[ET Net News Agency, 2 October 2019] Citi Research lifted its target price for Sun Art
Retail Group (06808) to HK$11.06 from HK$10.8 and maintained its "buy" rating.
Following the operating breakeven of Taoxianda in 1H, Sun Art started its wholesale to
Tmall Supermarket in August 2019, with a much deeper collaboration with Alibaba than its
simple traffic acquisition from Taobao (by Taoxianda) previously, the research house said.
Essentially, this new collaboration makes Sun Art a part of Tmall Supermarket's supply
chain, enabling Sun Art to gain market shares from its offline competitors (via Tmall
online platform) in areas up to 20km radius of its offline stores, Citi noted.
Citi expects Sun Art's sales related to Tmall Supermarket collaboration to amount to
Rmb5bn in 2020 (or 10% of Tmall Supermarket's estimated GMV) with 1.0-2.0% of net margin
(i.e., similar to its B2B biz). (KL)