Summary of investment
Sasha's 2018 annual income grew by 4.5% year-on-year, but fell by 5% in the second half of the year, 5.8% in China, Hong Kong and Macao, and 7.3% in same-store sales, compared with 18.5% in the first half. Management revealed that revenue in Hong Kong and Macao markets continued to decline in the first month of the new political year (April), falling by less than 4% in May, and by more than 3% from June 1 to 8, which was similar to that in May. During the period of large-scale demonstrations and sudden outbreaks from June 9 to 16, the number of mainland visitors was significantly smaller, and the decline in income was even greater to nearly 20%.
At the same time, China and the United States maintained a negative impact on the value of the people, and the stock market and stock market were fluctuating, and the intention was to be cautious. In the second half of 2018, the average amount of money per transaction in Hong Kong and Macao fell by 3% year-on-year, and the number of domestic customers fell by 5.9%. The market market is also increasing. Many retail stores have joined the ranks of selling merchandise and color products, and have opened a large number of new stores in busy areas. Coupled with the implementation of the e-commerce law, the number of overall transactions in Hong Kong and Macao has dropped by 2.8% in the second half of the year. When the number of mainland customers increased from 21.8% in the first half of the year to 1% in the second half of the year, the positive growth of local customers in the first half of the year changed to a decline of 7% in the second half of the year.
The opening of the high-end Hong Kong section and the Hong Kong-Zhuhai-Macao University at the end of last year led to an increase in the number of domestic visitors to Hong Kong, but their consumption power was limited and failed to stimulate the corresponding growth in retail sales. The management office said that it is believed that with the maturity of several large-scale infrastructure projects, the opportunities brought about by the introduction of the "Development Plan for the Greater Hong Kong and Macao region" will directly stimulate the economy of the Greater Asia region and increase the spending power of local tourists and tourists.
Sasha was affected by the growth of trendy products in the first quarter of last year, and the proportion of sales by brands dropped from 39.8% to 35.8% year on year, so that the gross profit margin was affected. In the second half of the year, the proportion of sales by brands rebounded to 37.3%, and the gross profit margin also recovered. The year-on-year gross profit margin fell 1.3 percentage points to 40.8% year-on-year, benefiting from a decline in rent and staff costs as a share of income. We expect that as a result of the increase in market conditions, the gross profit margin will bear a strain of 1 or 2 percentage points this year, and the rent-to-income ratio is expected to fall further, up from 11.8% last year.
The management said that the relative gross profit margin this year will focus on increasing sales, and the pace of opening stores will be determined in the light of the rent situation, and the new stores will be especially aimed at street shops, hoping to help increase the market share. At present, the company has made it more balanced by improving the composition of its products, and the market-to-market market is getting bigger and bigger, and it will sell houses to each other in order to buy products, and there will be a continuous increase in the sale of more and more big-name products, and health food service can also help to deal with related products.
In terms of e-commerce services, revenue grew by 22% to 390 million yuan last year, accounting for 4.7% of the revenue, and inland sales, which accounted for 90% of the total, increased by 10.6%. Third-party platforms, which account for nearly 60% of revenue, are the main increase in dynamic power, with an increase of nearly 70% from third-party platforms such as Tianyuan, Internet-based koalas, microphones and Jingxing. Excluding non-routine expenses, the annual expenditure on employment expenses narrowed from 29.6 million yuan to 24.8 million yuan. After opening a store in HKTVmall, Hong Kong in early 2019, the management team said it was working with other third-party platforms.
In terms of domestic land services, revenue fell by 1.9% year-on-year and same-store sales fell by 1.1% in terms of local land sales. Last year, the main location for opening stores in the interior was the Greater area. By the end of 2018, Sasha had operated a total of 16 stores in eight inland cities in the Greater area. Due to the sluggish sales of products from several brands in the first half of the year, the annual cost of the banking industry increased to 16.1 million yuan. Sasha has reorganized sales in the second half of the year, reorganized the product mix, and held member activities and promotion activities, resulting in a pick-up in sales and same-store sales in the fourth quarter. Our price tag goes down to 2.5 yuan, with a price-to-earnings ratio of 16 times. (as of 7 April 2019)
Valuation and valuation
We will increase Sasha's position with a price-to-earnings ratio of 16 times earnings and down to 2.5 yuan. Investment in Hong Kong, including the political situation in Hong Kong, has led to a further sharp drop in the number of visitors to Hong Kong, and the local spending power has not been as expected. (as of April 7, 2019)