Macquarie has issued a research report expressing a conservative outlook on SUNART RETAIL (06808), projecting a low single-digit decline in revenue for the 2027 fiscal year, with the company's target being to break even or achieve a marginal profit. Due to the uncertain prospects, the firm has reduced the target price for SUNART RETAIL by 24% from HK$1.7 to HK$1.3 and has significantly lowered earnings per share (EPS) forecasts for the 2027 and 2028 fiscal years by 87% and 45%, respectively. However, citing an attractive dividend yield of 12%, Macquarie maintains its "Neutral" rating on the stock.

Offline retail remains a primary drag on SUNART RETAIL's same-store sales growth (SSSG) and overall revenue. The company reported a net loss of RMB 196 million for the second half of the 2026 fiscal year ending in March, a performance in line with its earlier profit warning. The report suggests that SUNART RETAIL lacks strong revenue growth drivers, with profit recovery largely dependent on cost-saving measures.

The analysis points to weak offline business performance, leading to a total revenue decline of 10.6% year-over-year. Implied same-store sales for the second half of fiscal 2026 fell by 10.3% year-over-year, reflecting declines in both customer traffic and average selling price (ASP). Management indicated that the year-over-year decline in same-store sales narrowed to a mid-to-high single-digit percentage in May, with offline customer traffic flat compared to the same period last year. Meanwhile, the online business has shown resilience, supported by partnerships in instant retail with platforms such as Meituan and Ele.me.