Morgan Stanley publishes technical research reportbingotableIt is expected that the stock price of Gaoxin Retail will rise in the next 60 days. The probability of this happening is expected to range from 60% to 70%, with a target price of 1bingotable.6 Hong Kong dollars and is rated "in sync with the market".
The report said that Gaoxin Retail's potential improvement in same-store sales was a key factor driving the stock price higher. The company's current share price is trading at about 70% of the bank's conservatively estimated net asset value (NAV) per share of HK$2.5, of which the bank assumes an $8 billion provision to close about 200 stores.
If its same-store sales improve and profits improve, the bank believes the value it has locked in can be released. Positive signs are that same-store sales fell by between 6% and 7% from January to March, down 2.8% in April, and up about 6% so far in May. Compared with the 2019 level, the decline in same-store sales in April and May narrowed significantly.
The bank said the food consumer price index (CPI) remained negative, but the mix was changing, with pork turning positive year-on-year in April, while fruits and eggs turning negative. Historically, pork prices have had a greater impact on Gaoxin Retail's same-store sales, and recently pork prices have been climbing on a weekly basis.