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<Research> G Sachs Lowers TP for Xtep International (01368.HK) to HKD5.7, Maintains 'Buy' Rating
Recommend 3 Positive 3 Negative 1 |
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G Sachs published a research report stating that Xtep International (01368.HK) reported a net profit for the second half of last year that was 3% below the firm's expectations, primarily due to core brand sales falling short of projections. The group expects revenue in 2026 to record mid-single-digit growth year-on-year, with a net profit margin reaching high single digits. For the Xtep brand, management anticipates positive year-on-year revenue growth, reflecting confidence in the growth of the running category. However, the accelerated offline direct retail transformation (with plans to transform about 500 stores this year, compared to over 100 in the second half of last year) will exert short-term pressure on sales and profit margins. Regarding the Saucony brand, the company is optimistic about the brand's development prospects, expecting revenue to grow by 20% to 30% year-on-year this year, benefiting from product, channel, and brand upgrades. If the recovery of the e-commerce channel is faster than expected, growth may surprise on the upside. Considering the weak offline traffic and the greater-than-expected impact of the direct retail transformation on sales, along with increased investment in the Xtep brand, higher employee stock ownership plan expenses confirmed this year, and rising tax rates, G Sachs has lowered Xtep International's net profit forecasts for 2026 and 2027 by 14% to 18%. The target price has been reduced from HKD6.6 to HKD5.7, corresponding to an unchanged forecast P/E ratio of 11 times for 2026, while maintaining a 'Buy' rating. (ec/u) Auto-translated by third-party software This translation was auto-generated by third-party software. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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