HONG KONG Nov 18 Hong Kong-based retailer Sa Sa
International Holdings Ltd on Monday posted a 26.7
percent rise in net profit for the six months ended in
September, as strong cosmetics sales balanced slowing growth in
mainland Chinese tourist numbers.
A bellwether of the cosmetics retail sector and Chinese
tourist spending, Sa Sa said net profit rose to HK$357.4 million
($46.09 million) in the fiscal first-half, from HK$282.1 million
a year ago. The result was in line with an average forecast of
HK$360 million by four analysts polled by Reuters.
Growth in the number of same-day-return tourists fell from
37.2 percent to 21.0 percent in the first nine months of 2013,
the company said. Declining tourist numbers were reflected in
the company's Golden Week holiday sales last month, which rose a
less-than-expected 11 percent.
Kingsway Group Research analyst Steve Chow said Sa Sa faced
possible challenges from foreign competitors and rising costs.
"We have to keep watching how the company controls the cost
of rent and labour, and how it deals with the potential change
in the industry due to change in (Chinese) policy," he said.
China is considering allowing the sale of certain cosmetics
without requiring them to be tested on animals, opening up a
potential route into the country's 134 billion yuan
($22 billion) cosmetics market for firms like The Body Shop,
wholly-owned by L'Oreal S.A., which oppose animal
Sa Sa said revenue rose 15.4 percent to HK$3.90 billion from
HK$3.38 billion a year ago, while gross profit margin increased
to 47 percent from 45.7 percent.
Chairman Simon Kwok said in the earnings statement that
sales to mainland visitors continued to insulate the $3 billion
company - known for its face creams and moisturisers - from
shaky consumer sentiment and global economic uncertainty.
Sa Sa and smaller rival Bonjour Holdings Ltd's
stores in Hong Kong are usually packed with Chinese tourists
snapping up face masks, perfumes and other cosmetics at
Sa Sa shares have climbed 31 percent this year, outpacing
the 3.9 percent gain in the benchmark Hang Seng Index but
well behind the 77 percent surge in Bonjour, which has posted
strong earnings growth.
($1 = 7.7537 Hong Kong dollars)
(Reporting by Donny Kwok; Editing by Stephen Coates)