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Macquarie cuts Chow Sang Sang (00116) to HK$22

  Macquarie Research lowered its target price for 
Chow Sang Sang (CSS)(00116) to HK$22 from HK$23, and reiterated its "outperform" rating.
  The research house said the company, in 1Q 2018, saw strong momentum of gem-set
jewellery in HK, and a stabilized Mainland market. Looking forward, Macquarie expects the
favorable product mix and double-digit decline in rentals will help to deleverage
operating leverage. It trimmed its net profit estimates by 6% and 12% for FY2018 and 
FY2019, by lowering its SSSg assumption to 3.7% from 6.7%.
  Macquarie projected the GPM to be 24.5% for 2018, up 0.9ppt compared with that of 2017.
As for operating profit margin, it only projected a 4% increase of staff cost to factor in
the 20% decline of employees based in HK as well as the rising employees in mainland. Plus
the rental savings, Macquarie expects operating profit margin will arrive at 7.6%, 
increasing by 1.3ppt YoY. 

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