Daily reporter: Chen Ting Daily editor: Wenduo On the evening of November 12, Sun Art Retail (HK06808, stock price HK$2.09, market value HK$19.938 billion) released its interim performance report for the first half of the fiscal year (as of September 30, 2024) . According to the

reporter: Chen Ting editor: Wenduo

On the evening of November 12, Sun Art Retail (hk06808, stock price 2.09 Hong Kong dollars, market value 19.938 billion Hong Kong dollars) released the first half of the fiscal year (as of September 30, 2024) Interim results report. The

announcement shows that during the reporting period, Sun Art's retail revenue was 34.708 billion yuan, and the net profit attributable to its parent company was 6.206 billion yuan, compared with a loss of 359 million yuan in the same period last year, achieving a turnaround.

Image source: Announcement screenshot

In the first half of the fiscal year (as of September 30, 2024), revenue from the sale of goods was 33.186 billion yuan, compared with 34.225 billion yuan in the same period of the previous fiscal year (as of September 30, 2023) A decrease of 1.039 billion yuan, a decrease of 3.0%. This decline is mainly due to the closure of long-term loss-making stores and the contraction of supply chain businesses such as Taocai Cai and Tmall's shared inventory business.

In addition, during the reporting period, Sun Art Retail’s same-store sales growth (calculated based on sales of goods excluding supply chain business) was 0.3%. Sun Art Retail stated that the same-store sales growth mainly comes from the increase in unit price per customer. The low-price strategy and product strategy improve users' minds, drive the increase of pen units, and increase user stickiness.

It is worth mentioning that according to the announcement issued by Sun Art Retail on October 15, Alibaba discussions with interested bidders were still ongoing at that time.

Performance is getting better

In the first half of the fiscal year, Sun Art's retail sales and marketing expenses were 7.667 billion yuan, a decrease of 1.051 billion yuan, or 12.1%, from 8.718 billion yuan in the same period of the previous fiscal year.

In terms of business performance, Sun Art Retail emphasized "returning to price competitiveness and product strength." Sun Art Retail stated that it is actively reshaping price competitiveness and quickly adjusting the selection of products in different price ranges to strengthen fortress products.

In addition, Sun Art Retail has also launched more than 1,100 single products in series such as "RT-Mart must buy", "increasing quantity without increasing price" and "cheap every day" to create a reputation for low prices and shape price mentality. Sun Art Retail is also focusing on developing more large single product series with sales exceeding 100 million yuan.

In addition, regarding the "number of offline customers", a key indicator of the hypermarket format, Sun Art Retail stated that with the steady advancement of its low-price strategy and commodity strategy, in the first half of the fiscal year, the number of offline customers of the company's comparable stores gradually stabilized , the unit price per customer was stable, and the unit price increased slightly.

Regarding the development of various business formats, the company mentioned that RT-Mart Super (Chinese Super League) had 30 stores in Shanghai, Jiangsu, Anhui, Zhejiang, Shandong, Jilin, Hubei, Gansu, Sichuan and Guangdong during the reporting period.

In addition, during the reporting period, Sun Art Retail has opened 6 member stores in Yangzhou, Changzhou, Nanjing, Changshu, Jiaxing and Wuxi, and the Jiangyin store has also opened in November 2024. During the reporting period, Sun Art's new retail revenue (from membership fees) was 14 million yuan.

As of September 30, 2024, Sun Art Retail has 466 hypermarkets, 30 medium-sized supermarkets and six m membership stores.

In its financial report, Sun Art Retail stated that commodities and prices are the fundamental operating principles of the retail industry. In August this year, Shen Hui, executive director and CEO of Sun Art Retail, said in an interview with media including the Daily Economic News that the most important thing in operating a hypermarket is to make small profits but quick turnover, and to match the lowest prices in the business district.

At that time, he said that RT-Mart was recovering very quickly, "I believe everyone will see a very healthy RT-Mart soon."

The change of owner of Sun Art Retail has not yet been determined.

It is worth mentioning that in September this year, Sun Art Retail issued a "short suspension" announcement because it was waiting for an announcement containing the company's inside information to be issued in accordance with the company's acquisition and merger code.

As of October 15, Sun Art Retail announced that on September 27, 2024, the company's board of directors received a contact letter from a potential offeror. The potential offeror stated that it was interested in being subject to various matters. The Company made a voluntary conditional offer with preconditions for all issued shares of the Company (the "Possible Offer"), and made an offer to cancel all outstanding share options issued by the Company.

The announcement stated that according to Alibaba Group’s notification, discussions between Jixin Holdings Co., Ltd., Taobao China Holdings Co., Ltd. and new retail strategic opportunities investments 1 limited and the intended offeror on the main terms of the possible offer to make any irrevocable commitments are ongoing. , Alibaba Group is also in discussions with certain other parties, and these discussions may not lead to any agreement or transaction.

Sun Art Retail announced that on the date of the above announcement, Alibaba Group indirectly held approximately 73.66% of the issued share capital of the listed company through its wholly-owned subsidiaries Jixin Holdings Co., Ltd. and Taobao China Holdings Co., Ltd., and new retail strategic opportunities investments 1 limited (an investment company wholly owned by an investment fund that Alibaba Group can exercise significant influence over its investment decisions) holds approximately 5.04% of the issued share capital of listed companies.

In the financial report conference call in February this year, regarding the sale of non-core assets, Alibaba Group Chairman Tsai Chongxin clearly responded that traditional physical retail business is not Alibaba’s core business, and it is reasonable to withdraw from this type of business. But this will take time and should be implemented slowly based on market conditions. At the same time, it was disclosed that in the nine months from fiscal year 2024 to that time, Alibaba had exited US$1.7 billion in non-core assets.

Not long after, on March 26, Sun Art Retail announced on the Hong Kong Stock Exchange: Shen Hui was appointed as the executive director and CEO of Sun Art Retail, and Lin Xiaohai resigned as CEO of Sun Art Retail.

In the past few years, the development of Sun Art Retail has not been smooth. On May 21, Sun Art Retail released its performance for the 2024 fiscal year as of March 31. The company's revenue was 72.567 billion yuan, a year-on-year decrease of 13.3%, and the net profit attributable to the parent company was 1.605 billion yuan. When

released its financial report for the last fiscal year, Huang Mingduan, chairman of the board of directors of Sun Art Retail, said: "In fiscal year 2024, Sun Art Retail took some detours." He said that starting from fiscal year 2025, the board of directors appointed a new CEO. Under the leadership of Shen Hui, Sun Art Retail will focus on returning to the essence of retail.

"Returning to the essence of retail" is still on the road. Facing fierce market competition, Sun Art Retail still has many tough battles to fight.

Daily Economic News