Tianfeng Securities: Maintains "Overweight" rating on Jiuxing Holdings, driven by growth in sports-related and new customer demand

According to the Zhitong Finance APP, Tianfeng Securities has released a research report maintaining a "Buy" rating for Jiuxing Holdings (01836). Based on the company's performance in the third quarter and considering the relatively weak consumer environment, the earnings forecast has been adjusted. It is expected that the revenue for 2025-2027 will be USD 1.58 billion, USD 1.66 billion, and USD 1.76 billion (previously USD 1.62 billion, USD 1.71 billion, and USD 1.81 billion), with net profits of USD 160 million, USD 170 million, and USD 190 million (previously USD 160 million, USD 180 million, and USD 190 million); corresponding P/E ratios are expected to be 11, 10, and 9x.

As the company's three-year plan (2023-2025) approaches its conclusion, it is expected to achieve a target of a 10% operating profit margin and a low double-digit percentage compound annual growth rate in after-tax profits over the three-year period. The company has already exceeded these targets in 2023 and 2024.

Looking ahead, the company continues to improve its product category mix, diversify and expand its customer base, and optimize the layout of its manufacturing bases. The company will continue to optimize the capacity allocation between luxury and high-end fashion categories and new sports category clients. As the company will begin shipping to two new clients in the fashion and sports categories in the second half of the year, it is expected that non-client-specific manufacturing facilities will continue to operate at near-saturation levels in the second half. Despite the current market uncertainties, the demand for the company's product development and production capacity remains strong as the company continues to win new clients.

The company is also firmly committed to making its handbag and accessory manufacturing business a core growth driver, aiming to introduce it to more high-end customer groups. Accelerating the development of this business will be one of the key focuses of the next three-year plan (starting in 2026). The company has recently completed the acquisition of a small handbag and accessory factory in Vietnam and plans to leverage the factory's high-end production expertise and experienced team to comprehensively enhance the quality and production efficiency of its handbag and accessory manufacturing business