Maintain Buy SSSG in the HK & Macau and China markets improved QoQ on recoveringconsumer sentiment. 3QFY18 group GPM rose 1pp to 64.9% on lower discounts. Lookinginto 4QFY18, the cold weather in Hong Kong during Dec, very low base （HK & Macau-8% in 4QFY17） and a later Chinese New Year holiday should benefit 4QFY18 SSS. Thewealth effect from the Hong Kong stock market should also support a further recovery inconsumer sentiment and a reduction in discounts. We think 9MFY18 group operationsare on track towards our expectation. We maintain our Buy rating and target price ofHK$5.22, based on 15x FY18E P/E.
HK & Macau SSS turned positive SSS in the HK & Macau market was up 2.4% in3QFY18, after a successive decline for five uarters, due to improving consumersentiment and a low base. SSSG was led by volume growth. GPM widened 1.6pp to62.9% as less discounts were offered.
China SSS +1.5% SSSG was not bad given the very high base （+18.5% in 3QFY17）。
GPM rose 0.3pp to 64.8% thanks to renminbi appreciationJapan market momentum continued SSS in the Japanese & US markets increased by25.5%, driven by volume growth. 9MFY18 SSSG was 30.7%. GPM dropped by just 0.8ppto 68.9%, with 9MFY18 GPM stable at 70.8%.