[ET Net News Agency, 18 August 2020] UBS Global Research raised its target price for
Sun Art Retail (06808) to HK$15.62 from HK$14.68 and maintained its "buy" rating.
The research house thinks Sun Art's SSSG will likely moderate in 2H as consumers shift
towards "out-of-home" consumption due to easing COVID-19 concerns, but UBS expects solid
revenue and profit growth driven by continuous online revenue growth and Auchan
integrations.
It expects new store format rollouts to support accelerating revenue growth from 2021,
leading to re-rating opportunities. UBS continues to consider Sun Art as a consolidator in
China's fragmented food grocery market (China food grocery sector report) and views
current valuation (8x/7x 2021/22 EV/EBITDA) as attractive, given 12% EBITDA CAGR over
2020-22. (KL)