Citi expects Shenzhou's sales to record a high single-digit growth next year

Citi published a research report stating that Nike (NKE.US) management's latest guidance for third-quarter sales is expected to record a low single-digit decline, which is considered slightly negative for ODM suppliers like SHENZHOU INTL (02313.HK). However, they remain optimistic about SHENZHOU's ability to gain more market share this year in new product areas such as running, golf, and basketball jerseys. The management of SHENZHOU International has also recently provided conservative guidance, expecting mid-single-digit sales growth in the second half of 2025, which is lower than the bank's previous forecast of high single-digit growth, believing that this has largely reflected the impact of Nike's latest outlook.

Citi currently predicts that Nike's sales orders for SHENZHOU will remain flat in 2026 rather than decline. Considering the visibility of orders from the top four clients, they believe SHENZHOU's sales in 2026 can achieve high single-digit growth. They think that if its stock price experiences a pullback due to Nike's cautious outlook, it may be a buying opportunity, giving SHENZHOU a "Buy" rating with a target price of HKD 94