22-05-2025
Sun Art Retail Group Ltd (SURRF) (FY 2025) Earnings Call Highlights: Navigating Growth and ...
Release Date: May 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Sun Art Retail Group Ltd (SURRF) reported a revenue increase of 1.6% for the year, reaching 71.55 billion.
The company achieved a positive cash flow from its store expansions, including the opening of 1 hypermarket, 4 supermarkets, and 4 membership stores.
Online business showed single-digit growth, indicating stabilization and potential for future expansion.
The company successfully reduced expenses by 2.2 billion, optimizing store expense structures and achieving significant savings on headquarter personnel costs.
Sun Art Retail Group Ltd (SURRF) improved its operating profit by 1.146 billion year on year, demonstrating effective cost management and operational efficiency.
The company's net profit margin fell to 0.5%, indicating challenges in maintaining profitability.
Gross profit margin decreased by 4%, primarily due to efforts in reshaping price competitiveness.
The vacancy rate for the year was 4.7%, suggesting underutilization of retail space.
The company's net cash position decreased by 3.9 billion, impacted by dividends and a decrease in prepaid card balances.
Membership store expansion faced delays, with the time taken longer than expected to refine and optimize the model.
Warning! GuruFocus has detected 5 Warning Signs with SURRF.
Q: Can you elaborate on your strategy regarding gross profit (GP) and GP margin, and how you plan to achieve positive leverage? A: The focus is on GP growth rather than just margin expansion. We aim to reduce wastage in promotions and pricing, which should drive revenue and GP growth. While GP margin is important, the priority is on efficiency and reducing unnecessary expenses. (Respondent: CEO, Mr. Shen Hui)
Q: What is your approach to prepaid cards, and how does it impact your cash flow? A: We have introduced e-cards, which are bundled with wallets, increasing their usage frequency. This has led to a quicker consumption of balances, which is positive. Despite a decrease in prepaid card balances, our cash flow remains healthy and stable. (Respondent: CFO, Mr. Sri)
Q: How are you addressing the competition from emerging snack stores and their impact on your business? A: While snack stores are growing, their impact on our major products is limited. We focus on optimizing our product mix and enhancing fresh product offerings. The market is large, and we believe in our ability to maintain competitiveness through quality and pricing. (Respondent: CEO, Mr. Shen Hui)
Q: Can you discuss your dividend policy and its sustainability? A: Our dividend policy remains aligned with our net profit and cash performance. Despite past losses, we maintained dividends, showing our confidence in operational cash flow. The policy will continue to reflect our strategic direction and financial health. (Respondent: CFO, Mr. Sri)
Q: What are your plans for store expansion, particularly for supermarkets and membership stores? A: We will focus on opening more supermarkets in the short term, actively seeking prime locations. Membership stores require continuous product updates to surprise and engage members. The expansion will be strategic, considering logistical and community integration. (Respondent: CEO, Mr. Shen Hui)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
