Jinwu Finance | HTSC's research report indicates that on January 1, SUNART RETAIL (06808) announced that the offeror Paragon Shine Limited has entered into a sale and purchase agreement to conditionally acquire 7.508 billion shares of SUNART RETAIL from Alibaba (09988) subsidiary and New Retail, accounting for 78.70% of the company's issued share capital. The buyer for this equity transaction is a seasoned alternative asset management institution with rich experience in the Consumer industry, which may further enhance the company's Operation optimization. Attention is on subsequent developments.
The institution indicated that since the new management took charge, the results of the Operation transformation have gradually become apparent, with the cost-performance SKU matrix boosting customer flow; the iteration of the second generation of hypermarkets has led to some Indicators turning positive and becoming growth drivers; member stores continue to refine the Commodity supply chain; coupled with strict cost control at the headquarters, Net income for the first half of FY25 has turned positive year-on-year to 0.21 billion yuan. The delivery deadline for this equity transaction is September 30, 2025, and it requires the approval of the State Administration for Market Regulation. Once completed, the company's team is expected to stabilize morale and continue to promote various transformation measures, driving profitability steadily upward.
The institution stated that it maintains the predicted Net income for the parent company for fiscal years 25-27 at 0.4/0.5/0.66 billion yuan, with the average comparable company's PE for FY25 at 74x. Considering the high valuation of comparable companies, including HFY (the Pengdonglai model catalyzing stock prices), a valuation of 47x PE for FY26 is assigned, with a Target Price of 2.60 HKD (previously 1.82 HKD, based on 40x PE for FY25), with a substantial increase due to the implicit effectiveness of transformation measures, improved profitability, and potential synergies from the acquirer. Maintaining a 'Shareholding' rating.
