Citi expects Shenzhou's sales to still have high single-digit growth next year, urging to buy on the dip with a target price of 94 yuan

Citigroup's research report indicates that Nike (NKE.US) expects a low single-digit decline in revenue for the third quarter of fiscal year 2026, in line with the market's expected decline of 1%. In the second fiscal quarter results, the North American market showed a strong recovery, with revenue rising 9%, primarily driven by a 24% increase in wholesale business, but this growth was largely offset by a 16% decline in revenue from the Greater China region.

Shenzhou International (02313.HK) management has recently provided conservative expectations, anticipating that sales growth in the second half of 2025 will slow to the mid-single digits, below the bank's previous expectation of high single digits. The bank believes its forecast has largely reflected the impact of Nike's cautious outlook.

However, the bank expects Nike's sales orders for Shenzhou International in 2026 to remain flat rather than decline. Based on visibility of orders from the four major clients, Shenzhou International is still expected to achieve high single-digit sales growth in 2026. The bank believes that if Shenzhou International's stock price experiences a pullback due to Nike's cautious outlook, it will present a better buying opportunity; it currently sets a target price of 94 HKD and a "Buy" rating