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Sun Art Retail Records Net Earnings of CNY 2.06 Billion in 1H 2020, Up 17% YoY
COVID-19 and China
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On August 12, Sun Art Retail released its financial report for 1H 2020. The company recorded a revenue of CNY 53.17 billion, a year-on-year increase of 5.1%, and net profit of CNY 2.06 billion, a year-on-year increase of 16.8%.

The decrease in profit was mainly due to the decline in rental income, which fell by around 1%. Also, more sales of fresh food experienced lower gross profit margins, dragging down gross profit margin.

In terms of orders, Sun Art Retail's fresh-food-to-home business rose steadily, and revenue generated from the B2C model accounted for more than B2B business. In terms of B2C business, the average daily order volume of online stores exceeded 750 and 950 in the first and second quarters, respectively.

Affected by the epidemic, many small businesses have withdrawn from the market. It is expected that rental income will be under pressure in 2020. The company pointed out that it started to deploy online in the past few years and will invest in CNY 200-300 million. Also, capital expenditures are expected to be CNY 2 billion in the second half of 2020, mainly for opening new hypermarkets, store renovations and digitalization.

As of June 30, 2020, Sun Art Retail had 481 hypermarkets and 3 medium-sized supermarkets in China, with a total construction area of ​​approximately 12.97 million square meters, of which about 69.9% are leased stores, 29.8% are self-owned property stores and 0.3% are contracted stores.

Editor: Luke Sheehan
ANALYST
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