Zhejiang Merchants Securities: Maintains "Buy" rating on STELLA HOLDINGS, promises an average of USD 60 million in repurchases or special dividends for 2025-26

ZheShang Securities released a research report stating that it maintains a "Buy" rating for STELLA HOLDINGS, expecting the company to achieve revenues of USD 1.57 billion, 1.64 billion, and 1.75 billion in 2025-2027, with net profits attributable to the parent company of USD 150 million, 170 million, and 190 million respectively. It is expected that the dividend payout ratio will remain at 70% in 2025, and the company has committed to repurchasing or special dividends of USD 60 million each in 2025 and 2026, corresponding to a dividend yield of 10%. The company's scarce production capacity and abundant customer orders ensure steady revenue growth, with new capacities in Indonesia and Bangladesh expanding in an orderly manner. Short-term capacity ramp-up and profit margin fluctuations do not change the long-term positive trend. The report states that customer feedback for STELLA in 2026 is positive, with strong order demand, smooth expansion of new customers, and ample large-scale orders, while the orders from the largest customer remain stable. Currently, capacity expansion is a key variable, and the company expects to add 20 million pairs of new capacity to support planned business growth over the next three years. The new factory in Solo, Indonesia is expected to gradually increase its capacity by 7 million pairs, while the new factory in Bangladesh is expected to expand by 3 million pairs. The new capacity for the exclusive factory of the largest customer in Indonesia is expected to be put into production in the second half of 2026, contributing 10-15 million pairs of new capacity