Minsheng International has issued a research report assigning a "Buy" rating to BOSIDENG (03998) with a target price of HK$5.80. The bank highlights the company's attractive dividend yield, projecting an over 80% payout ratio for FY26, translating to an estimated dividend yield of around 6.0% at the current price.
Revenue forecasts for FY26E-FY28E stand at RMB28.51 billion, RMB31.60 billion, and RMB34.93 billion, reflecting year-on-year growth of +10.1%, +10.8%, and +10.5%, respectively. Net profit attributable to shareholders is expected to reach RMB3.90 billion, RMB4.37 billion, and RMB4.90 billion, with year-on-year increases of +10.9%, +12.0%, and +12.2%. The current price implies a FY26E P/E ratio of 13x.
Key takeaways from Minsheng International’s analysis include: 1. **FY26H1 Performance Meets Expectations**: BOSIDENG’s core brand demonstrated steady growth, supported by proactive inventory reduction. Group revenue rose 1.4% YoY to RMB8.93 billion, while net profit grew 5.3% YoY to RMB1.19 billion. Inventory levels declined 20% YoY due to slower raw material procurement and strategic destocking ahead of peak season. Accounts receivable turnover days improved by 4 days to 59 days. - **Segment Breakdown**: Branded downwear revenue increased 8% YoY to RMB6.57 billion, with the core brand outperforming others and offline channels surpassing online. Core brand revenue rose 8% YoY to RMB5.72 billion, with wholesale and self-operated sales up 8% and 7%, respectively, while online revenue grew 2.4%. - **Margin Expansion**: The group’s gross margin edged up 0.1pp to 50.0%, driven by the core brand’s 64.8% gross margin, benefiting from faster wholesale growth and inventory optimization.
2. **Strategic Initiatives for Peak Season**: - **Product Innovation**: The core brand strengthened its lineup with a focus on functional technology and fashion aesthetics, collaborating with top international designers. Highlights include the Areal premium line (with former luxury creative director Kim Jones) and the Vertex 3-in-1 down jacket (with designer Errolson Hugh). - **Operational Efficiency**: Store optimization (67 net closures for the core brand, offset by 126 net openings for Snow Flying) and improved inventory management are expected to enhance discounts and margins during the peak season. - **Strong Sales Momentum**: Management reaffirmed FY26 guidance (10% revenue growth, profit growth outpacing revenue), with October-November offline sales posting double-digit YoY growth and better discounting trends.
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