Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 2.35 [8][9]. Core Insights - The company reported a significant improvement in profitability for FY25, with revenue of HKD 71.55 billion (down 1.4% year-on-year) and a net profit of HKD 405 million, marking a turnaround from a loss of HKD 1.605 billion in the previous year [1][5]. - The new management has focused on fine-tuning operations at frontline stores and implementing more efficient cost control measures, leading to a return to profitability [1][4]. - The company plans to continue its strategy of tailored store operations and aims for steady improvement in profitability through enhanced operational efficiency [1][4]. Revenue and Business Segments - The company's merchandise sales revenue was HKD 68.48 billion, also down 1.4% year-on-year, primarily due to a contraction in supply chain operations and the closure of underperforming stores. However, the average transaction value increased, resulting in a same-store sales growth of 0.6% [2]. - Rental income slightly decreased to HKD 3.03 billion, down 2.8% year-on-year, attributed to store closures and tenant restructuring, with an overall vacancy rate of approximately 4.7% [2]. - Membership fees generated revenue of HKD 40 million, reflecting a substantial year-on-year growth of 125% [2]. Profitability and Cost Control - The gross margin slightly declined by 0.6 percentage points to 24.1%, mainly due to the enhanced focus on cost-effective product strategies [3]. - Cost control measures were effective, with total expenses (excluding impairment impacts) decreasing by HKD 2.2 billion, driven by reductions in personnel costs and rent [3]. - The net profit margin improved by 2.8 percentage points to 0.6%, with adjusted net profit reaching HKD 690 million, corresponding to a profit margin of 1.0% [3]. Future Outlook and Strategy - The company’s future operational plans will focus on three main areas: enhancing efficiency through a "daily low price + community life center" model, continuing cost-saving measures, and expanding revenue sources through improved store formats and membership offerings [4]. - The medium-sized supermarket segment is expected to see same-store sales growth of 8%, with positive cash flow anticipated as the business model stabilizes [4]. Earnings Forecast and Valuation - The report maintains net profit forecasts of HKD 500 million for FY26 and HKD 660 million for FY27, with an introduction of an FY28 forecast of HKD 850 million [5]. - The average PE ratio for comparable companies is projected at 43x for FY25, with a target price adjustment of 9.6% down to HKD 2.35, while maintaining the "Buy" rating [5].
高鑫零售：FY25盈利改善明显，股东回报优化-20250522