Sa Sa International (178) H2 23/24 earnings summary

Executive summary

• Turnover increased 24.8% year-over-year to HK$4,367.5 million, driven by tourism recovery, operational agility, and exclusive brands.

• Net profit reached HK$219 million, a turnaround from a loss last year and a fivefold increase on an adjusted basis.

• Gross profit rose 27.3% to HK$1,783.4 million, with gross margin up 0.8 points to 40.8%.

• Cash inflow from operations was HK$254 million, exceeding net profit and representing 1.1 times profit for the year.

• Final dividend of HK$0.05 per share declared, representing a 70% payout ratio and the first since the pandemic.

Financial highlights

• Second half turnover and net profit outpaced first half by 3.7% and 13.7%, respectively.

• Basic earnings per share rose to 7.1 HK cents from 1.9 HK cents.

• Inventory turnover reduced by 16 days to 100 days; total inventory up 5% to HK$705 million.

• Selling and distribution costs and administrative expenses as a percentage of turnover decreased to 29.8% and 5.2%, respectively.

• Store portfolio revamped with net additions in Hong Kong, expansion in Singapore, and closures across all markets.

Outlook and guidance

• Online sales in Mainland China expected to continue strong growth, with over 70% sales mix.

• Q1 FY2024/25 turnover declined 9.5% YoY, mainly due to outbound travel by Hong Kong residents and reduced inbound tourism.

• Mainland China sales grew 83.9% in Q1 FY2024/25, driven by online channels.

• Southeast Asia to focus on expanding store network and third-party platform collaboration, with five stores in Singapore by May 2024.

• The Group will focus on operational efficiency, digitalization, exclusive brand growth, and OMO strategies.