Consumer China

Sun Art – leveraging lower-tier city growth

  • Published 20 Oct 2011

Sun Art surpassed Carrefour in a China Confidential survey to rank as the second most popular supermarket in third-tier cities after Walmart.

Positioning of Sun Art's (6808:HKG) mainstay brand, RT-Mart, at the lower end of the market has helped it survive recent inflationary pressures. Competitive pricing, when compared with major players such as Walmart (WMT:NYSE) and Carrefour (CA:PAR), helped same-store sales grow 12% YoY in 1H11 despite a 5.4% YoY growth in the consumer price index over the same period. Although hypermarket expansion is unlikely to reach its targeted 45-50 stores this year, strong same-store sales growth and some expansion are expected to drive revenue growth over 20% YoY in 2011. Expansion of its distribution centres is also expected to boost efficiencies, meaning that operating margin has some room to grow.

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