About a year ago SBI E2-Capital maintained its 'buy' recommendation on casual-wear retailer Bossini International after the company announced strong profits for 2003 and ambitious plans to tap the pockets of mainland tourists. The company would spend $30 million to open five shops in Hong Kong, bringing its total to 32. On the mainland, it planned to franchise 100 more shops. Announcing its first operating profit in three years, Bossini posted a net profit of $118.09 million for the year to March 2004 on turnover of $1.78 billion after a loss of $74.13 million the previous financial year. The number of directly managed stores was reduced from 392 to 314 and retail floor area cut by 17.9 per cent. Despite this, average sales climbed 7.7 per cent because of improved efficiency. The broker said it had raised its sales assumption from $892 million to $917 million and operating margin from 9.4 per cent to 13 per cent for Hong Kong. Given the higher than expected margins, it had increased its assumption on gross margin from 44.2 per cent to 48.3 per cent. Overall operating margin assumption had been raised from 7.2 per cent to 11.4 per cent. SBI upgraded its earnings forecast by 48 per cent to $174.2 million for the year to March 2005 and by 35 per cent to $214.5 million for the year to March 2006. It set a target price of $2.10 on the stock, based on 10 times forecast price/earnings for 2004, up from $1.45. The counter was trading at $2.025 a year ago. This month Bossini said it expected to keep up sales and profit-growth momentum this year after delivering a 54 per cent rise in net profit to $182.13 million in the year to March. Operating profit last year was 54.32 per cent higher at $225.67 million, while earnings per share jumped 47.3 per cent to 11.74 cents. Expecting the opening of the Disneyland theme park to spur retail sales, the company aimed to achieve double-digit growth this year by adding three to five new stores in Hong Kong. The counter closed on Friday at $1.66.