Nomura slightly lowers the target price for SHENZHOU INTL to 67.8 yuan, maintaining a "Buy" rating

Nomura published a research report stating that Shenzhou International (02313.HK) had a year-on-year revenue growth of 8.1% to RMB 30.99 billion last year, with revenue growth in the second half slowing to 2.2%, mainly affected by weakened demand for sportswear in the Chinese market, where sales fell by 8.4% year-on-year. The full-year gross profit margin decreased by 1.8 percentage points year-on-year to 26.3%, primarily due to sharing tariff costs with American clients and rising labor costs. Although the operating expense ratio decreased by 0.4 percentage points year-on-year to 8.6%, the full-year net profit still fell by 6.7% year-on-year to RMB 5.83 billion, mainly due to one-time gains in 2024 and the appreciation of the RMB.

Considering more conservative sales growth and gross profit margin assumptions, Nomura has lowered its revenue forecast for Shenzhou for 2026 to 2027 by 9% to 15%, and the net profit forecast by 16% to 23%, with the target price adjusted from HKD 68.3 to HKD 67.8, maintaining a "Buy" rating