Sa Sa International (178) H1 24/25 earnings summary

Executive summary

• Turnover for the six months ended 30 September 2024 was HK$1,920.5 million, down 10.4% year-over-year due to headwinds in Hong Kong and Macau, outbound travel, and lower spending by Mainland Chinese tourists, partially offset by strong online sales and new store openings in Singapore.

• Profit for the period was HK$32.4 million, a significant decrease from HK$102.4 million in the prior year, with basic EPS at 1.0 HK cent (2023: 3.3 HK cents).

• Online sales surged 32.6% to HK$396.2 million, now representing 20.6% of total turnover, with Mainland China online sales up 61.2% to HK$257.5 million.

• The Board declared an interim dividend of 0.75 HK cents per share, representing a payout ratio of approximately 72%.

• The Group operated 178 retail stores as of 30 September 2024, with expansion in Singapore and store closures in Mainland China.

Financial highlights

• Gross profit declined 14.1% to HK$756.5 million, with gross margin at 39.4% (2023: 41.1%).

• Operating profit was HK$50.8 million, down from HK$135.1 million; profit before tax was HK$43.9 million.

• Net cash and bank balances stood at HK$337.9 million as of 30 September 2024, with unutilised banking facilities of HK$267.5 million.

• No gearing; total equity at HK$1,145.9 million, down 8.5% from March 2024.

• Capital expenditure was HK$30.6 million, mainly for store upgrades and technology enhancements.

Outlook and guidance

• The Group is focused on sustainable profit and long-term growth, with continued investment in digitalisation, exclusive brands, and operational efficiency.

• Management expects gradual improvement in retail and tourism consumption as government initiatives in Hong Kong and Macau aim to boost visitor arrivals.

• Inventory management and working capital efficiency remain priorities to support margin growth.

• Mainland China strategy centers on exclusive brands and online channel growth, with cautious inventory management.

• Southeast Asia to see further store expansion and e-commerce platform launches, especially in Singapore and Malaysia.