sha Tsui, Yau Ma Tei and other places enjoy a certain amount of new passenger flow, but it may divert other location stores with inconvenient transportation. We believe that Sasha should tap the sales opportunities in the bridge entry area in the future and open new stores in the bridge tourist radiation area, but it is difficult to reflect in the short term.
Maintain Sasha's "sell" and target price of HK $2.1
In mid-October last year, we downgraded Sasha from "hold" to "sell", emphasizing that the poor passenger flow of Wangding could not boost consumer performance after the opening of infrastructure. While the RMB / USD midpoint remains relatively high at 6.8, we believe that under the trend of "low-end" shopping, it will still suppress the willingness of price-sensitive customers to spend. Sasha will face a high base of 18 in the first half of this year, and we think there is room for further revision. Although Sasha said that she would increase exclusive agency products, increase distribution channels, and launch discounts in cooperation with payment platforms to cope with changes in market competition, including the development of daigou into a "quasi-agent" form of sales promotion with the apathy of purchasing agents. However, in the "sunset afterglow" of the entire retail market in Hong Kong, we think that the company is more similar to "making an ashram in a spiral shell", with limited flexibility and putting pressure on profit margins. We believe that the company's share price may still be closer to the historical bottom of PE13-14x and fall further, and we maintain the "sell" and target price of HK $2.10.
Risk tips: new passenger flow is higher than expected, Hong Kong retail industry is picking up, company performance is improving, etc.
