1H16 revenue growth at -0.4% year-on-year (yoy), dragged by soft 1Q16 and Nanjing Nanzhan store. Topline growth turnaround to 0.8% yoy in 2Q16 from -1.5% yoy in 1Q16. The two new stores, Putian Xianyou store (opened in December 2015) and Quanzhou Wanxiang (opened in January 2016) contributed about 3% to 4% yoy growth in 1H16; but were offset by slower turnover in Nanjing Nanzhan store at -2% yoy as it was in the process of ceasing its operation.
We expect minimal impact from closure of underperforming Nanjing Nanzhan store
Redirect focus back to Fujian, expect two new stores by end-FY2016
The new store is expected to commence business in end-September 2016, a year earlier than expected (initial targeted date to open: by 2017/18). The new store is in line with its effort to wind down managed stores. It will be replacing the managed store in vicinity, with about a week’s transition period. The staff from the existing store will be redeployed to the new store.
A slight delay in store opening (initial targeted date to open: June 2016) as it is still undergoing renovation and pending government’s approval.
Total store count of 14 (11 self-owned stores and 3 managed stores) with GFA over 180,000 sqm (c. -8% yoy) by end-FY2016.
Maintain “Neutral” rating with unchanged TP of S$1.44, this implied a forward P/E multiple of 28.5x over 0.24 Singapore cents EPS.