The results for fiscal year 2020 are in line with expectations. Revenue rose 12.6% year-on-year to 1.841 billion yuan. The overall gross profit margin improved 4.3 percentage points year-on-year to 60.2%, mainly due to the company's transformation from a wholesale model to a large cargo flow model. The income of the investment segment in fiscal year 2020 fell 16.9% to 567 million yuan compared with the same period last year, resulting in a 9.5% year-on-year decline in operating profit margin to 26.3%. Net profit fell 14.7 per cent year-on-year to 366 million yuan. The dividend payout ratio for the whole of fiscal year 2020 was 70.1%.

The earnings per share forecasts for fiscal year 2021 and fiscal year 2022 were lowered by 22.0% and 6.9% to 0.079 yuan and 0.098 yuan, respectively. Retail flow in China returned to positive growth in May 2020, but the Japanese branch is still under a lot of pressure. As a result, we cut our revenue forecasts for fiscal year 2021 and fiscal year 2022 by 23.6% and 12.2%, respectively. We assume that the company's overall business will recover in fiscal year 2022 and forecast a compound annualized growth rate of 18.0% for earnings per share between fiscal year 2020 and fiscal year 2023.

Lower the target price to HK $0.96 but still maintain the "buy". The company's business in China has basically recovered from the epidemic, but the impact is likely to continue in the second half of 2020. In addition, uncertainty in global financial markets in 2020 may have an impact on the investment segment. We lowered our target price by 18.6% to reflect the adjustment to the profit forecast. The new target price is equivalent to 11.0,8.9 and 8.5 times the price-to-earnings ratio for fiscal year 2021, fiscal year 2022 and fiscal year 2023, respectively, and 39.1% upward space. Current valuations are low and the dividend yield (7.5 per cent in fiscal year 2021) is attractive. So we maintain our "buy" rating.