[ET Net News Agency, 22 August 2019] Citi Research lowered its target price for Colour
Life Services (01778) to HK$5.6 from HK$6.8 and maintained its "buy" rating.
The research house said Colour Life has switched its growth strategy from offline GFA
scale to online GMW and customer base, eyeing to cover 100mn users in its ecosystem by
2020 via cooperation with online giants, such as JD.com (second-largest shareholder),
58.com, Pagoda, etc., and leverage on platform expansion.
Management lifted it 2020 GFA target to 2.5bn sqm, the majority of which will be
cooperation area, which can boost coverage but have only a minor profit contribution.
Citi thinks that Colour Life's complete change in development direction towards
new retail is a bold move that lacks near-term earnings visibility, and profitability
remains remote, but it can shape the company's unique long-term edge if successful. (KL)